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The Act applies to construction work which increases the navigability of a waterway, protects it from floods or otherwise improves or maintains its use as an instrumentality of interstate commerce. The courts have held that a program for controlling floods is inseparably related to the stabilization and maintenance of the navigable channel of the river, since levees, dams, dikes and like structures, which hold back the waters in time of flood, at the same time confine a more efficient body of water during other periods by increasing its velocity and scouring and deepening its channels. 43

(1) Flood control work in non-navigable parts of a waterway. Both Congress and the courts have considered that watersheds and headwaters are keys to the control of floods on navigable streams and that the control over the non-navigable parts of a river is essential for the prevention of overflows on the navigable portions. It is also well settled that in order to control floods on a navigable stream it is necessary to take flood control measures on its tributaries.

(2) Basis of coverage. (i) The construction of a levee, dam or other improvement in any part of a river or its tributaries for the purpose of preventing floods or aiding navigation must be considered as an integral part of a single comprehensive project for improvement of the river system. Even though a particular levee or dike, by itself, may not effect an improvement, the courts have made it clear that the combined effect of a chain of such structures serves as the basis for determining coverage. The construction of a particular river structure may, therefore, be subject to the Act simply because it is part of a comprehensive system of structures, whose combined effect will achieve the improvement of the navigable channel. Thus, it has been held that site clearance work in the construction of a multiple-purpose dam on a non-navigable stream is covered by the Act where the work is an

43 Tobin v. Pennington-Winter Const. Co., ante; Tobin v. Ramey, 206 F. (2d) 505 (C.A. 5) certiorari denied, sub nom Hughes Construction Co. v. Secretary of Labor, 346 U.S. 925; Jackson v. U.S., 230 U.S. 1.


integral part of a comprehensive system for the control of floods and the betterment of navigation on the Arkansas and Mississippi Rivers. “ Similarly, the enlargement of a setback levee, located from two to six miles from the banks of the Mississippi, was held to be covered because it was part of the Mississippi leveee system even though the set-back levee, when viewed separately, was not directly related to the functioning of the Mississippi as an instrumentality of commerce. 45

(ii) The principle involved applies also to other instrumentalities of interstate commerce. As in the case of covered waterway projects, individual additions or improvements to other instrumentalities of interstate commerce may for coverage purposes be considered as part of a whole program rather than separately. The Act will apply to the construction in such situations if the unit, considered by itself or as part of a larger program, promotes the efficient or effective operation of the instrumentality of interstate commerce.

(3) Construction of wharves, piers and docks. The Act also applies to the construction of new piers, wharves, docks and other facilities if they are integrated with the interstate commerce functions of an existing harbor. Similarly, the new construction of such facilities in other locations along the waterway is subject to the Act if they are regularly used by vessels carrying goods or persons in interstate


(f) Highways, county roads and city streets (1) Typical examples. As a generic term highways includes bridges, underpasses, overpasses, bypasses, county roads, access roads, city streets and alternate roads, draw bridges, toll bridges, toll roads and turnpikes, but does not include roads or parking facilities on privately owned land and which are not for use by the general public for interstate traffic.

"Tobin v. Pennington-Winter Const. Co., ante.

45 Tobin v. Ramey, 205 F. (2d) 606, rehearing denied 206 F. (2d) 505 (C.A. 5) certiorari denied, sub nom Hughes Construction Co. v. Secretary of Labor, 346 U.S. 925.

(2) Basis of coverage. The general rules for determining the coverage of employees engaged in the construction of other instrumentalities of interstate commerce apply to highway construction work. The United States Supreme Court has stated that in applying the Act to highway construction as to other coverage problems, practical rather than technical constructions are decisive. 46 After the Court remanded the Overstreet case to the district court, the latter held that the employees engaged in maintaining and repairing the facilities regularly used and available for interstate commerce were engaged in commerce, regardless of the extent of the interstate traffic. 47 The court recognized that although the amount of the interstate commerce in the Overstreet case was very small it was regular and recurring and not occasional nor incidental. Thus, under the authoritative decision a percentage test is not regarded as a practical guide for ascertaining whether a particular facility is an instrumentality of interstate commerce." Employees who are engaged in the repair, maintenance, extension, enlargement, replacement, reconstruction, redesign ing or other improvement of such a road are subject to the Act. The fact that the road is owned or controlled by the State or Federal Government or by any subdivision thereof would not affect the applicability of the Act. The same would be true if State or Federal funds were used to finance the construction. It should be noted, however, that if the employees are actually employees of a State, or a political subdivision thereof, they are excepted from coverage of the Act under section 3(d).

