California Code of Regulations
Title 9 - Rehabilitative and Developmental Services
Division 3 - Department of Rehabilitation
Chapter 6 - Business Enterprises Program for the Blind
Article 7.7 - Vending Facility Operations
Section 7220 - Operation of a Vending Facility

Universal Citation: 9 CA Code of Regs 7220

Current through Register 2024 Notice Reg. No. 38, September 20, 2024

(a) Upon signing the vendor's operating agreement, the vendor shall be recognized as the operator of the vending facility named in the agreement and shall operate and manage all aspects of the vending facility in accordance with the vendor operating agreement, permit or contract, United States Code, title 20, section 107 et seq., Code of Federal Regulations, title 34, part 395, Welfare and Institutions Code section 19625 et seq., applicable Health and Safety Code sections, California Code of Regulations, title 9, section 7210 et seq., and local permits and business licenses that may be required to operate the vending facility. This includes maintaining a drug-free environment within the vending facility.

(b) The Business Enterprises Program for the Blind, herein BEP, shall provide the vendor with a copy of the vendor operating agreement, which shall include the permit or contract for the vending facility as an exhibit thereof. The BEP shall also provide the vendor with the vendor operating agreement and exhibit thereof in the vendor's preferred mode of communication, to the extent possible.

(c) The vendor shall obtain and maintain all required state and local licenses and permits and satisfy any other legal requirements to operate the vending facility prior to commencing operation of a vending facility.

(d) The vendor shall sell only those items identified in the permit or contract for the vending facility. If a vendor wishes to add or delete items for sale listed in the permit or contract, he or she shall submit a written request of the proposed changes to the BEP. An amendment to the vendor operating agreement and, if applicable, the permit or contract must be executed by the vendor, BEP, and, if applicable, contracting agency, prior to the vendor changing the items for sale at the vending facility.

(e) A vending facility shall not be operated without liability and workers' compensation insurance required and provided by the BEP through the BEP group policy, except a vending facility established pursuant to title 34 Code of Federal Regulations part 395.33. The vendor shall remit payment for liability and workers' compensation insurance in accordance with Section 7221(c) of these regulations. Within 24 hours of a vendor learning of an incident occurring in connection with the vending facility that may give rise to a workers' compensation or liability claim, the vendor must contact the BEP and the insurance carrier to report the incident.

(f) The vendor shall be personally responsible and accountable for all of the following:

(1) Operating the vending facility in accordance with all applicable federal, state, and local laws and regulations, as identified in subdivision (a) of this section;

(2) Providing a level of goods and services satisfactory to the contracting agency;

(3) Establishing and maintaining good relations with customers and the contracting agency;

(4) Maintaining and operating the facility in accordance with all health and safety standards set forth in Health and Safety Code sections 113700 et seq. and 114259.4, and other Health and Safety Code sections referenced in this chapter, as applicable; and

(5) Posting information for employees as required by Labor Code section 6408;

(g) To ensure that his or her vending facility operates in full compliance with all applicable law and regulation, a vendor shall be physically present at the primary site of his or her vending facility on a regular basis and personally accountable for, and fully aware of, the ongoing activities at any satellite sites that are part of his or her vending facility.

(h) Vendors shall be personally present at and participate in all of the following:

(1) A quarterly meeting with the Business Enterprises Consultant, hereafter BEC, at the vendor's primary site, which shall include, but not be limited to, a review all of the DR 478, Vendor's Monthly Operating Reports (Rev. 06/16) filed since the last quarterly meeting, payment of any financial obligations owed to the BEP, any delinquent DR 478, Vendor's Monthly Operating Reports (Rev. 06/16) or payments of any financial obligations owed to the BEP, any complaints received from the contracting agency, and any incidents reported in accordance with subdivision (e) of this section.

(2) A quarterly meeting with the BEC to review the results of the DR 484, Vending Facility Review (Rev. 11/07).

(3) An annual meeting with the BEC to review, update, and sign for the vending facility equipment at all sites within the vendor's vending facility.

(i) Failure of a vendor to be personally present at and participate in the reviews required by subdivision (h) of this section shall be good cause for termination or suspension of the Vendor's Operating Agreement and/or license. Employees or other agents of the vendor may not represent the vendor for the purpose of such reviews, except as provided for in Section 7220.7 of these regulations.

(j) Under no circumstances shall a vendor purchase services, merchandise, supplies or equipment for his or her vending facility from himself or herself or a partnership or other entity in which the vendor has a financial interest of any type and include the cost of such services, merchandise, supplies or equipment in a DR 478, Vendor's Monthly Operating Report (Rev. 06/16) to offset the set aside fees owed to the BEP.

(k) Upon the request of the BEP, vendors shall establish that the compensation paid to employees, including family members, is reasonable and commensurate with compensation for other similarly situated employees. For the purposes of this subdivision, similarly situation employees may include employees working at other BEP vending facilities or businesses which are not part of the BEP. Excessive compensation shall not be paid to employees, including family members.

