Legal Memorandum: Annual Gross Volume Exclusions

Issue: What items of hotel receipts can be excluded in computing a hotel’s Annual Gross Volume of business for the purpose of determining whether federal minimum wage requirements should be imposed?

The Fair Labor Standards Act (FLSA) imposes minimum wage requirements on enterprises engaged in commerce or in the production of goods for commerce.  The FLSA applies to enterprises that have employees engaged in commerce and whose annual gross volume of sales made or business done is not less than $500,000 (exclusive of excise taxes at the retail level that are separately stated).  29 U.S.C. § 203 (1996). 

Interpreting the above provision of the FLSA, 29 C.F.R. § 779.259 provides, in relevant part, as follows:

The gross volume of sales made or business done means the gross dollar volume (not limited to income derived from all sales and business transactions including, for example, gross receipts from services, credit, or other similar charges.  Credits for goods returned or exchanged and rebates and discounts, and the like, are not ordinarily included in the annual gross volume of sales of business.  The gross volume of sales or business includes the receipts form sales made or business done by the retail or service establishments of the enterprise as well as the sales made or business doe by any other establishments of the enterprise, exclusive of the internal transactions between them.  Gross volume is measure by the price paid by the purchase for the property or service to him, as states in the Senate Committee Report (Sec. 779.258).  It is not measure by the profit on goods sold or commissions on sales made for others.  The dollar value of sales or business […]

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