(a) Scope of bulletin and general coverage statement. This subpart
contains the opinions of the Administrator of the Wage and Hour Division
with respect to the applicability of the Fair Labor Standards Act to
employees engaged in the building and construction industry. The
provisions of the Act expressly make its application dependent on the
character of an employee's activities, that is, on whether he is engaged
``in commerce'' or in the ``production of goods for commerce including
any closely related process or occupation directly essential to such
production.'' Under either of the two prescribed areas of covered work,
coverage cannot be determined by a rigid or technical formula. The
United States Supreme Court has said of both phases that coverage must
be given ``a liberal construction'' determined ``by practical
considerations, not by technical
conceptions.'' 1 The Court has specifically rejected the
technical ``new construction'' concept, as a reliable test for
determining coverage under this Act.2
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1 Mitchell v. Vollmer & Co., 349 U.S. 427; Kirschbaum Co. v.
Walling, 316 U.S. 517; Alstate Construction Co. v. Durkin, 345 U.S. 13.
2 Mitchell v. Vollmer & Co., ante.
So far as construction work specifically is concerned, the courts have
cast the relevant tests for determining the scope of ``in commerce''
coverage in substantially similar language as they have used in
construing the ``production'' phase of coverage. Thus the Act applies to
construction work which is so intimately related to the functioning of
interstate commerce as to be, in practical effect, a part of it, as well
as to construction work which has a close and immediate tie with the
process of production.3
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3 Mitchell v. Vollmer & Co., ante; Cf. Armour & Co. v.
Wantock, 323 U.S. 126.
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(b) Engagement in commerce. The United States Supreme Court has held
that the ``in commerce'' phase of coverage extends ``throughout the
farthest reaches of the channels of interstate commerce,'' and covers
not only construction work physically in or on a channel or
instrumentality of interstate commerce but also construction work ``so
directly and vitally related to the functioning of an instrumentality or
facility of interstate commerce as to be, in practical effect, a part of
it, rather than isolated, local activity.'' 4
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4 Mitchell v. Vollmer & Co., ante; Walling v. Jacksonville
Paper Co., 317 U.S. 564; Overstreet v. North Shore Corp., 318 U.S. 125.
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(c) Production of goods for commerce. The ``production'' phase of
coverage includes ``any closely related process or occupation directly
essential'' to production of goods for commerce. An employee need not be
engaged in activities indispensable to production in order to be
covered. Conversely, even indispensable or essential activities, in the
sense of being included in the long line of causation which ultimately
results in production of finished goods, may not be covered. The work
must be both closely related and directly essential to the covered
production.5
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5 Armour & Co. v. Wantock, ante; Kirschbaum v. Walling, 316
U.S. 417; Cf. 10 E. 40th St. Co. v. Callus, 325 U.S. 578.
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(d) State and national authority. Consideration must also be given
to the relationship between state and national authority because
Congress intended ``to leave local business to the protection of the
State.'' 6 Activities which superficially appear to be local
in character, when isolated, may in fact have the required close or
intimate relationship with the area of commerce to which the Act
applies. The courts have stated that a project should be viewed as a
whole in a realistic way and not broken down into its various phases so
as to defeat the purposes of the Act. 7
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6 Walling v. Jacksonville Paper Co., ante; Kirschbaum v.
Walling, ante; Phillips Co. v. Walling, 324 U.S. 490, 497.
7 Walling v. Jacksonville Paper Co., ante; Bennett v. V.
P. Loftis Co., 167 F. (2d) 286 (C.A.4); Tobin v. Pennington-Winter
Const. Co., 198 F. (2d) 334 (C.A.10), certiorari denied 345 U.S. 915;
See General Coverage Bulletin, Secs. 776.19 (a), (b), and 776.21(b).
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(e) Interpretations. In his task of distinguishing covered from non-
covered employees the Administrator will be guided by authoritative
court decisions. To the extent that prior administrative rulings,
interpretations, practices and enforcement policies relating to
employees in the construction industry are inconsistent or in conflict
with the principles stated in this subpart, they are hereby rescinded
and withdrawn.
[21 FR 5439, July 20, 1956. Redesignated at 35 FR 5543, Apr. 3, 1970]
