When Does the Motor Carrier Exemption Apply to Drivers?

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By Keith M. Hill

“I don't understand why you don't pay us overtime for our work,” Hoke, a limousine driver, said to Daisy, the company's payroll manager. “Sometimes we're working more than 40 hours a week.”

“All the drivers are covered by the motor carrier exemption, which means we do not have to pay overtime, no matter how many hours you work in a week,” Daisy said.

FACTS: A group of limousine drivers were deemed exempt from overtime pay by their employer under the motor carrier exemption.

The chauffeurs were responsible for prepping and cleaning their vehicles and driving from and to the corporate garage at the beginning and end of their work day. They also spent some time driving Uber customers.

The Labor Department's Wage and Hour Division filed a lawsuit against the company seeking back wages after an investigation found that the drivers were not properly compensated for the tasks they performed.

The investigators said that the drivers were underpaid by more than $190,000.

ISSUE: Were the drivers properly classified as exempt under the FLSA motor carrier exemption?

DECISION: The drivers were improperly classified as exempt under the Fair Labor Standards Act and were entitled to overtime pay, a federal district court said.

The employer incorrectly categorized the drivers as exempt from overtime, the court said. Some drivers met the requirements for the exemption in some workweeks, but most were legally entitled to time and one-half for hours worked in excess of 40 in a week, the court said.

The court ordered the company to pay the 34 drivers $190,716 in back wages and an equal additional amount in liquidated damages, totaling $381,432. The court also enjoined the company, the chief executive officer and the chief operating officer from violating the FLSA in the future (Perez v. DT & C Global Management LLC d/b/a/ Town & Country Limousine, N.D. Ill., No. 15-cv-02010, 3/6/15).

POINTERS: The Fair Labor Standards Act generally requires employees who do not fall within any of the law's exemptions to be paid overtime at time-and-one-half for any hours worked beyond 40 in a workweek.

A group of limousine drivers were deemed exempt from overtime pay by their employer.

Some transportation-industry employers are exempt from the FLSA overtime requirements with respect to employees engaged in transportation-related activities.

FLSA Section 213(b)(1), known as the Motor Carrier Act exemption, excludes from overtime-pay requirements employees of motor carriers and motor private carriers who are engaged in activities directly affecting the safety of motor vehicles in interstate commerce and whose qualifications and maximum hours of service are established by the transportation secretary under the Motor Carrier Act.

The Motor Carrier Act exemption from FLSA overtime provisions applies to employees who are:

• employed by a motor carrier that provides motor vehicle transportation for compensation or by a motor private carrier, including the owner, lessee or bailee of the property they are transporting for sale, lease, rent or bailment.

• drivers, drivers' helpers, loaders or mechanics whose duties, either regularly or occasionally, affect the safety of operation of motor vehicles in transportation on public highways in interstate or foreign commerce and whose duties affect the safety of operation of motor vehicles weighing more than 10,000 pounds.

Interstate commerce means transport across state or international lines or connecting with an intrastate rail, air, water or land terminal to continue an interstate journey of goods that have not come to rest at a final destination, a Labor Department fact sheet (No. 19) said.

Employees whose duties affect the safety of motor vehicles may meet the Motor Carrier Act exemption's duties requirement even if they have not made an actual interstate trip if the employer is shown to be involved in interstate commerce and if the employees could, in the regular course of employment, reasonably expect to make an interstate journey or could have worked on the motor vehicle in a manner that affects safety, the fact sheet said.

FLSA overtime protections apply to covered employees who otherwise fall under the scope of the Motor Carrier Act in any week that those employees work, in part or entirely, as drivers, drivers' helpers, loaders or mechanics affecting the safety of motor vehicles weighing up to 10,000 pounds in transportation on public highways in interstate or foreign commerce, except when the vehicles are designed and used to transport more than eight passengers including the driver for pay or are designed or used to transport more than 15 passengers, including the driver, without compensation.

Case law interpreting the applicability of the Motor Carrier Act exemption has addressed employees' duties and employers' qualification as motor carriers subject to the jurisdiction of the transportation secretary under the law based on vehicle weight, use and interstate travel.

For more information, see PAG's “FLSA Exemptions” chapter.

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This analysis illustrates how courts resolve pay-related disputes. The names and dialogue are fictitious.