[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: 29CFR541.113]

[Page 191-192]
 
                             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. 541.113  Sole-charge exception.

    (a) An exception from the percentage limitations on nonexempt work 
is provided in Sec. 541.1(e) for ``an employee who is in sole charge of 
an independent establishment or a physically separated branch 
establishment * * *''. Such an employee is considered to be employed in 
a bona fide executive capacity even though he exceeds the applicable 
percentage limitation on nonexempt work.
    (b) The term ``independent establishment'' must be given full 
weight. The establishment must have a fixed location and must be 
geographically separated from other company property. The management of 
operations within one among several buildings located on a single or 
adjoining tracts of company property does not qualify for the exemption 
under this heading. In the case of a branch, there must be a true and 
complete physical separation from the main office.
    (c)(1) A determination as to the status as ``an independent 
establishment or a physically separated branch establishment'' of any 
part of the business operations on the premises of a retail or other 
establishment, however, must be made on the basis of the physical and 
economic facts in the particular situation. (See 29 CFR 779.225, 
779.305, 779.306.) A leased department cannot be considered to be a 
separate establishment where, for example, it and the retail store in 
which it is located operate under a common trade name and the store may 
determine, or have the power to determine, the leased department's space 
location, the type of merchandise it will sell its pricing policy, its 
hours of operation and some or all of its hiring, firing, and other 
personnel policies, and matters such as advertising, adjustment, and 
credit operations, insurance and taxes, are handled on a unified basis 
by the store.

[[Page 192]]

    (2) A leased department may qualify as a separate establishment, 
however, where, among other things, the facts show that the lessee 
maintains a separate entrance and operates under a separate name, with 
its own separate employees and records, and in other respects conducts 
his business independently of the lessor's. In such a case the leased 
department would enjoy the same status as a physically separated branch 
store.
    (d) Since the employee must be in ``sole charge, only one person in 
any establishment can qualify as an executive under this exception, and 
then only if he is the top person in charge at that location. (It is 
possible for other persons in the same establishment to qualify for 
exemption as executive employees, but not under the exception from the 
nonexempt work limitation.) Thus, it would not be applicable to an 
employee who is in charge of a branch establishment but whose superior 
makes his office on the premises. An example is a district manager who 
has overall supervisory functions in relation to a number of branch 
offices, but makes his office at one of the branches. The branch manager 
at the branch where the district manager's office is located is not in 
``sole charge'' of the establishment and does not come within the 
exception. This does not mean that the ``sole-charge'' status of an 
employee will be considered lost because of an occasional visit to the 
branch office of the superior of the person in charge, or, in the case 
of an independent establishment by the visit for a short period on 1 or 
2 days a week of the proprietor or principal corporate officer of the 
establishment. In these situations the sole-charge status of the 
employee in question will appear from the facts as to his functions, 
particularly in the intervals between visits. If, during these 
intervals, the decisions normally made by an executive in charge of a 
branch or an independent establishment are reserved for the superior, 
the employee is not in sole charge. If such decisions are not reserved 
for the superior, the sole-charge status will not be lost merely because 
of the superior's visits.
    (e) In order to qualify for the exception the employee must 
ordinarily be in charge of all the company activities at the location 
where he is employed. If he is in charge of only a portion of the 
company's activities at his location, then he cannot be said to be in 
sole charge of an independent establishment or a physically separated 
branch establishment. In exceptional cases the divisions have found that 
an executive employee may be in sole charge of all activities at a 
branch office except that one independent function which is not 
integrated with those managed by the executive is also performed at the 
branch. This one function is not important to the activities managed by 
the executive and constitutes only an insignificant portion of the 
employer's activities at that branch. A typical example of this type of 
situation is one in which ``desk space'' in a warehouse otherwise 
devoted to the storage and shipment of parts is assigned a salesman who 
reports to the sales manager or other company official located at the 
home office. Normally only one employee (at most two or three, but in 
any event an insignificant number when compared with the total number of 
persons employed at the branch) is engaged in the nonintegrated function 
for which the executive whose sole-charge status is in question is not 
responsible. Under such circumstances the employee does not lose his 
``sole-charge'' status merely because of the desk-space assignment.