The Small Business Nutrition Labeling Exemption
21 CFR 101.9(j)(18) is narrower than almost everyone expects. It attaches to a product, not a company, it lasts 12 months at a time, and a single nutrient claim forfeits it. The two numbers, the notice, and what happens when you outgrow it.
The small business nutrition label exemption in 21 CFR 101.9(j)(18) lets a low-volume product from a small company be sold without a Nutrition Facts panel. It is narrower than almost everyone expects. It is not a company status you apply for once and keep: it is claimed one product at a time, for one 12-month period at a time, and it disappears the moment your label, labeling or advertising provides nutrition information or makes a nutrient content or health claim.
Two numbers do the work. For any 12-month period, a product qualifies if, in the preceding 12 months, the person claiming the exemption employed fewer than an average of 100 full-time equivalent employees and fewer than 100,000 units of that product were sold in the United States. If you find 300 employees and 400,000 units quoted in an old guide, you are reading a phase-in schedule written for the mid-1990s whose last window closed on 7 May 1997.
What the exemption is, and what it is attached to
Paragraph (j) of 101.9 lists the foods exempt from nutrition labeling or subject to special labeling requirements. Item (j)(18) is the one people mean, and it reads as three conditions that must all hold at once.
- The product is low-volume, meaning it meets the units-sold requirement in (j)(18)(i) or (j)(18)(ii).
- It is the subject of a claim for exemption giving the information required by (j)(18)(iv), filed before the period claimed begins, by a person, whether manufacturer, packer or distributor, that qualifies on average full-time equivalent employees.
- The labels, labeling and advertising do not provide nutrition information and do not make a nutrient content or health claim.
Three definitions in (j)(18)(vi) decide how you count. A unit is the packaging or, if there is none, the form in which the product is offered for sale to consumers. A food product is food in any sized package manufactured by a single manufacturer or bearing the same brand name, bearing the same statement of identity, and having similar preparation methods. A person means the entity together with all its domestic and foreign affiliates, as defined in 13 CFR 121.401.
That definition is why this is a per-product exemption rather than a per-company one. Your 8 oz jar and your 16 oz jar of the same sauce are one food product if brand name, statement of identity and preparation methods match, so their unit counts add together. Two different sauces are two food products, each with its own 100,000 unit ceiling. The employee number belongs to the person and applies to every product at once.
The two numbers in the small business nutrition label exemption
The current test is in 101.9(j)(18)(ii) and covers everything except products first introduced into interstate commerce before 8 May 1994. A product is eligible for an exemption for any 12-month period if, for the preceding 12 months, the person claiming the exemption employed fewer than an average of 100 full-time equivalent employees and fewer than 100,000 units of that product were sold in the United States.
There is one variant for a product with no sales history. If the food product was not sold in the 12-month period preceding the period claimed, the units test is met when fewer than 100,000 units are reasonably anticipated to be sold in the United States during the period claimed. That means a forecast you can defend, because you are certifying it.
Full-time equivalent employees are not headcount. The calculation appears twice, in (j)(18)(iv)(D) and in the definition at (j)(18)(vi)(D): divide the total hours of salary or wages paid to employees of the person and all of its affiliates by the number of hours of work in a year, 2,080 hours, which the regulation derives as 40 hours times 52 weeks.
A worked case. A sauce company pays 2 owners at 2,080 hours each, 3 production staff at 1,560 hours each, and a seasonal crew totalling 5,400 hours: 14,240 hours in all, divided by 2,080, is 6.85 full-time equivalent employees. Twelve people on the payroll, 6.85 by the regulation's arithmetic, under both the 100 threshold and the 10 threshold that governs filing. Part-time and seasonal staff count in proportion to the hours paid, and "and its affiliates" means a small company owned by a larger group counts the group's hours too.
The notice, and the carve-out from filing it
Qualifying on the numbers is not enough. Unless the carve-out applies, a notice must be filed with the Office of Nutrition and Food Labeling (HFS-800), Center for Food Safety and Applied Nutrition, Food and Drug Administration, 5001 Campus Dr., College Park, MD 20740, before the period claimed begins. There is no retroactive filing in the text: a notice sent in month four does not cover months one through three.
The carve-out sits in the same sentence that sets the address. If the person is not an importer and has fewer than 10 full-time equivalent employees, that person does not have to file a notice for any food product with annual sales of fewer than 10,000 total units. Both halves matter: an importer files no matter how small it is, and a 6-employee company with one product at 40,000 units a year still files, because 40,000 is not fewer than 10,000.
