Intrastate Bus Charter Drivers Exempt From Overtime, Court Says

By Jay-Anne Casuga

A class of 33 drivers for bus charter company are not entitled to overtime pay under the Fair Labor Standards Act because they fall within the scope of the law's Motor Carrier Act exemption, a federal appeals court ruled.

According to the Third Circuit, Krapf's and the drivers agreed that the company is a motor carrier subject to the Transportation Department's jurisdiction, a requirement for the FLSA's motor carrier exemption to apply, but the parties disputed whether the drivers operated vehicles for interstate transport within the meaning of the Motor Carrier Act. Krapf's, of West Chester, Pa., is a local and interstate charter service for passenger groups.

Although many of the Krapf's drivers “rarely or never crossed state lines,” they reasonably could have been expected to drive interstate given that nearly 10 percent of the company's transit division revenue came from interstate routes, that Krapf's trained drivers for interstate routes and retained the discretion to assign such routes and that the company adhered to federal regulations regarding the drivers, the court said.

The Transportation Department has jurisdiction “even if the driver has not personally driven in interstate commerce if, because of company policy and activity, the driver could reasonably be expected to do interstate driving,” the appeals court said.

The court rejected the drivers' argument that the FLSA exemption should not apply because their interstate driving was de minimis. That exception has been applied where a company's interstate business constitutes less than 1 percent of all overall trips, a scenario that does not apply in the present case, the court said.

The court said the evidence shows that 6.9 percent of all trips taken by the Krapf's drivers were interstate, about 9.7 percent of annual revenue generated by the transit division came from interstate routes and the company “operated at least one interstate route per month.”

The company also had a policy of training its drivers for interstate routes and had the discretion to assign interstate routes “at any time” and to discipline drivers who refused assignments, the court said. “Given this evidence, the District Court properly found no genuine dispute of material fact regarding whether plaintiffs reasonably could have expected to drive interstate,” the appeals court said, affirming the ruling in favor of Krapf's.

For more information, see Compensation and Benefits Library's “FLSA Exemptions” chapter.

To contact the reporter on this story: Jay-Anne Casuga in Washington at jcasuga@bna.com

To contact the editor on this story: Michael Trimarchi in Washington at mtrimarchi@bna.com.