(a) Coverage in general. Employees who are not actually ``producing
* * * or in any other manner working on'' goods for commerce are,
nevertheless, engaged in the ``production'' of such goods within the
meaning of the Act and therefore within its general coverage if they are
employed ``in any closely related process or occupation directly
essential to the production thereof, in any State.'' 77
Prior to the Fair Labor Standards Amendments of 1949, this was true of
employees engaged ``in any process or occupation necessary to the
production'' of goods for commerce. The amendments deleted the word
``necessary'' and substituted the words ``closely related'' and
``directly essential'' contained in the present law. The words
``directly essential'' were adopted by the Conference Committee in lieu
of the word ``indispensable'' contained in the amendments as first
passed by the House of Representatives. Under the amended language, an
employee is covered if the process or occupation in which he is employed
is both ``closely related'' and ``directly essential'' to the production
of goods for interstate or foreign commerce.
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77 If coverage of an employee is determined to exist on
either basis, it is, of course, not necessary to determine whether the
employee would also be covered on the other ground. See Warren-Bradshaw
Drilling Co. v. Hall, 124 F. 2d 42 (C.A. 5), affirmed in 317 U.S. 88.
The legislative history shows that the new language in the final clause
of section 3(j) of the Act is intended to narrow, and to provide a more
precise guide to, the scope of its coverage with respect to employees
(engaged neither
``in commerce'' nor in actually ``producing or in any other manner
working on'' goods for commerce) whose coverage under the Act formerly
depended on whether their work was ``necessary'' to the production of
goods for commerce. Some employees whose work might meet the
``necessary'' test are now outside the coverage of the Act because their
work is not ``closely related'' and ``directly essential'' to such
production; others, however, who would have been excluded if the
indispensability of their work to production had been made the test,
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remain within the coverage under the new language.78
The scope of coverage under the ``closely related'' and ``directly
essential'' language is discussed in the paragraphs following. In the
light of explanations provided by managers of the legislation in
Congress 78 including expressions of their intention to
leave undisturbed the areas of coverage established under court
decisions containing similar language,79 this new language
should provide a more definite guide to the intended coverage under the
final clause of section 3(j) than did the earlier ``necessary'' test.
However, while the coverage or noncoverage of many employees may be
determined with reasonable certainty, no precise line for inclusion or
exclusion may be drawn; there are bound to be borderline problems of
coverage under the new language which cannot be finally determined
except by authoritative decisions of the courts.
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78 H. Mgrs. St., 1949, p. 14; Sen. St., 1949 Cong. Rec.
p. 15372; Statement of the Chairman of the Committee on Education and
Labor explaining the conference agreement to the House of
Representatives, 1949 Cong. Rec., p. 15135; colloquy between
Representatives McConnell and Javits, 1949 Cong. Rec., p. 15129; of
statements of Representative Barden (1949 Cong. Rec. p. 15131),
Representative Brehm (1949 Cong. Rec. p. 15132), and Senator Taft (1950
Cong. Rec., p. A-1162).
79 See Kirschbaum Co. v. Walling, 316 U.S. 517.
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(b) Meaning of ``closely related'' and ``directly essential''. The
terms ``closely related'' and ``directly essential'' are not susceptible
of precise definition; as used in the Act they together describe a
situation in which, under all the facts and circumstances, the process
or occupation in which the employee is employed bears a relationship to
the production of goods for interstate or foreign commerce: (1) Which
may reasonably be considered close, as distinguished from remote or
tenuous, and (2) in which the work of the employee directly aids
production in a practical sense by providing something essential to the
carrying on in an effective, efficient, and satisfactory manner of an
employer's operations in producing such goods.80
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80 See H. Mgrs. St. 1949, pp. 14, 15; Sen. St., 1949 Cong.
Rec., p. 15372; cf. Kirschbaum Co. v. Walling, 316 U.S. 517.
Not all activities that are ``closely related'' to production will be
``directly essential'' to it, nor will all activities ``directly
essential'' to production meet the ``closely related'' test. For
example, employees employed by an employer in an enterprise, or portion
thereof, which is devoted to the production of goods for interstate or
foreign commerce will, as a general rule, be considered engaged in work
``closely related'' to such production, but some such employees may be
outside the coverage of the Act because their work is not ``directly
essential'' to production of the goods. (For a discussion of this point
and specific illustration, see Sec. 776.18(b).) Similarly, there are
some situations in which an employee performing work ``directly
essential'' to production by an employer other than his own may not be
covered because the kind of work and the circumstances under which it is
performed show the employee's activities to be so much a part of an
essentially local business operated by his employer that it would be
unrealistic to consider them ``closely related'' to the productive
activities of another. (For a more detailed discussion and specific
illustrations see Sec. 776.19.)
