BRO-3-05 CO:R:C:E 225011 TLS
Ms. Mary A. Rasmussen
Assitant District Director
U.S. Customs Service
300 South Ferry Street
San Pedro, California 90731
RE: Request for Internal Advice concerning a licensed broker
qualifying a licence and permit for one broker and being employed
by a second broker; 19 U.S.C. 1641; 19 CFR 111.11; 19 CFR
111.19(d); C.S.D. 91-12 (March 8, 1991); Customs ruling 221724
(June 4, 1991).
Dear Ms. Rasmussen:
This office has received the above-referenced request for
internal advice as provided for under Customs regulations. We
have considered the request and have made the following decision.
A licensed broker qualifying a license and permit for her
sole proprietorship (Broker 1) is also employed by another broker
(Broker 2). At the end of her workday for Broker 2, Broker 1
travels to her own business office and reviews her employee's
work. The employee may or may not be present.
Broker 1 contends that she is performing her duties for
Broker 2 during non-concurrent hours. She is seeking advice on
whether this scenario is consistent with current Customs laws.
Whether Broker 1 may continue to operate her own brokerage
business and simultaneously be employed by Broker 2 under the
circumstances outlined above.
Whether Broker 1 is exercising responsible supervision over
her employee under the circumstances noted above.
Whether both brokers are involved in a conflict of interest
in the circumstances presented if they do not inform their
clients of the arrangement and obtain consent from those clients.
LAW AND ANALYSIS:
The first issue presented here has been addressed in a
previous Customs ruling. Concerning the first issue, we have
held 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." Customs ruling
HQ 222573 (March 8, 1991). The individual qualifying the permit
for one broker cannot qualify the permit for another, unless
authorized by a waiver. 19 U.S.C. 1641(c)(2); 19 CFR 111.19(d).
The qualifying broker must be under responsible supervision and
control while working for the second broker. 19 U.S.C.
1641(b)(4); 19 CFR 111.11(b) and (c); 19 CFR 111.19(d).
In this case, Broker 1 works for Broker 2 during the day and
then works at her own office afterwards to review her employee's
work. To the extent that these work hours are part of a regular
schedule, we find that they are prescribed and non-concurrent.
The facts presented indicate that Broker 1 qualifies the permit
only for her own brokerage firm. The fact that she also
qualifies the license for her own firm is of no consequence in
this case. From the facts presented, we cannot determine if
responsible supervision and control is being exercised over
Broker 1 while she is working for Broker 2. If such is the case,
we find that Broker 1 may work for Broker 2 as a non-qualifying
employee while qualifying the permit and license for her own
business. We do stress that the requisite supervision and
control over Broker 1 must be present while she is working for
Broker 2. We also emphasize here, as we did in HQ 222573, that
this finding on the first issue does not in any way absolve
Broker 1 of the responsibility of exercising responsible
supervision and control over her employee in the office where she
qualifies the permit.
On the second issue, we must look at what constitutes
"responsible supervision and control." The term is defined under
19 CFR 111.19(d) as such:
[T]hat degree of supervision and control necessary to
ensure that the employee provides substantially the
same quality of service in handling customs
transactions that the licensed broker is required to
The facts presented here do not give a clear picture of how
Broker 1 is supervising her employee, except to state that she
reviews her employee's work, presumably after the work has been
completed. We have found in at least one case that responsible
supervision and control was present where the broker was in a
position to direct and control her employees and specify the
method and manner in which the work was done. Customs ruling HQ
221724 (June 4, 1991). Thus, if such is present in this case,
the requirements of 19 CFR 111.19(d) are considered to be met.
The fact that the broker is not present while the employee is
performing her duties does not preclude the broker from
exercising responsible control and supervision over the employee.
Concerning whether a conflict of interest exists under the
current arrangement if the brokers do not inform their respective
clients of the arrangement, we find no reason for having the
brokers inform their clients of the arrangement. We have
previously required that a parent broker must obtain a power of
attorney from its client if a subsidiary broker is to conduct
business on behalf of the parent for the client. HQ 221724,
supra. The subsidiary must also obtain a power of attorney from
the client, as well as exchange powers of attorney with the
In the present case, the facts given do not indicate that
Broker 1 will be conducting business for Broker 2's clients on
behalf of Broker 2 as a broker. Broker 1, for all intent and
purposes, is an agent of Broker 2 while working as an employee
for Broker 2. As such, Broker 1 is only representing Broker 2 in
transactions involving Broker 2's clients; she is not
representing her own brokerage firm. Conversely, Broker 1 is
only representing her own firm when she is not in the employ of
Broker 2. Assuming that the client lists of Broker 1 and Broker
2 do not overlap, we find no apparent conflict of interest in the
Under the circumstances presented, Broker 1 may qualify the
license and permit for her own brokerage firm while working
prescribed, non-concurrent hours in the employ of Broker 2.
Broker 1 is exercising responsible supervision and control
over her employee only if she is in a position to direct and
control her employee and specify the method and manner in which
the employee's work is done. The fact that she might not be
present when the employee is performing her duties does not
preclude the broker from exercising such control over the
There is no conflict of interest in this case between Broker
1 and Broker 2. Neither is required to inform their respective
clients of their arrangement, provided that Broker 1 and Broker 2
do not represent the same clients. This ruling is based only on
the facts presented as stated above.
John Durant, Director
Commercial Rulings Division