The U.S. Food and Drug Administration (FDA) recently published a draft guidance on how to determine whether a business is a “small business” under the Preventive Controls for Human and Animal Food Rules. The rules define a “small business” as having fewer than 500 “full-time equivalent employees.” Small businesses are subject to different compliance deadlines and, in some cases, different requirements than other businesses sizes. The recent guidance demonstrates that the definition of full-time equivalent employee may exclude many facilities from small business classification.
What is a Full-time Equivalent Employee?
As outlined by 21 CFR Part 117, the number of full-time equivalent employees for a given facility is determined by dividing the total number of hours worked in one year by all of the business’s staff (including those that do not handle food and those employed by affiliates and subsidiaries) by the number of hours one full-time employee would work in one year (i.e. 2,080).
For example, a facility may employ 150 full-time employees at 40 hours per week and 200 part-time employees at 30 hours per week for food manufacturing roles (a total of 624,000 hours in a year). The facility may be a division of a legal entity that employs 150 full-time employees and an additional 250 part-time employees across multiple subsidiaries for various roles unrelated to food manufacture (an additional 702,000 hours in a year). Though the facility only has 150 full-time employees, the legal entity it comprises actually has 637 full-time equivalent employees (1,326,000 hours divided by 2,080).
For this reason, some facilities may not realize that they are actually subject to requirements for large businesses under the Preventive Controls Rules.
How Does Business Size Affect Preventive Controls Requirements?
The rules provide small businesses a longer timeframe than their larger counterparts to develop written Food Safety Plans required by the Preventive Controls Rules; however, the compliance deadlines for most food facilities have passed, and small animal food businesses only have until September 17, 2018 to comply with preventive control requirements.
Certain farms that engage in activities requiring FDA registration (e.g. processing) may be exempt from requirements under the rule if they are considered a small business, but large farms that engage in these activities are required to have Food Safety Plans in place.
Additionally, “very small businesses” (defined by the rules as averaging less than $1,000,000 per year in sold and unsold products during the preceding three-year calendar period) are required to submit a “Qualified Facility Attestation” to FDA. These facilities receive modified preventive controls requirements, including exemption from developing Food Safety Plans. Facilities who submit an attestation must ensure that the average value per year of their sold and unsold products does not exceed $1,000,000, or they may be providing false statements to FDA. Submitting false statements to a U.S. federal agency is a criminal offense.
It is wise for covered facilities to develop Food Safety Plans immediately. FDA may look for a Food Safety Plan as part of a routine facility inspection, and U.S. importers may request their suppliers’ Food Safety Plan as part of a required supplier approval process.
Registrar Corp’s Food Safety Specialists are Preventive Controls Qualified Individuals (PCQIs) who can develop a Food Safety Plan for your facility or review your current plan for compliance. For more information, call us at +1-757-224-0177 or chat with a Regulatory Advisor 24-hours-a-day at www.registrarcorp.com/livehelp.