(3) City streets. The construction, reconstruction or repair of a city street, whether residential or not, which is part of an interstate highway or which directly connects with any interstate highway is so closely related to the interstate commerce moving on the ex

46 Overstreet v. North Shore Corp., ante. 4752 F. Supp. 503.

48 North Shore Corp. v. Barnett, 143 F. (2d) 172 (C.A. 5); Schmidt v. Peoples Telephone Union of Maryville, Mo., 138 F. (2d) 13 (C.A. 8).

isting highway as to be a part of it. Construction of other streets, which are not a part of a public road building program and are constructed on private property as a part of a new residential development, will not be considered covered until further clarification from the courts.

(4) New highway construction. Although a number of appellate court decisions have held that the construction of new highways is not within the coverage of the Act, these decisions relied upon the technical "new construction" concept which the United States Supreme Court has subsequently held to be inapplicable as the basis for determining coverage under this Act." Under the principles now established by that Court's decision, which require determination of coverage on the basis of realistic, practical considerations, the construction of new expressways and highways that will connect with an interstate highway system is so "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." "Such highways and expressways not only are so designed as necessarily to become a part of or additions to an existing interstate highway system, but their construction is plainly of a national rather than a local character, as evidenced by the Federal financial contribution to their construction. And neither the fact that they are not dedicated to interstate use during their construction, nor the fact that they will constitute alternate routes rather than replacement of existing road, constitute sufficient basis, under the controlling court decisions, for excluding them from the coverage of the

"Compare Mitchell v. Vollmer, ante, with Koepfie v. Garavaglia, 200 F. (2d) 191 (C.A. 6); Moss v. Gillioz Const. Co., 206 F. (2d) 819 (C.A. 10); and Van Klaveren v. Killian House, 210 F. (2d) 510 (C.A. 5). The Vollmer decision specifically rejected the applicability of the decision construing the Federal Employer's Liability Act, on which the cited appellate court decision relied.

50 Mitchell v. Vollmer, ante; Walling v. Jacksonville Paper Co., ante; and Overstreet v. North Shore Corp., ante.


Act. Accordingly, unless and until authoritative court decision in the future hold otherwise, the construction of such new highways and expressways will be regarded as covered.

§ 776.30 Construction performed on temporarily idle facilities.

The Act applies to work on a covered interstate instrumentality or production facility even though performed during periods of temporary non-use or idleness. 52 The courts have held the Act applicable to performance of construction work upon a covered facility even though the use of the facility was temporarily interrupted or discontinued. 53 It is equally clear that the repair or maintenance of a covered facility (including its machinery, tools, dies, and other equipment) though performed during the inactive or dead season, is subject to the Acts.




Subpart A-General Considerations

778.0 Introductory statement.

778.1 Purpose of interpretative bulletin. 778.2 Coverage and exemptions not dis


778.3 Interpretations made, continued, and superseded by this part.

778.4 Reliance on interpretations. 778.5 Relation to other laws generally. 778.6 Effect of Davis-Bacon Act.

51 Mitchell v. Vollmer & Co., ante; Tobin v. Pennington-Winter Const. Co., 198 F. (2d) 334, certiorari denied 345 U.S. 915; and Bennett v. V. P. Loftis Co., 167 F. (2d) 286.

52 Walton v. Southern Package Corp., 320 U.S. 540; Slover v. Wathen & Co., 140 F. (2d) 258 (C.A. 4); Bodden v. McCormick Shipping Corp., 188 F. (2d) 733; and Russell Co. v. McComb, 187 F. (2d) 524 (C.A. 5).

53 Pedersen v. J. F. Fitzgerald Construction Co., ante; Bennett v. V. P. Loftis, ante; Walling v. McCrady Const. Co., ante; and Bodden v. McCormick Shipping Corp., 188 F. (2d) 733.

