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