Small Business Nutrition Labeling Exemption Guide
Learn how the small business nutrition labeling exemption works, including FDA thresholds, filing rules, product limits, claims and labeling duties.
The small business nutrition labeling exemption in 21 CFR 101.9(j)(18) allows a low-volume product from a small company to be sold without a Nutrition Facts panel. The exemption is narrower than many small food businesses expect. It is not a company status you apply for once and keep. You claim it one product at a time, for one 12-month period at a time, and it disappears when your label, labeling or advertising provides nutrition information or makes a nutrient content or health claim.
Two numbers determine eligibility. 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 see 300 employees and 400,000 units in an old guide, you are looking at a phase-in schedule from the mid-1990s whose last window closed on 7 May 1997.
What the nutrition label exemption is, and what it applies to
Paragraph (j) of 101.9 lists foods exempt from nutrition labeling or subject to special labeling requirements. Item (j)(18) is the provision people usually mean by the small business exemption, and it has three conditions that must all be satisfied.
- 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 providing the information required by (j)(18)(iv), filed before the claimed period begins, by a person, whether manufacturer, packer or distributor, that qualifies based 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) determine 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.
Those definitions make this a per-product exemption rather than a per-company exemption. Your 8 oz jar and 16 oz jar of the same sauce are one food product if the brand name, statement of identity and preparation methods match, so you add their unit counts 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 labeling 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, during the preceding 12 months:
- The person claiming the exemption employed fewer than an average of 100 full-time equivalent employees.
- Fewer than 100,000 units of that product were sold in the United States.
There is one variation for products without a sales history. If the food product was not sold in the 12-month period preceding the period claimed, the units test is satisfied when fewer than 100,000 units are reasonably anticipated to be sold in the United States during the claimed period. You therefore need a forecast you can defend because you are certifying it.
Full-time equivalent employees are not the same as headcount. The calculation appears twice, in (j)(18)(iv)(D) and the definition at (j)(18)(vi)(D). Divide the total hours of salary or wages paid to employees of the person and all 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.
Consider a sauce company that pays 2 owners at 2,080 hours each, 3 production employees at 1,560 hours each, and a seasonal crew totaling 5,400 hours. That is 14,240 hours in total. Dividing by 2,080 gives 6.85 full-time equivalent employees.
The business has twelve people on the payroll but 6.85 employees under the regulation's arithmetic. That puts it below both the 100 threshold and the 10 threshold that governs filing. Part-time and seasonal employees count in proportion to hours paid, and "and its affiliates" means a small company owned by a larger group must count the group's hours too.
FDA small business exemption notice and the filing carve-out
Qualifying on the employee and unit numbers is not enough. Unless the filing carve-out applies, you must file a notice with FDA before the claimed period begins. FDA's exemption guide currently accepts notices through its online submission system, by email to HFP-SmallBusinessNotification@fda.hhs.gov, by fax, or by mail to the Human Foods Program, Food and Drug Administration, HFS-820, 5001 Campus Drive, College Park, MD 20740-3835.
There is no retroactive filing in the text. A notice sent in month four does not cover months one through three.
The carve-out appears in the same sentence that provides 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 conditions matter. An importer files regardless of how small it is. A company with 6 full-time equivalent employees and one product selling 40,000 units a year also 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) creates a standing obligation, not simply a signature requirement. 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.
The individual also states that if either figure exceeds the applicable numbers during the claimed period, the person will notify FDA of that fact and the date it occurred. Signing the notice therefore commits you to reporting your own growth.
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 requirement extends beyond the physical package. Advertising counts, so a claim on your website or a shelf talker can cost you the exemption even when the package itself is bare. Voluntarily providing a partial panel also ends the exemption without any claim being made.
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.
Examples of express claims in the regulation are "low sodium" and "contains 100 calories".
Implied claims can be less obvious but have the same effect. 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, with "high in oat bran" as its example. It also covers suggesting that a food may be useful in maintaining healthy dietary practices where nutrition information is also provided, with "healthy" as its example.
If you are unsure whether wording on your jar is a claim, run it through the claim validator before printing.