54 Maneja v. Waialua Agricultural Co., 349 U.S. 254; Bowie v. Gonzalez, 117 F. (2d) 11; Weaver v. Pittsburgh Steamship Co., 153 F. (2d) 597, certiorari denied 328 U.S. 858; Walling v. Keensburg Steamship Co., 462 F. (2d) 405.

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Subpart C-Payments That May Be Excluded From the "Regular Rate"


778.200 Provisions governing inclusion, exclusion, and crediting of particular payments.

EXTRA COMPENSATION PAID FOR OVERTIME 778.201 Overtime premiums-general. 778.202 Premium pay for hours in excess of a daily or weekly standard. 778.203 Premium pay for work on Satur

days, Sundays, and other "special days". 778.204 "Clock pattern" premium pay. 778.205 Premiums for weekend and holiday work-example.

778.206 Premiums for work outside basic workday or workweek-examples. 778.207 Other types of contract premium pay distinguished.



778.208 Inclusion and exclusion of bonuses in computing the "regular rate". 778.209 Method of inclusion of bonus in regular rate.

778.210 Percentage of total earnings as bonus.

778.211 Discretionary bonuses.

778.212 Gifts, Christmas and special occa

sion bonuses. 778.213 Profit-sharing, thrift, and savings plans.

778.214 Benefit plans; including profitsharing plans or trusts providing similar benefits.

778.215 Conditions for exclusion of benefitplan contributions under section 7(e) (4).

PAYMENTS NOT FOR HOURS WORKED 778.216 The provisions of section 7(e) (2) of the Act.

778.217 Reimbursement for expenses. 778.218 Pay for certain idle hours. 778.219 Pay for foregoing holidays and vacations.

778.220 "Show-up” or “reporting" pay. 778.221 “Call-back" pay.

778.222 Other payments similar to "callback" pay.

778.223 Pay for non-productive hours distinguished.

778.224 "Other similar payments".

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778.332 Awards for activities not normally

part of employee's job.

778.333 Suggestion system awards.

Subpart E-Exceptions From the Regular Rate



778.400 The provisions of section 7(g)(3) of
the Act.
778.401 Regulations issued under section


778.402 The statutory exception provided by section 7(f) of the Act. 778.403 Constant pay for varying workweeks including overtime is not permitted except as specified in section 7(f). 778.404 Purposes of exemption. 778.405 What types of employees are affected.

778.406 Nonovertime hours as well as overtime hours must be irregular if section 7(f) is to apply.

778.407 The nature of the section 7(f) contract.

778.408 The specified regular rate. 778.409 Provision for overtime pay. 778.410 The guaranty under section 7(f). 778.411 Sixty-hour limit on pay guaranteed by contract.

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778.501 The "split-day" plan.


778.502 Artificially labeling part of the regular wages a "bonus".

778.503 Pseudo "percentage bonuses".

Subpart G-Miscellaneous

778.600 Veterans' subsistence allowances. 778.601 Special overtime provisions available for hospital and residential care establishments under section 7(j).

778.602 Special overtime provisions under section 7(b).

778.603 Special overtime provisions for certain employees receiving remedial education under section 7(q).

AUTHORITY: 52 Stat. 1060, as amended; 29 U.S.C. 201 et seq.

SOURCE: 33 FR 986, Jan. 26, 1968, unless otherwise noted.

Subpart A-General Considerations

§ 778.0 Introductory statement.

The Fair Labor Standards Act, as amended, hereinafter referred to as the Act, is a Federal statute of general application which establishes minimum wage, overtime pay, child labor, and equal pay requirements that apply as provided in the Act. All employees whose employment has the relationship to interstate or foreign commerce which the Act specifies are subject to the prescribed labor standards unless specifically exempted from them. Employers having such employees are required to comply with the Act's provisions in this regard unless relieved therefrom by some exemption in the Act. Such employers are also required to comply with specified recordkeeping requirements contained in part 516 of this chapter. The law authorizes the Department of Labor to investigate for compliance and, in the event of violations, to supervise the payment of unpaid wages or unpaid overtime compensation owing to any employee. The law also provides for enforcement in the courts.

§ 778.1 Purpose of interpretative bulletin.

This part 778 constitutes the official interpretation of the Department of Labor with respect to the meaning and application of the maximum hours

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