[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: 29CFR541.108]

[Page 186-188]
 
                             TITLE 29--LABOR
 
         CHAPTER V--WAGE AND HOUR DIVISION, DEPARTMENT OF LABOR
 
PART 541_DEFINING AND DELIMITING THE TERMS ``ANY EMPLOYEE EMPLOYED IN A 
 
                        Subpart B_Interpretations
 
Sec. 541.108  Work directly and closely related.

    (a) This phrase brings within the category of exempt work not only 
the actual management of the department and the supervision of the 
employees therein, but also activities which are closely associated with 
the performance of the duties involved in such managerial and 
supervisory functions or responsibilities. The supervision of employees 
and the management of a department include a great many directly and 
closely related tasks which are different from the work performed by 
subordinates and are commonly performed by supervisors because they are 
helpful in supervising the employees or contribute to the smooth 
functioning of the department for which they are responsible. Frequently 
such exempt work is of a kind which in establishments that are organized 
differently or which are larger and have greater specialization of 
function, may be performed by a nonexempt employee hired especially for 
that purpose. Illustration will serve to make clear the meaning

[[Page 187]]

to be given the phrase ``directly and closely related''.
    (b) Keeping basic records of working time, for example, is 
frequently performed by a timekeeper employed for that purpose. In such 
cases the work is clearly not exempt in nature. In other establishments 
which are not large enough to employ a timekeeper, or in which the 
timekeeping function has been decentralized, the supervisor of each 
department keeps the basic time records of his own subordinates. In 
these instances, as indicated above, the timekeeping is directly related 
to the function of managing the particular department and supervising 
its employees. However, the preparation of a payroll by a supervisor, 
even the payroll of the employees under his supervision, cannot be 
considered to be exempt work, since the preparation of a payroll does 
not aid in the supervision of the employees or the management of the 
department. Similarly, the keeping by a supervisor of production or 
sales records of his own subordinates for use in supervision or control 
would be exempt work, while the maintenance of production records of 
employees not under his direction would not be exempt work.
    (c) Another example of work which may be directly and closely 
related to the performance of management duties is the distribution of 
materials or merchandise and supplies. Maintaining control of the flow 
of materials or merchandise and supplies in a department is ordinarily a 
responsibility of the managerial employee in charge. In many 
nonmercantile establishments the actual distribution of materials is 
performed by nonexempt employees under the supervisor's direction. In 
other establishments it is not uncommon to leave the actual distribution 
of materials and supplies in the hands of the supervisor. In such cases 
it is exempt work since it is directly and closely related to the 
managerial responsibility of maintaining the flow of materials. In a 
large retail establishment, however, where the replenishing of stocks of 
merchandise on the sales floor is customarily assigned to a nonexempt 
employee, the performance of such work by the manager or buyer of the 
department is nonexempt. The amount of time the manager or buyer spends 
in such work must be offset against the statutory tolerance for 
nonexempt work. The supervision and control of a flow of merchandise to 
the sales floor, of course, is directly and closely related to the 
managerial responsibility of the manager or buyer.
    (d) Setup work is another illustration of work which may be exempt 
under certain circumstances if performed by a supervisor. The nature of 
setup work differs in various industries and for different operations. 
Some setup work is typically performed by the same employees who perform 
the ``production'' work; that is, the employee who operates the machine 
also ``sets it up'' or adjusts it for the particular job at hand. Such 
setup work is part of the production operation and is not exempt. In 
other instances the setting up of the work is a highly skilled operation 
which the ordinary production worker or machine tender typically does 
not perform. In some plants, particularly large ones, such setup work 
may be performed by employees whose duties are not supervisory in 
nature. In other plants, however, particularly small plants, such work 
is a regular duty of the executive and is directly and closely related 
to his responsibility for the work performance of his subordinates and 
for the adequacy of the final product. Under such circumstances it is 
exempt work. In the data processing field the work of a supervisor when 
he performs the more complex or more responsible work in a program 
utilizing several computer programers or computer operators would be 
exempt activity.
    (e) Similarly, a supervisor who spot checks and examines the work of 
his subordinates to determine whether they are performing their duties 
properly, and whether the product is satisfactory, is performing work 
which is directly and closely related to his managerial and supervisory 
functions. However, this kind of examining and checking must be 
distinguished from the kind which is normally performed by an 
``examiner,'' ``checker,'' or ``inspector,'' and which is really a 
production operation rather than a part of the supervisory function. 
Likewise, a department manager or buyer in a retail

[[Page 188]]

or service establishment who goes about the sales floor observing the 
work of sales personnel under his supervision to determine the 
effectiveness of their sales techniques, checking on the quality of 
customer service being given, or observing customer preferences and 
reactions to the lines, styles, types, colors, and quality of the 
merchandise offered, is performing work which is directly and closely 
related to his managerial and supervisory functions. His actual 
participation, except for supervisory training or demonstration 
purposes, in such activities as making sales to customers, replenishing 
stocks of merchandise on the sales floor, removing merchandise from 
fitting rooms and returning to stock or shelves, however, is not. The 
amount of time a manager or buyer spends in the performance of such 
activities must be included in computing the percentage limitation on 
nonexempt work.
    (f) Watching machines is another duty which may be exempt when 
performed by a supervisor under proper circumstances. Obviously the mere 
watching of machines in operation cannot be considered exempt work 
where, as in certain industries in which the machinery is largely 
automatic, it is an ordinary production function. Thus, an employee who 
watches machines for the purpose of seeing that they operate properly or 
for the purpose of making repairs or adjustments is performing nonexempt 
work. On the other hand, a supervisor who watches the operation of the 
machinery in his department in the sense that he ``keeps an eye out for 
trouble'' is performing work which is directly and closely related to 
his managerial responsibilities. Making an occasional adjustment in the 
machinery under such circumstances is also exempt work.
    (g) A word of caution is necessary in connection with these 
illustrations. The recordkeeping, material distributing, setup work, 
machine watching and adjusting, and inspecting, examining, observing and 
checking referred to in the examples of exempt work are presumably the 
kind which are supervisory and managerial functions rather than merely 
``production'' work. Frequently it is difficult to distinguish the 
managerial type from the type which is a production operation. In 
deciding such difficult cases it should be borne in mind that it is one 
of the objectives of Sec. 541.1 to exclude from the definition foremen 
who hold ``dual'' or combination jobs. (See discussion of working 
foremen in Sec. 541.115.) Thus, if work of this kind takes up a large 
part of the employee's time it would be evidence that management of the 
department is not the primary duty of the employee, that such work is a 
production operation rather than a function directly and closely related 
to the supervisory or managerial duties, and that the employee is in 
reality a combination foreman-``setup'' man, foreman-machine adjuster 
(or mechanic), or foreman-examiner, floorman-salesperson, etc., rather 
than a bona fide executive.