E-100-2 Continued

E-100-2.2

E-100-3

(a)

Sale, Rental, or Laundering of Protective Clothing, Coveralls, etc.: Deductions for purchasing, renting or laundering protective clothing, coveralls, etc., where the use of such clothing is required either by the employer or the nature of the job, is not permitted.

Employee Work Habit Penalties: The practice of
"docking" an employee a stated period of time
(other than the actual time lost) for being late
for work, failing to punch a time clock or
other employee's breach of employment rule is
considered a kickback, rebate or unlawful deduc-
tion prohibited by the Act and implementing

regulations.

Exception for Safety Shoes Suitable for General Wear: An exception is made and deductions for the sale of certain types of safety shoes have been permitted in instances where:

E-100-3.1

Their use is not required by the employer, even though the nature of the job may dictate their use;

E-100-3.2 The shoes are useful off the job as well as on the job; and,

E-100-3.3 They are a type that are normally worn off the job in ordinary everyday activities without regard to their usefulness as a safety measure, and in fact are so used.

APPENDIX E-2

CHAPTER E-200

OFFSITE CONSTRUCTION ACTIVITIES

MATERIALMEN AND SUBCONTRACTORS

E-200-1 General: Matters relating to offsite construction-
type activities and the distinction between materialmen and
subcontractors are closely connected insofar as highway con-
struction is concerned. Accordingly, both subjects are
combined and discussed together in this chapter and in
chapters E-201 and E-202. There is an attempt in these
latter chapters to separate those examples relating to
offsite activities from those relating to the materialman-
subcontractor distinction, however, since many of the cases
digested involve both subjects, a review of both chapters
is recommended.

The instructions set forth below outline the labor compliance criteria applicable to offsite construction activities conducted by contractors and subcontractors in connection with direct Federal and Federal-aid construction projects. All questions of coverage which cannot be resolved by the instructions contained below should be submitted to the Office of Chief Counsel for appropriate action.

E-200-2 Direct Federal Projects: The basic guidelines rela-
tive to the applicability to direct Federal projects of labor
standards in construction contracts are contained in subpart
1-12.4 of the Federal Procurement Regulations. (Title 41,
Code of Federal Regulations). The provisions of section 1-12.
402-1 of the Federal Procurement Regulations relative to off-
site activities are incorporated into the criteria set forth
in section E-200-4.

E-200-3

Federal-aid Projects: The criteria for determining the applicability of the prevailing wage requirements to offsite construction activities and for distinguishing between subcontractors and materialmen for labor compliance purposes,

E-200-3 Continued

is established by the Solicitor of Labor pursuant to his authority under Reorganization Plan No. 14 of 1950. This criteria, with regard to satellite facilities, is set forth in section E-200-4. The criteria with regard to subcontractors vs. materialmen is best illustrated by the examples set forth in chapter E-202.

E-200-4 Coverage Criteria: The contract labor standards provisions of direct Federal and Federal-aid construction contracts are applicable to the manufacture or fabrication of construction materials and components on the site of the work by a construction contractor or subcontractor. The "site of the work" may include the sites of job headquarters, storage yards, prefabrication or assembly yards, quarries or borrow pits, batch plants, and similar facilities if they are set up for and serve exclusively the particular direct Federal or Federal-aid construction project or projects and are reasonably near such construction sites. A facility is considered to serve a direct Federal or Federal-aid project "exclusively" if no more than a token amount of sales are made from the facility to other than direct Federal or Federal-aid projects.

E-200-4.1

Material Suppliers: The contract labor standards
provisions of direct Federal and Federal-aid con-
tracts are not normally applicable to established
material suppliers. However, if the material
supplier, in addition to the delivery of material
to the project site, performs a function which is
a part of the construction process itself, such
as the spreading of liquid bituminous products in
accordance with contract specifications the con-
tract labor standards provisions will be appli-
cable only to the performance of such function on
the project site. In addition, in those instances
where the functions, operational procedures and
practices of a material supplier fall within the
criteria set forth in section E-200-4, such mate-
rial supplier shall be reclassified, with respect
to such activities, as a subcontractor for labor
compliance purposes, but only with respect to the
particular construction project or projects.

E-200-4.2

Transportation of Materials: Transportation of
materials, equipment, or personnel to and from
direct Federal or Federal-aid construction sites
by employees of construction contractors or sub-
contractors is covered by the contract labor
standards provisions; however, such transporta-
tion by common carriers, material suppliers
(who are not reclassified as subcontractors), or
manufacturers is not subject to the labor stand-
ards provisions. To qualify as a "common carrier"
under the above exception, the transporter must
be engaged generally in transportation activities
for profit. The mere holding of a license to
operate as a common carrier under other circum-
stances is not sufficient to qualify for the
exception.

NOTE:

CHAPTER E-201

EXAMPLES RELATING TO OFFSITE
CONSTRUCTION ACTIVITIES

The majority of opinions expressed in
this chapter and chapter E-202 are
digested from the decisions of the
Solicitor of Labor, U.S. Department
of Labor.

E-201-1 General: The Department of Labor has traditionally held that where a facility, such as a batch plant or a quarry, is set up or opened in the vicinity of a covered construction site for the purpose of serving exclusively, or nearly exclusively, the needs of the particular covered construction contract, the operator of such a facility is a subcontractor, subject to the contract labor standards requirements, and is not a materialman excluded therefrom.

E-201-2 Geographical Location Not Controlling: The fact
that the plant, processing, or assembly point where the ques-
tioned work is being performed is not physically located
within or contiguous to the site of the principal performance
of the contract is not determinative as to whether or not the

work performed there by laborers and mechanics is being performed "on the site of the work" within the contemplated coverage of the Davis-Bacon Act. The Solicitor of Labor has held that geographically the term "site of the work" normally contemplates a large area than that which the completed building or other installation will actually occupy. It will vary in size with the nature of the work required to be done. If a particular facility, although geographically separated from the project (1) is designed exclusively, or nearly exclusively, to serve the needs of the Government construction project, (2) is an integral part of the continuous operation and process contributing to the prosecution of the work, and (3) is actually set up for the primary or sole purpose of contributing thereto, then the laborers and mechanics employed at such facility are entitled to the benefits of the Act.

E-201-3 Non-Federal-aid Sales: A satellite facility, in order to be covered by the prevailing wage requirements, must, among other considerations, be established to serve the covered project exclusively. The Solicitor of Labor has stated that until such time as a firm, which would otherwise be covered, can show proof of sales from the facility in sufficient quantities to other than Federal-aid contractors, all laborers and mechanics employed at the facility must be paid not less than the applicable contract wage rates. What constitutes "sufficient quantities" of sales to other than Federal-aid contractors is dependent on the attendant facts and circumstances in each case. For instance, a bona fide commercial supplier, well established at other sites, would be required to show a lesser amount of public sales than a newly organized firm undertaking initial business at the site in question.

E-201-3.1

A supplier, whose nearest permanent plant
was approximately 30 miles from the construc-
tion project, established a portable hot top
plant 3 miles from the project pursuant to
an agreement with the contractor to serve the
Federal-aid project. The supplier alleged that
he was serving the public and would sell to
anyone, although there was no indication that