BRO-2-01-CO:R:C:E 222573 PH
Harvey A. Isaacs, Esq.
Tompkins & Davidson
One Whitehall Street
New York, New York 10004
RE: Employees of customhouse brokers; Employment by more than
one broker; 19 U.S.C. 1641; 19 CFR 111.11(d); 19 CFR 111.19(d).
Dear Mr. Isaacs:
In your letter of July 19, 1990, on behalf of the National
Customs Brokers and Forwarders Association of America, Inc., you
request a ruling on certain understandings you have regarding the
circumstances under which an employee may work for more than one
licensed broker. Our ruling follows.
FACTS:
The inquirer seeks clarification regarding the circumstances
in which an employee may work for more than one licensed broker.
The inquirer requests a ruling on a number of understandings on
this issue. These understandings are set forth below in the form
of issues.
ISSUES:
(1) May an unlicensed employee work for more than one broker
if the work is performed at each broker's office during prescrib-
ed hours (e.g., from 9:00 AM to 5:00 PM for broker "A" and from
6:00 PM to 11:00 PM for broker "B")?
(2) May an employee qualifying the permit for one broker be
employed by another broker under the circumstances outlined in
ISSUE 1 if the employee is not also the qualifying licensee of
the second broker?
(3) Is an employee employed under the circumstances
outlined in ISSUES 1 and 2 authorized to sign customs documents
for one or both of the licensees under 19 CFR 111.3(b)(1) and
conduct other business on behalf of either or both brokers under
19 CFR 111.3(b)(2) if it is done during the course of the
employee's employment?
LAW AND ANALYSIS:
The statutory provision governing customs brokers is found in
section 641, Tariff Act of 1930, as amended (19 U.S.C. 1641).
Licenses for customs brokers are provided for in paragraph (b) of
this provision (19 U.S.C. 1641(b)). Licenses for individuals are
granted under 19 U.S.C. 1641(b)(2) and licenses for corporations,
associations, or partnerships are granted under 19 U.S.C.
1641(b)(3). Pursuant to the latter provision, "at least one
officer of the corporation or association, or one member of the
partnership" must hold a valid individual customs brokers
license. Under 19 U.S.C. 1641(b)(4), a customs broker, defined
in 19 U.S.C. 1641(a)(1) as "any person granted a customs broker's
license ... under [19 U.S.C. 1641(b)]", "shall exercise
responsible supervision and control over the customs business
that it conducts."
The Customs Regulations pertaining to customs brokers are
found in Part 111 of the Customs Regulations (19 CFR Part 111).
Under 19 CFR 111.2, a person is required to obtain a customs
brokers license to transact the business of a broker and a
separate permit is required for each Customs district in which a
licensee conducts customs business. Under paragraphs (b) and (c)
of section 111.11, a partnership, association, or corporation
must have at least one member (in the case of a partnership) or
officer (in the case of an association or corporation) who is a
licensed broker. Also under these provisions, the partnership,
association, or corporation must establish that it will have an
office in the Customs district where it has applied for a permit
in which its customs transactions will be performed by a licensed
member of the partnership (if the broker is a partnership), or a
licensed officer (if the broker is an association or a
corporation), or by an employee under the responsible supervision
and control of the licensed member or officer.
Each person granted a customs broker's license is required,
under 19 CFR 111.19, to have a permit for the district in which
the broker operates. Under 19 CFR 111.19(d), a customs broker
must employ within each district for which a permit is granted at
least one individual having an individual broker's license,
except as authorized by a waiver under 19 U.S.C. 1641(c)(2) and
19 CFR 111.19(d).
The term "responsible supervision and control" is defined
very broadly in 19 CFR 111.11(d). The term is defined as mean-
ing, in part, "that degree of supervision and control necessary
to ensure that the employee provides substantially the same
quality of service in handling customs transactions that the li-
censed broker is required to provide ...." Failure to exercise
such responsible supervision and control over the customs
business conducted by the customs broker and over its employees
requiring such supervision may result in the cancellation of the
customs brokers license or permit (see 19 CFR 111.53(c)).
Under 19 CFR 111.3(b), an employee of a customs broker acting
solely for his or her employer is not required to be licensed if:
(1) ... The broker has authorized the employee
to sign Customs documents on his [or her] behalf,
and has executed a power of attorney for that
purpose. ...; or
(2) ... The broker has filed with the district
director a statement identifying the employee as
authorized to transact business on his [or her]
behalf. ...