Paragraph (j)(18)(iv) lists what the notice contains.
| Item | What the regulation asks for |
|---|---|
| (A) | Name and address of the person requesting the exemption, with a telephone or FAX number and a contact name. |
| (B) | Names of the food products, including the various brand names, for which exemption is claimed. |
| (C) | Name and address of the manufacturer, distributor or importer, if different from the person claiming the exemption. |
| (D) | The average number of full-time equivalent individuals employed by the person and its affiliates for the 12 months preceding the period claimed, as total hours of salary or wages divided by 2,080. |
| (E) | Approximate total units of the product sold, or expected to be sold, in the United States. For products in production a year or more that is the period immediately preceding the exemption period; for others it is the exemption period itself. |
| (F) | Signature of a responsible individual for the person who can certify the accuracy of the information. |
Item (F) is a standing obligation, not a signature block. The individual certifies that the notice is a complete and accurate statement of the average full-time equivalent employees of the person and its affiliates and of the units sold, and also states that if either figure goes over the applicable numbers during the period claimed, the person will notify FDA of that fact and the date it happened. Signing commits you to reporting your own success.
What forfeits the exemption, and what happens when you outgrow it
The condition that catches small producers most often is the third one: labels, labeling and advertising must not provide nutrition information or make a nutrient content or health claim. This is broader than the panel. Advertising counts, so a claim on your website or a shelf talker can cost you the exemption for a product whose package is bare, and volunteering a partial panel ends it with no claim made at all.
A nutrient content claim is defined in 21 CFR 101.13(b) as a claim that expressly or implicitly characterizes the level of a nutrient of the type required in nutrition labeling. Its examples of express claims are "low sodium" and "contains 100 calories". Implied claims are subtler and just as fatal: 101.13(b)(2) covers describing a food or ingredient in a way that suggests a nutrient is absent or present in a certain amount, its example being "high in oat bran", and suggesting a food may be useful in maintaining healthy dietary practices where there is also nutrition information, its example being "healthy". If you are unsure whether a phrase on your jar is a claim, run it through the claim validator before you print.
Growth is handled in (j)(18)(iii). If the number of full-time equivalent employees goes over the applicable number during the period, or the units sold in the United States go over it, or the product no longer qualifies at the end of the period, you have 18 months from the date the product stopped being a low-volume product of a small business to comply with 101.9. That is the right moment to think about the wider compliance systems an operating manufacturer needs.
The 1990s numbers, and why they are not your test
Paragraph (j)(18)(i) still carries the original phase-in, and it is the single biggest source of wrong advice about this exemption. It applies only to products first introduced into interstate commerce before 8 May 1994, and it granted two fixed, dated windows: between 8 May 1995 and 7 May 1996 for a person with fewer than an average of 300 full-time equivalent employees and fewer than 400,000 units sold in the qualifying year, and between 8 May 1996 and 7 May 1997 for fewer than an average of 200 full-time equivalent employees and fewer than 200,000 units.
Both windows are historical, the second having ended on 7 May 1997. No product introduced today can use either. If a guide, a forum answer or a consultant quotes 300 employees, 400,000 units, 200 employees or 200,000 units as your threshold, they have read (j)(18)(i) and missed that it is dated. Your test is (j)(18)(ii): 100 and 100,000.
Other exemptions in the same paragraph that get mistaken for this one
Paragraph (j) contains eighteen items. Several relieve small producers of nutrition labeling on grounds unrelated to employee counts, and people routinely claim the wrong one.
- Retailer sales, (j)(1). Food offered for sale by a person making direct sales to consumers with annual gross sales made or business done in sales to consumers of not more than $500,000, or annual gross sales of food to consumers of not more than $50,000, calculated on the most recent 2-year average of business activity. A dollar test on a seller, not a unit test on a product, and no notice to file.
- Immediate consumption, (j)(2), and one-store retail, (j)(3). Food served in restaurants, schools, hospitals, cafeterias, trains, airplanes, delicatessens with facilities for eating on the premises, mall cookie counters, vending machines and sidewalk carts, or sold only in such facilities; and ready-to-eat food processed and prepared primarily in a retail establishment and not offered for sale outside it, such as an in-store bakery or a salad bar. Both are subject to 101.11 where it applies.
- Insignificant amounts of everything, (j)(4). Foods containing insignificant amounts of all the required nutrients, meaning an amount allowing a declaration of zero, except that for total carbohydrate, dietary fiber and protein it is an amount allowing "less than 1 gram". The examples given are coffee beans, tea leaves, plain unsweetened instant coffee and tea, and flavor extracts.