(l) The vendor shall maintain required records on the operation of the facility for the current year plus the three preceding years or until completion of the action and resolution of all issues which may arise as a result of any litigation, claim, negotiation, audit, or other relevant action involving the records prior to the expiration of the three-year period, whichever is later. Upon written request, books of accurate account and records pertaining to a vending facility operation shall be made available for examination and audit by the Department at any reasonable time and place. Such records shall include:

(1) Monthly operating reports (profit and loss statements);

(2) Work sheets used to prepare monthly operating reports;

(3) Sales register (monthly summary of sales and other income);

(4) Daily cash reports (cash count forms);

(5) Cash register tapes (entire tape, if adjustments have been made to the total-"z" totals, if no adjustments have been made);

(6) Records on other operation receipts (vending machines, catering, etc.);

(7) Board of Equalization reports (sales tax);

(8) Bank deposit receipts;

(9) Purchase register (monthly summary of purchases or check register);

(10) Invoices from purveyors (cash, check and credit purchases);

(11) Canceled checks;

(12) Records on other operation purchases (vending machines, catering, etc.);

(13) Supporting records for reported monthly inventory;

(14) Physical inventory records;

(15) Payroll register (compensation records);

(16) Employee time cards or time sheets;

(17) Quarterly tax reports (Federal 941 and State DE3);

(18) Employee W-2 reports;

(19) Documentation for cost of employee meals;

(20) Records on employee fringe benefits (health, dental, pension, etc.);

(21) Records on other operating expenditures;

(22) Records on other income (subsidies, commissions, trainee revenue, vending machine commissions, etc.); and

(23) Bank statements and reconciliations.

(m) If records are not maintained to support the DR 478, Vendor's Monthly Operating Reports (Rev. 06/16), the BEP or the Department may estimate the sales, expenses, and set-aside fees from all information available, including sales tax returns, facility announcements, prior DR 478, Vendor's Monthly Operating Reports (Rev. 06/16) filed for the vending facility or other similar locations. The vendor shall pay the BEP the set-aside fees calculated in accordance with this subdivision and any penalties.

(n) A vendor must take all appropriate action to correct any deficiencies identified by a BEP facility review or an audit conducted by the Department within the period of time established by the Department.

(o) The vendor shall take and report the physical inventory of the vending facility merchandise and supplies twice annually for the periods ending June 30th and December 31st and submit the inventory reports to his or her assigned BEP Business Enterprises Consultant by July 25th and January 25th, respectively. The BEP may also notify the vendor in writing that the vendor must take and report the physical inventory of the vending facility merchandise and supplies at other times as well. The written notice shall include date in which the report must be submitted to the BEP.

(p) The vendor shall be solely responsible for the payment of all rent or utility charges in accordance with the terms and conditions of the vendor operating agreement or permit or contract.

(q) The vendor shall ensure that any guide dog shall be excluded from food preparation and utensil wash areas in accordance with Health and Safety Code Section 114259.4.

(r) An amount equal to 10 percent of the wages paid by a vendor to any blind person, as defined in Welfare and Institutions Code section 19153, or employee who has a mental or physical disability, as defined in Government Code section 12926, shall be deducted from any set-aside fees paid by the vendor. Upon the request of the BEP, a vendor who is deducting an amount equal to 10 percent of the wages paid to a blind or disabled person must provide documentation supporting the deduction. If a vendor does not claim the deduction during the month for which the gross earnings were paid, the vendor may claim it at a later date. In any one month the deductions shall not exceed the set-aside charges. There shall be no deduction from set-aside fees paid by a vendor, if the vendor does not pay wages at least equal to minimum wages required of employers pursuant to Chapter 1 (commencing with Section 1171) of Part 4 of Division 2 of the Labor Code).

(s) The continuing eligibility of a vendor as a blind person pursuant to Welfare and Institutions Code section 19153 shall be recertified every 24 months for partially sighted individuals and whenever the Department has reason to believe a vendor's status as a blind person no longer meets the definition set forth in Welfare and Institutions Code section 19153. Recertification shall require an examination by a licensed physician or surgeon who specializes in diseases of the eye or a licensed optometrist and submission of documentation signed by the examining physician or optometrist to the BEP Manager upon completion.

1. Renumbering and amendment of former section 7218 to section 7220 and amendment of NOTE and renumbering of former section 7220 to section 7225 filed 2-4-93; operative 3-8-93 (Register 93, No. 6).
2. New article 7.7 heading, amendment of section heading, repealer and new section and amendment of NOTE filed 9-22-2009; operative upon the approval of the Secretary of the United States Department of Education, in accordance with title 34, Code of Federal Regulations, section 395.4(a) (Register 2009, No. 39).
3. Approved by the Secretary of the United States Department of Education in accordance with section 395.4(a) of title 34 of the Code of Federal Regulations on 6-2-2010; operative 9-15-2010 pursuant to section 7210(b)(2) of title 9 of the California Code of Regulations (Register 2010, No. 39).
4. Amendment of subsections (h)(1), (j) and (m) filed 10-18-2017; operative upon approval of the Secretary of the United States Department of Education in accordance with title 34 of the Code of Federal Regulations section 395.4(a) (Register 2017, No. 42).

Note: Authority cited: 20 USC Section 107b(5); 34 CFR Section 395.4; and Sections 19006, 19016 and 19639, Welfare and Institutions Code. Reference: 20 USC Sections 107, 107a(a)(5), 107a(b), 107a(e) and 107b(3); 34 CFR Sections 361.5(b)(5), 395.1(o), 395.3(a)(7), 395.3(a)(11)(vi), 395.3(a)(11) (viii), 395.3(a)(11)(ix), 395.5, 395.7, 395.9, 395.16, 395.34 and 395.35; Section 12926, Government Code; Sections 113700 et seq. and 114259.4, Health and Safety Code; Sections 1171 et seq., 5401, 6408 and 6409.1, Labor Code; and Sections 19011, 19013.5(b), 19153, 19625, 19629, 19632(a) and 19633, Welfare and Institutions Code.

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