Where the employee is given authority under
either paragraph (b)(1) or (2) of this section,
the broker must promptly give notice of the
withdrawal of authority of any such employee and
must exercise such supervision of his [or her]
employees as will insure proper conduct on the
part of the employees in the transaction of
Customs business. Each broker will be held
strictly responsible for the acts or omissions of
his [or her] employees within the scope of their
employment, and for acts or omissions of such
employees which, in the exercise of reasonable
care and diligence, the broker should have
foreseen.
In the first issue under consideration, an unlicensed
employee would work for more than one customs broker at the
office of each broker during prescribed, non-concurrent hours.
We see no objection to such an arrangement, provided that the
requisite responsible supervision and control over the employee
is exercised, as required by 19 U.S.C. 1641(b)(4) and 19 CFR
111.11(b) and (c) and 111.19(d). As stated above, such respon-
sible supervision and control must ensure that the employee
provides substantially the same quality of service in handling
customs transactions that a licensed broker is required to
provide.
In the second issue under consideration, a licensed employee
would work for more than one customs broker at the office of each
broker during prescribed, non-concurrent hours, and the employee
would be the qualifying employee for the permit of one of the
brokers. In interpreting the statutory and regulatory
provisions described above, it is the position of the Customs
Service that an individually licensed customs broker may be the
qualifying employee for the permit of only one broker (except as
authorized by a waiver under 19 U.S.C. 1641((c)(2) and 19 CFR
111.19(d)). An employee, whether or not licensed with an
individual broker's license, while employed by the broker for
which he or she is not the qualifying employee, must be subject
to the responsible supervision and control required by 19 U.S.C.
1641(b)(4) and 19 CFR 111.11(b) and (c) and 111.19(d). In view
of this requirement for responsible supervision and control, we
conclude that a licensed individual who serves as the qualifying
employee for the permit of one broker may be employed by another
broker as a non-qualifying employee (i.e., a supervised
employee), provided that the work is performed at each broker's
office during prescribed, non-concurrent hours. However, we
emphasize that this ruling provides no defense to a charge of
failure to exercise responsible supervision and control over the
broker's office for which the licensed individual qualifies the
permit if the licensed individual also works for a second broker
in a supervised capacity.
The third issue raises the question of whether an employee
employed under the arrangements discussed above may sign customs
documents for, and conduct other business on behalf of, one or
both of the customs brokers under 19 CFR 111.3(b) during the
course of the employee's employment. Provided that the
requirements in 19 CFR 111.3(b) are met and that the requisite
responsible supervision and control is exercised over the
unlicensed employee, and the licensed employee while he or she is
employed by the broker for which he or she is not the qualifying
employee, such an employee may sign customs documents for, and
conduct other business on behalf of, one or both of the customs
brokers. These actions (i.e., signing customs documents and
conducting other business) may only be performed during the
course of the employee's employment by the customs broker on
behalf of which they are performed and at the office of the
broker on behalf of which they are performed during the
prescribed, non-concurrent hours during which the employee is
employed by that broker.
HOLDINGS:
(1) An individual who is not licensed with an individual
broker's license may be employed by more than one customs broker
if the work for each broker is performed at that broker's office
during prescribed, non-concurrent hours, provided that the
responsible supervision and control required by 19 U.S.C.
1641(b)(4) and 19 CFR 111.11(b) and (c) and 111.19(d) is
exercised over the employee.
(2) An individual who is licensed with an individual
broker's license may be employed by more than one customs broker
at each broker's office when the individual serves as the
qualifying employee for the permit (but not the license) of one
of the brokers, provided that:
(a) the responsible supervision and control required by 19
U.S.C. 1641(b)(4) and 19 CFR 111.11(b) and (c) and 111.19(d)
is exercised over the employee in his or her employment by
the customs broker for which he or she does not serve as the
qualifying employee; and
(b) the hours of employment of the individual for each
broker are prescribed and non-concurrent.
(3) An employee employed under the circumstances approved in
HOLDINGS 1 and 2 may sign customs documents for, and conduct
other business on behalf of, one or both of the customs brokers
by which he or she is employed, provided that the requirements in
19 CFR 111.3(b) are met and that, as required by 19 U.S.C.
1641(b)(4) and the Customs Regulations issued thereunder, the
requisite responsible supervision and control is exercised over
the unlicensed employee, and the licensed employee while he or
she is employed by the broker for which he or she is not the
qualifying employee. The employee may only perform these actions
during the course of the employee's employment by the customs
broker on behalf of which they are performed and at the office of
the broker on behalf of which they are preformed during the
prescribed, non-concurrent hours during which the employee is
employed by that broker.
Sincerely,
John Durant
Director, Commercial
Rulings Division