- Very small packages, (j)(13)(i). Foods in packages with a total surface area available to bear labeling of less than 12 square inches, provided they bear no nutrition claims or other nutrition information and the label carries an address or telephone number a consumer can use to obtain the nutrition information.
- Bulk, (j)(9) and (j)(16). Food shipped in bulk form that is not for distribution to consumers in that form and is used solely in manufacturing or is to be processed, labeled or repacked elsewhere; and food sold from bulk containers where the nutrition information is displayed on the container.
A separate set sits in 21 CFR 101.100 and runs to other labeling requirements rather than to nutrition labeling: 101.100(b) for food repackaged in a retail establishment, 101.100(c) for an open container of fresh fruit or vegetable holding not more than 1 dry quart, and 101.100(d) for a shipment that, by trade practice, is to be processed, labeled or repacked in substantial quantity elsewhere.
Two patterns run through nearly all of them. Almost every one is conditioned on the food bearing no nutrition claims or other nutrition information, so a claim collapses whichever exemption you rely on, and none, including (j)(18), touches anything outside the Nutrition Facts panel.
What an exempt label still has to carry
The exemption is from 101.9 and from nothing else. An exempt package still needs a statement of identity under 101.3, an ingredient list in descending order of predominance by weight under 101.4, a net quantity of contents statement under 101.7, the name and place of business of the manufacturer, packer or distributor, and major food allergen declarations. Placement and prominence still apply: the principal display panel under 101.1, the information panel under 101.2, and 101.15, which keeps required statements from being crowded off the package. The exempt label is a normal label minus one box, which is why the rest of the FDA food labeling requirements deserve as much attention as the panel you are skipping. Before a print run, walk the package through the FDA label checklist, which covers the elements the exemption leaves in place.
If your unit count is climbing toward 100,000, or a buyer wants a panel before you are required to have one, build it now rather than at the deadline: the nutrition label generator produces a compliant Nutrition Facts panel from your recipe, and having it ready turns the 18-month clock in (j)(18)(iii) into a formality.
Frequently asked questions
Do I have to file a notice with FDA to use the small business exemption?
Usually yes. Under 101.9(j)(18) the exemption requires a claim for exemption containing the information in (j)(18)(iv), filed before the period claimed begins. The one relief is in (j)(18)(iv) itself: a person who is not an importer and has fewer than 10 full-time equivalent employees does not have to file for any food product with annual sales of fewer than 10,000 total units. If you are an importer, or have 10 or more full-time equivalent employees, or the product sells 10,000 units or more a year, you file.
Is the exemption per company or per product?
Per product, and for one 12-month period at a time. The employee threshold is measured on the person and its affiliates, so it applies across the whole business, but the 100,000 unit threshold is measured for each food product separately. A food product is defined in (j)(18)(vi)(B) as food in any sized package from a single manufacturer, or bearing the same brand name, with the same statement of identity and similar preparation methods, so different pack sizes of one item count together.
Can I say "low sodium" or "healthy" on an exempt product?
No. 101.9(j)(18) conditions the exemption on labels, labeling and advertising that do not provide nutrition information and do not make a nutrient content or health claim. Both phrases are nutrient content claims under 21 CFR 101.13(b): "low sodium" is the regulation's own example of an express claim, and "healthy" is its example of an implied one. Making either forfeits the exemption and you owe a full Nutrition Facts panel.
What if I go over 100,000 units in the middle of the year?
Paragraph (j)(18)(iii) gives you 18 months from the date the product stopped qualifying as a low-volume product of a small business to comply with 101.9. The certification you signed in the notice also commits you to tell FDA that it happened and on what date, so the reporting obligation starts immediately even though the labeling deadline is 18 months out.
Why do some sources say 300 employees or 400,000 units?
Because 101.9(j)(18)(i) still contains the original phase-in for products first introduced into interstate commerce before 8 May 1994: fewer than an average of 300 full-time equivalent employees and fewer than 400,000 units for the year from 8 May 1995, then 200 employees and 200,000 units for the year from 8 May 1996. Both windows closed by 7 May 1997. The test for everything else is (j)(18)(ii): 100 employees and 100,000 units.
My product is brand new, so there is no previous year of sales. Do I qualify?
Possibly. Paragraph (j)(18)(ii) covers a food product not sold in the 12-month period preceding the period claimed: the units test is then met if fewer than 100,000 units are reasonably anticipated to be sold in the United States during the period claimed. In the notice, item (E) asks for units expected to be sold, and for a new product the relevant 12-month period is the exemption period itself.