Growth is addressed in (j)(18)(iii). If the number of full-time equivalent employees exceeds the applicable number during the period, the units sold in the United States exceed 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 also the right time to consider the wider compliance systems an operating manufacturer needs.
The 1990s numbers, and why they are not your test
Paragraph (j)(18)(i) still contains the original phase-in rules, and they are one of the biggest sources of incorrect advice about the exemption.
The provision applies only to products first introduced into interstate commerce before 8 May 1994. It established two fixed, dated windows.
The first ran 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.
The second ran 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 ended on 7 May 1997. A product introduced today cannot use either threshold.
If a guide, forum answer or consultant tells you that the current threshold is 300 employees and 400,000 units, or 200 employees and 200,000 units, they have read (j)(18)(i) without accounting for its dates.
Your current test is (j)(18)(ii): fewer than 100 full-time equivalent employees and fewer than 100,000 units of the product.
Other nutrition label exemptions that get mistaken for this one
Paragraph (j) contains eighteen items. Several can relieve small producers of nutrition labeling for reasons unrelated to employee counts, and it is easy to confuse them with the small business exemption.
- 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. This is a dollar test on a seller, not a unit test on a product, and there is 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. This also covers 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 salad bar. Both are subject to 101.11 where it applies.
- Insignificant amounts of everything, (j)(4). Foods containing insignificant amounts of all 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". Examples include 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 carry no nutrition claims or other nutrition information and the label includes an address or telephone number consumers 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. This also covers food sold from bulk containers where the nutrition information is displayed on the container.
A separate group of exemptions appears in 21 CFR 101.100 and applies to other labeling requirements rather than 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 these exemptions. Almost every one is conditioned on the food carrying no nutrition claims or other nutrition information, so a claim can collapse whichever exemption you rely on.
None of them, including (j)(18), removes requirements outside the Nutrition Facts panel.
What an exempt food label still has to carry
The small business exemption is from 101.9 and 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 requirements also remain. These include 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.
In practical terms, an exempt label is a normal food label minus one box. That is why the rest of the FDA food labeling requirements deserve as much attention as the Nutrition Facts panel you are skipping.
Before a print run, walk the package through the FDA label checklist, which covers the elements that the exemption leaves in place.
If your unit count is approaching 100,000, or a buyer requests a Nutrition Facts panel before you are required to have one, you can build it before the deadline. The nutrition label generator produces a compliant Nutrition Facts panel from your recipe, so having the panel ready can turn the 18-month clock in (j)(18)(iii) into a formality.
Small business nutrition labeling exemption FAQ
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 containing the information in (j)(18)(iv), filed before the claimed period begins. The exception applies when the person is not an importer, has fewer than 10 full-time equivalent employees, and the food product has annual sales of fewer than 10,000 total units. Otherwise, you file.
Is the exemption per company or per product?
It is per product and applies for one 12-month period at a time. The employee threshold is measured across the person and its affiliates, while the 100,000 unit threshold applies separately to each food product. Under (j)(18)(vi)(B), different package sizes can count as the same food product when the brand name, statement of identity and preparation methods match.
Can I say "low sodium" or "healthy" on an exempt product?
No. 101.9(j)(18) requires the labels, labeling and advertising not to provide nutrition information or make a nutrient content or health claim. Under 21 CFR 101.13(b), "low sodium" is the regulation's example of an express claim and "healthy" its example of an implied claim. Making either forfeits the exemption and requires 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 in the notice also commits you to notify FDA that the applicable figure was exceeded and provide the date it happened, so the reporting obligation begins before the labeling deadline.
Why do some sources say 300 employees or 400,000 units?
Those numbers come from the historical phase-in in 101.9(j)(18)(i). It covered products first introduced into interstate commerce before 8 May 1994 and used thresholds of 300 employees and 400,000 units, then 200 employees and 200,000 units. Both windows ended by 7 May 1997. The test for everything else under (j)(18)(ii) is 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 during the 12 months preceding the claimed period. The units test is met if fewer than 100,000 units are reasonably anticipated to be sold in the United States during the exemption period. Item (E) of the notice asks for the expected units, so your forecast becomes part of the exemption claim.
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