Drivers Who Aid Fracking Eligible for Overtime Pay

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By Kevin McGowan

May 23 — Drivers of trucks hauling water to and from hydraulic fracturing sites within Pennsylvania are eligible for overtime pay, the U.S. Court of Appeals for the Third Circuit ruled.

Affirming a district court judgment for the drivers, the Third Circuit May 23 said two trucking company defendants failed to prove the employees are covered by a Fair Labor Standards Act's motor carrier exemption.

The trucking companies provide services for gas drilling companies engaged in fracking. The truckers deliver water from retention ponds to drilling sites and occasionally haul away wastewater after fracking is completed. But the trucking companies didn't show those operations, which mostly occur within Pennsylvania, are “part of a continuous movement of goods in interstate commerce” for purposes of the FLSA exemption, the appeals court ruled.

The decision creates a “slippery slope” that could encourage more FLSA lawsuits against an emerging industry of fracking-related transportation services, said attorney William E. Vinsko Jr., who represents the employers, Fast Rig Support Inc. and First Americans Shipping and Trucking Inc.

The Third Circuit erred because the “injection wells,” the final destination of the wastewater, are located outside Pennsylvania, Vinsko told Bloomberg BNA May 23.

Even if the wastewater was hauled out of state by companies other than Fast Rig and First Americans, the water was in interstate commerce for FLSA exemption purposes, he said. The companies are exploring their options, which may include a petition for rehearing by the full Third Circuit, said Vinsko, who practices in Wilkes-Barre, Pa.

Meanwhile, the drivers who prevailed will be asking the district court to award their attorneys' fees and costs, said Peter Winebrake, one of the plaintiffs' lawyers in Dresher, Pa.

No Interstate Commerce Link

The drivers sued under the FLSA and Pennsylvania Minimum Wage Act because they were paid overtime only if they worked more than 45 hours per week. They sought overtime pay for hours worked between 40 and 45 per week, but Fast Rig and First Americans argued the motor carrier exemption barred their claims.

The district court entered a $31,000 conditional judgment covering 38 drivers that allowed the companies to appeal the exemption issue.

Although the trucking companies indisputably are “motor carriers” subject to Department of Transportation jurisdiction, the FLSA exemption doesn't apply because the drivers weren't engaged in interstate commerce, Judge Patty Shwartz wrote for the Third Circuit.

When transportation activities occur within one state, an interstate commerce requirement still may be met if the employee's work involves “a practical continuity of movement across state lines,” the court said.

It applied a multi-factor test that includes the employer's intent regarding delivery when transportation commences, as well as whether the product “pauses” in a warehouse en route, the product is altered during transport and the employer's business “involves an integrated system of interstate shipments.”

“While no single factor is required or controlling, a factor's presence or absence may reveal the employer's ‘fixed and persisting intent' at the time the shipment commenced, which is important to showing the existence of practical continuity of movement in interstate commerce,” the court said.

Evidence Held Lacking

The employers' evidence—a DOT certificate permitting them to engage in interstate commerce, a news article indicating a separate Pennsylvania company transported fracking wastewater to Ohio and a spreadsheet covering a three-day water shipment period in January 2013—doesn't prove the drivers engaged in interstate commerce, the court said.

“None of this evidence shows that the drivers or water were part of the practical continuity of movement in interstate commerce,” Shwartz wrote, in an opinion joined by Judges Thomas M. Hardiman and D. Brooks Smith.

The companies'“bare assertions” that the water sometimes is picked up in New York and that they sometimes contract to haul wastewater to Ohio is insufficient to trigger the exemption, the court said.

Its decision doesn't mean that drivers' transportation of water to and from fracking sites never could be subject to the FLSA exemption, the court said.

But the trucking companies' failure to present evidence of the shippers' intent when the shipment commenced, the drivers' role, whether the water was altered during fracking and the steps for water removal and outgoing transportation mean they can't show a “practical continuity of movement” of the water in interstate commerce, the court said.

Winebrake & Santillo represented the drivers.

To contact the reporter on this story: Kevin McGowan in Washington at kmcgowan@bna.com

To contact the editor responsible for this story: Susan J. McGolrick at smcgolrick@bna.com