[Code of Federal Regulations]
[Title 29, Volume 3]
[Revised as of July 1, 2004]
From the U.S. Government Printing Office via GPO Access
[CITE: 29CFR531.3]

[Page 162-163]
 
                             TITLE 29--LABOR
 
         CHAPTER V--WAGE AND HOUR DIVISION, DEPARTMENT OF LABOR
 
PART 531_WAGE PAYMENTS UNDER THE FAIR LABOR STANDARDS ACT OF 1938
--Table of Contents
 
  Subpart B_Determinations of ``Reasonable Cost'' and ``Fair Value''; 
               Effects of Collective Bargaining Agreements
 
Sec. 531.3  General determinations of ``reasonable cost.''


    (a) The term reasonable cost as used in section 3(m) of the Act is 
hereby determined to be not more than the actual

[[Page 163]]

cost to the employer of the board, lodging, or other facilities 
customarily furnished by him to his employees.
    (b) Reasonable cost does not include a profit to the employer or to 
any affiliated person.
    (c) Except whenever any determination made under Sec. 531.4 is 
applicable, the ``reasonable cost'' to the employer of furnishing the 
employee with board, lodging, or other facilities (including housing) is 
the cost of operation and maintenance including adequate depreciation 
plus a reasonable allowance (not more than 5 1/2 percent) for interest 
on the depreciated amount of capital invested by the employer: Provided, 
That if the total so computed is more than the fair rental value (or the 
fair price of the commodities or facilities offered for sale), the fair 
rental value (or the fair price of the commodities or facilities offered 
for sale) shall be the reasonable cost. The cost of operation and 
maintenance, the rate of depreciation, and the depreciated amount of 
capital invested by the employer shall be those arrived at under good 
accounting practices. As used in this paragraph, the term ``good 
accounting practices'' does not include accounting practices which have 
been rejected by the Internal Revenue Service for tax purposes, and the 
term ``depreciation'' includes obsolescence.
    (d)(1) The cost of furnishing ``facilities'' found by the 
Administrator to be primarily for the benefit or convenience of the 
employer will not be recognized as reasonable and may not therefore be 
included in computing wages.
    (2) The following is a list of facilities found by the Administrator 
to be primarily for the benefit of convenience of the employer. The list 
is intended to be illustrative rather than exclusive: (i) Tools of the 
trade and other materials and services incidental to carrying on the 
employer's business; (ii) the cost of any construction by and for the 
employer; (iii) the cost of uniforms and of their laundering, where the 
nature of the business requires the employee to wear a uniform.