[Code of Federal Regulations] [Title 29, Volume 3] [Revised as of July 1, 2004] From the U.S. Government Printing Office via GPO Access [CITE: 29CFR776.27] [Page 394-396] TITLE 29--LABOR CHAPTER V--WAGE AND HOUR DIVISION, DEPARTMENT OF LABOR PART 776_INTERPRETATIVE BULLETIN ON THE GENERAL COVERAGE OF THE WAGE AND HOURS PROVISIONS OF THE FAIR LABOR STANDARDS ACT OF 1938--Table of Contents Subpart B_Construction Industry Sec. 776.27 Construction which is related to covered production. (a) Existing production establishments. (1) Covered production facilities within the concept of the Act include mines, oil wells, banks, manufacturing, packing and processing plants, filtration, sewage treatment, electric power and water plants, shipyards, warehouses in which goods are broken down, packed or handled preparatory to being sent in interstate commerce, and similar establishments. (2) The repair or maintenance of a covered production unit is essential for its continued operation and has a close and immediate tie with the production of goods for commerce. \17\ The Act is also applicable to other construction which is an integral part of a covered production unit, such as the replacement, enlargement, reconstruction, extension or other improvement of the premises, the buildings, the machinery, tools and dies and other equipment. Functionally such work is like maintenance and repair and is necessary for the continued, efficient and effective operation of the facility as a unit. Thus the construction of new appurtenances of a covered production establishment such as parking aprons, access roads, railroad spurs, drainage ditches, storm, waste and sanitary sewers or adjacent integrated buildings is subject to the Act. Similarly, the Act applies to the installation of telephone, electric, gas and water lines, machinery and other equipment on the premises of such a facility. --------------------------------------------------------------------------- \17\ Kirschbaum Co. v. Walling, ante; Walling v. McCrady Const. Co., ante. --------------------------------------------------------------------------- (3) On the other hand, the production and furnishings, within the State, of construction materials, such as sand, gravel, brick and other construction materials produced for general local use, is not covered even if the producer also supplies such materials to construction companies which use them within the State in the repair, maintenance or improvement of facilities for [[Page 395]] the production of goods for commerce. Employees of the materialman in such a situation would not have such a close and immediate tie to the production of goods for commerce as to be considered ``closely related'' and ``directly essential'' to such production. \18\ --------------------------------------------------------------------------- \18\ See General Coverage Bulletin, Sec. 776.19(b)(3); but see Sec. 776.19 (b) (1), (2) and (3); on coverage of furnishing materials ``specially designed'', or meeting particular specifications, for use in production of particular kinds of goods for commerce; and paragraph (d) of this section, on coverage of producing and furnishing materials for use in construction work on instrumentalities of commerce. --------------------------------------------------------------------------- (b) Utilities which serve production establishments. The Act applies to employees of public utilities which furnish gas, electricity, water or fuel to firms engaged within the same State in manufacturing, processing, producing, or mining goods for commerce. \19\ Construction work performed upon the plant and facilities of such a utility is covered as in the case of any other covered production establishment. \20\ The extension of the lines or other facilities of a covered utility for the first time to the premises of an establishment which produces goods for commerce would be subject to the Act, because such extension is simply an improvement or enlargement of an existing covered utility. \21\ Furthermore, the maintenance or repair of the wires, pipes, or other conduits of a covered utility which serves business and manufacturing as well as residential areas would also be within the Act. On the other hand, extension or repair of lines or other facilities serving only residential areas would not be covered unless the electricity, gas, fuel, or water comes from out of the State. --------------------------------------------------------------------------- \19\ House Manager's Statement, 1949 Amendments. \20\ See decisions cited in footnotes 10 and 11, of this subpart. \21\ Meeker Cooperative Light & Power Ass'n v. Phillips, 158 F. (2d) 698 (C.A. 8); Cf. New Mexico Public Service Co. v. Engel, 145 F. (2d) 636 (C.A. 10); Lewis v. Florida Power & Light Co., 154 F. (2d) 75 (C.A. 5). --------------------------------------------------------------------------- (c) New construction which is not integrated with existing production facilities. (1) Construction of a new factory building, even though its use for interstate production upon completion may be contemplated, will not ordinarily be considered covered. However, if the new building is designed as a replacement of or an addition or an improvement to, an existing interstate production facility, its construction will be considered subject to the Act. (2) If the new building, though not physically attached to an existing plant which produces goods for commerce, is designed to be an integral part of the improved, expanded or enlarged plant, the construction, like maintenance and repair, it would be subject to the Act. \22\ --------------------------------------------------------------------------- \22\ Walling v. McCrady Const. Co., ante. --------------------------------------------------------------------------- (d) Production of materials for use in construction work on interstate instrumentalities. (1) The Act applies to employees who are engaged, at the job site or away from it, in the production of goods to be used within the State for the maintenance, repair, extension, enlargement, improvement, replacement or reconstruction of an instrumentality of interstate commerce. The goods need not go out of the State since the Act applies to the production of goods ``for'' commerce, including for use in commerce, and is not limited to ``production of goods for transportation in commerce,'' that is, to be sent across State lines. \23\ --------------------------------------------------------------------------- \23\ Alstate Construction Co. v. Durkin, 345 U.S. 13; Tobin v. Johnson, 198 F. (2d) 130 (C.A. 8); Mitchell v. Emulsified Asphalt Products Co., 222 F. (2) 913 (C.A. 6). --------------------------------------------------------------------------- (2) The Act would also apply to the production of such items as electricity, fuel or water, for use in the operation of railroads or other instrumentalities of commerce. \24\ Therefore, as in the case of other production units, the maintenance, repair or other improvement of the premises or buildings or the appurtenances, including the machinery, tools and dies and equipment, of the facilities which are used to produce such goods, are subject to the Act. --------------------------------------------------------------------------- \24\ Sections 776.19(b)(2) and 776.21. See also paragraph (b) of this section. --------------------------------------------------------------------------- (3) Coverage also extends to employees who produce sand, gravel, asphalt, cement, crushed rock, railroad ties, pipes, conduits, wires, concrete pilings and other materials which are to be used in the construction of instrumentalities which serve as the means for [[Page 396]] the interstate movement of goods or persons. (4) This does not mean, however, that in every case where employees produce such materials which are used within the State in the maintenance, repair, or reconstruction of an instrumentality of commerce, the production of such materials is necessarily considered as production ``for'' commerce. A material supply company may be engaged in an independent business which is essentially local in nature, selling its materials to the usual miscellany of local customers without any particular intent or purpose of supplying materials for the maintenance, repair, or reconstruction of instrumentalities of commerce, and without any substantial portion of its business being directed to such specific uses. Employees of such an ``essentially local business'' are not covered by the Act merely because as an incident to its essentially local business, the company, on occasion, happens to produce or supply some materials which are used within the State to meet the needs of instrumentalities of commerce. \25\ --------------------------------------------------------------------------- \25\ See Sec. Sec. 776.19 (a) and (b) and 776.21(b)(3). See also cases cited in footnote 22 of this subpart. ---------------------------------------------------------------------------