[Code of Federal Regulations]
[Title 29, Volume 3]
[Revised as of July 1, 2005]
From the U.S. Government Printing Office via GPO Access
[CITE: 29CFR549.1]

[Page 219-220]
 
                             TITLE 29--LABOR
 
         CHAPTER V--WAGE AND HOUR DIVISION, DEPARTMENT OF LABOR
 
PART 549_REQUIREMENTS OF A ``BONA FIDE PROFIT-SHARING PLAN OR TRUST''
--Table of Contents
 
Sec. 549.1  Essential requirements for qualifications.

    (a) A bona fide profit-sharing plan or trust for purposes of section 
7(e)(3)(b) of the Act is required to meet all of the standards set forth 
in paragraphs (b) through (g) of this section and must not contain any 
of the disqualifying provisions set forth in Sec. 549.2.
    (b) The profit-sharing plan or trust constitutes a definite program 
or arrangement in writing, communicated or made available to the 
employees, which is established and maintained in good faith for the 
purpose of distributing to the employees a share of profits as 
additional remuneration over and above the wages or salaries paid to 
employees which wages or salaries are not dependent upon or influenced 
by the existence of such profit-sharing plan or trust or the amount of 
the payments made pursuant thereto.
    (c) All contributions or allocations by the employer to the fund or 
trust to be distributed to the employees are:
    (1) Derived solely from profits of the employer's business 
enterprise, establishment or plant as a whole, or an established branch 
or division of the business or enterprise which is recognized as such 
for general business purposes and for which profits are separately and 
regularly calculated in accordance with accepted accounting practice; 
and
    (2) Made periodically, but not more frequently than is customary or 
consonant with accepted accounting practice to make periodic 
determinations of profit.
    (d) Eligibility to share in profits extends:
    (1) At least to all employees who are subject to the minimum wage 
and overtime provisions of the Act, or to all such employees in an 
established part of the employer's business as described in paragraph 
(c) of this section: Provided, however, That such eligibility may be 
determined by factors such as length of service or minimum schedule of 
hours or days of work which are specified in the plan or trust, and 
further, that eligibility need not extend to officers of the employer; 
or
    (2) To such classifications of employees as the employer may 
designate with the approval of the Administrator upon a finding, after 
notice to interested persons, including employee representatives, and an 
opportunity to present their views either orally or in writing, that it 
is in accord with the meaning and intent of the provisions of section 
7(e)(3)(b) of the Act and this part. The Administrator may give such 
notice by requiring the employer to post a notice approved by the 
Administrator for a specified period in a place or places where notices 
to employees are customarily posted or at such other place or places 
designated by the Administrator, or he may require notice to be given in 
such other manner as he deems appropriate.
    (e) The amounts paid to individual employees are determined in 
accordance with a definite formula or method of calculation specified in 
the plan or trust. The formula or method of calculation may be based on 
any one or more or more of such factors as straight-time earnings, total 
earnings, base rate of pay of the employee, straight-time hours or total 
hours worked by employees, or length of service, or distribution may be 
made on a per capita basis.
    (f) An employee's total share determined in accordance with 
paragraph (e) of this section may not be diminished because of any other 
remuneration received by him.
    (g) Provision is made either for payment to the individual employees 
of their respective shares of profits within a reasonable period after 
the determination of the amount of profits to be distributed, or for the 
irrevocable deposit by the employer of his employees' distributive 
shares of profits with a trustee for deferred distribution to such 
employees of their respective shares after a stated period of time or 
upon the occurrence of appropriate contingencies specified in the plan 
or trust: Provided, however, That the right of an employee to receive 
his share is

[[Page 220]]

not made dependent upon his continuing in the employ of the employer 
after the period for which the determination of profits has been made.

(Approved by the Office of Management and Budget under control number 
1215-0122)

[18 FR 3292, June 10, 1953, as amended at 47 FR 145, Jan. 5, 1982]