(c) Determining whether activities are ``closely related'' and
``directly essential''. (1) The close relationship of an activity to
production, which may be tested by a wide variety of relevant factors,
is to be distinguished from its direct essentiality to production, which
is dependent solely on considerations of need or function of the
activity in the productive enterprise. The words ``directly essential''
refer only to the relationship
of the employee's work to production. Work ``directly essential'' to
production remains so no matter whose employee does it and regardless of
the nature or purpose of the employer's business. It seems clear, on the
other hand, that the criteria for determining whether a process or
occupation is ``closely related'' to production cannot be limited to
those which show its closeness in terms of need or function.81
It may also be important to ascertain, for instance, whether the
activity of the employee bears a relationship to production which is
close in terms either of the place or the time of its performance, or in
terms of the purposes with which the activity is performed by the
particular employer through the employee, or in terms of relative
directness or indirectness of the activity's effect in relation to such
production, or in terms of employment within or outside the productive
enterprise. (Examples of the application of these principles may be
found in Secs. 776.18 and 776.19.)
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81 Of course, if the need of function of the activity in
production is such that the tie between them is both close and immediate
(cf. Kirschbaum Co. v. Walling, 316 U.S. 517), as for example, where an
employee is employed to repair electric motors which are used in
factories in the production of goods for commerce, this fact may be
sufficient to show both the direct essentiality and the close
relationship of the employee's work to production. See Roland Electrical
Co. v. Walling, 326 U.S. 657. See also Sec. 776.19 and H. Mgrs. St.,
1949, pp. 14, 15.
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(2) The determination of whether an activity is closely or only
remotely related to production may thus involve consideration of such
factors, among others, as the contribution which the activity makes to
the production; who performs the activity; where, when and how it is
performed in relation to the production to which it pertains; whether
its performance is with a view to aiding production or for some
different purpose; how immediate or delayed its effect on production is;
the number and nature of any intervening operations or processes between
the activity and the production in question; and, in an appropriate
case, the characteristics and purposes of the employer's
business.82 Moreover, in some cases where particular work
``directly essential'' to production is performed by an employer other
than the producer the degree of such essentiality may be a significant
factor in determining whether the work is also ``closely related'' to
such production. (See Sec. 776.19.) No one of the factors listed in this
paragraph is necessarily controlling, and other factors may assume
importance. Some may have more significance than others in particular
cases, depending upon the facts. They are merely useful guides for
determining whether the total situation in respect to a particular
process or occupation demonstrates the requisite ``close and immediate
tie'' 83 to the production of goods for interstate or
foreign commerce. It is the sum of the factors relevant to each case
that determines whether the particular activity is ``closely related''
to such production. The application of the principles in this paragraph
is further explained and illustrated in Secs. 776.18 and 776.19.
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82 Cf. Kirschbaum Co. v. Walling, 316 U.S. 517; 10 E.
40th St. Bldg. v. Callus, 325 U.S. 578; Schulte Co. v. Gangi, 328 U.S.
108; Borden Co. v. Borella, 325 U.S. 679; Armour & Co. v. Wantock, 323
U.S. 126.
83 See Kirschbaum Co. v. Walling, 316 U.S. 517.
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(3) In determining whether an activity is ``directly essential'' to
production, a practical judgment is required as to whether, in terms of
the function and need of such activity in successful production
operations, it is ``essential'' and ``directly'' so to such operations.
These are questions of degree; even ``directly'' essential activities
(for example, machinery repair, custodial, and clerical work in a
producing plant) (for other examples, see Secs. 776.18(a) and 776.19)
will vary in the degree of their essentiality and in the directness of
the aid which they provide to production. An activity may be ``directly
essential'' without being indispensable in the sense that it cannot be
done without; yet some activities which, in a long chain of causation,
might be indispensable to production, such as the manufacture of brick
for a new factory, or even the construction of the new
factory itself, are not ``directly'' essential.84 An
activity which provides something essential to meet the immediate needs
of production, as, for example, the manufacture of articles like
machinery or tools or dies for use in the production of goods for
commerce (see Sec. 776.19(b)) will, however, be no less ``directly''
essential because intervening activities must be performed in the
distribution, transportation, and installation of such products before
they can be used in production.85 The application of the
principles in this paragraph is further explained and illustrated in
Secs. 776.18 and 776.19.
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84 Cf. 10 E. 40th St. Bldg. v. Callus, 325 U.S. 578; Sen.
St. 95 Cong. Rec., October 19, 1949, at 15372.
85 See Walling v. Hamner, 64 F. Supp. 690 (W.D. Va.).
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