Interpretative Bulletin [of the Fair Labor Standards Act of 1938].

(1) Whether employees are engaged in the production of goods "for" commerce depends upon circumstances as they exist at the time the goods are being produced, not upon some subsequent event. Thus, if a lumber manufacturer produces lumber to fill an out-of-State order, the employees working on the lumber are engaged in the production of goods for commerce and within the coverage of the act's wage and hours provisions, even though the lumber does not ultimately leave the State because it is destroyed by fire before it can be shipped. Similarly, employees drilling for oil which the employer expects to leave the State either as crude oil or refined products are engaged in the production of goods for commerce while the drilling operations are going on and are entitled to be paid on that basis notwithstanding some of the wells drilled may eventually prove to be dry holes. 55

(2) On the other hand, if the lumber manufacturer first mentioned produces lumber to fill the order of a local contractor in the expectation that it will be used to build a schoolhouse within the State, the employees producing the lumber are not engaged in the production of goods "for" commerce and are not covered by the act. This would remain true notwithstanding the contractor subsequently goes bankrupt and the lumber is sold to a purchaser who moves it to another State; the status of the employees for purposes of coverage cannot in this situation, any more than in the others, be retroactively changed by the subsequent event.

(d) Goods disposed of locally to persons who place them in commerce

It is important to remember that if, at the time when employees engage in activities which constitute "production of goods" within the meaning of the act, their employer intends, hopes, expects, or has reason to believe that such goods will be taken or sent out of the State by

55 Culver v. Bell & Loffland, 146 F. 2d 29 (C. A. 9); see also Warren-Bradshaw Drilling Co. v. Hall, 317 U. S. 88.

a subsequent purchaser or other person into whose possession the goods will come, this is sufficient to establish that such employees are engaged in the production of such goods "for" commerce and covered by the act. Whether the producer passes title to the goods to another within the State is immaterial.56 The goods. are produced "for" commerce in such a situation whether they are purchased f. o. b. the factory and are taken out of the State by the purchaser, or whether they are sold within the State to a wholesaler or retailer or manufacturer or processor who in turn sells them, either in the same form or after further processing, in interstate or foreign commerce. The same is true where the goods worked on by the producer's employees are not owned by the producer and are returned, after the work is done, to the possession of the owner who takes or sends them out of the State.57 Similarly, employees are engaged in the production of goods "for" commerce when they are manufacturing, handling, working on, or otherwise engaging in the production of boxes, barrels, bagging, crates, bottles, or other containers, wrapping or packing material which their employer has reason to believe will be used to hold the goods of other producers which will be sent out of the State in such containers or wrappings. It makes no difference that such other producers are located in the same State and that the containers are sold and delivered to them there.58

156 Hamlet Ice Co. v. Fleming, 127 F. 2d 165 (C. A. 4), certiorari denied 317 U. S. 634; Bracey v. Luray, 138 F. 2d 8 (C. A. 4).

57 Schulte Co. v. Gangi, 328 U. S. 108; Warren-Bradshaw Drilling Co. v. Hall, 317 U. S. 88; Walling v. Kerr, 47 F. Supp. 852 (E. D. Pa.).

58 Enterprise Boo Co. v. Fleming, 125 F. 2d 897 (C. A. 5), certiorari denied 316 U. S. 704; Dize v. Maddrix, 144 F. 2d 584 (C. A. 4), affirmed 324 U. S. 697; Walling v. Burch, 5 W. H. Cases 323 (S. D. Ga); 9 Labor Cases (CCH) par. 62,613; Fleming v. Schiff, 1 W. H. Cases 893 (D. Colo.), 5 Labor Cases (CCH) par. 60,864.

It should be noted that where empty containers are purchased, loaded, or transported within a single State, as a part of their movement, as empty containers, out of the State, an employee engaged in such purchasing, loading, or transporting operations is covered by the act as engaged “in commerce." Atlantic Co. v. Weaver, 150 F. 2d 843 (C. A. 4); Klotz v. Ippolito, 40 F. Supp. 422 (S. D. Tex.); Orange Crush Bottling Co. v. Tuggle, 70 Ga. App. 144, 27 S. E. 2d 769.

U.S. GOVERNMENT PRINTING OFFICE 1964 0-725-477