In this edition: Factors to analyze when determining the classification applicable to tasting room operations.
It is common for some employers assignable to Classifications 2142(1), Wineries; 2142(2), Distilling; and 2121, Breweries or Malt Houses; to operate a tasting room in connection with their manufacturing operations. At breweries, these are sometimes described as tap rooms. However, not all tasting rooms and tap rooms are operated in the same manner, and several operational issues must be analyzed to determine the classification applicable to tasting room operations. When tasting or tap room operations are physically separated from manufacturing operations and there is no interchange of labor, the operations are separately classified in accordance with the USRP provisions at Part 3, Section III, Rule 3, Multiple Enterprises.
When tasting room operations are not physically separated or if there is an interchange of labor with the manufacturing operations, the manufacturing classification applies. Some tasting room employees provide tours of the manufacturing facility and as such have exposure to the manufacturing operations; in such cases the manufacturing classification applies to the tasting room employees.
If the tasting room operations qualify for separate assignment from the manufacturing classification, the operations are classified as 8060, Stores – wine, beer or spirits, if the tasting room primarily sells alcoholic beverages for consumption away from the store premises, as directed in the footnote to Classification 8060.
STORES – wine, beer or spirits – retail
This classification shall apply to those firms operating under “off-sale” licenses issued by the California State Alcohol Board of Control and predominately (in excess of 50% of gross sales) engaged in the sale of alcoholic beverages to walk-in trade for consumption away from the store premises. 8060
If 50% or more of the gross sales are generated from the on-premises tasting or consumption of beverages or food, the operations are classified as 9079(1), Restaurants or Taverns.
Further, if a tasting room that qualifies for assignment to Classification 8060 also maintains a department for the preparation and sale of hot foods, Classification 9079(1) may apply to the hot food department pursuant to USRP Part 3, Section IV, Special Industry Classification Procedures, Rule 6e shown below.
|If a store maintains a department for the preparation and sale of hot foods, such operations shall be classified as 9079(1), Restaurants or Taverns. The payroll of employees that interchange between store operations and the department engaged in the preparation and sale of hot foods shall be assigned in accordance with Section V, Rule 3, Division of Single Employee’s Payroll.|
This marks the last Classification and Test Audit Insight e-Newsletter edition to be released in 2014. We thank you for reading and look forward to bringing you more topics covering common classification and test audit issues in the coming year. We always welcome feedback for future e-Newsletter topics. If you have a suggestion, please email us at [email protected].