The State of the Motor Carrier Exemption Under the FLSA

by Daniel G. Vliet, Esq. and Brian J. Waterman, Esq.

Over the last year there has been much uncertainty regarding the applicability of the motor carrier exemption under the Fair Labor Standards Act (FLSA). This confusion is a result of transportation legislation passed last year that limited the exemption's prior coverage. However, much to the relief of employers, recent developments in Congress may soon bring an end to the current ambiguity.

The Motor Carrier Exemption Prior to August 2005

The FLSA's motor carrier exemption relieves employers from the act's overtime requirements with regard to certain employees (see ¶413 of the Employer's Guide to the Fair Labor Standards Act). Specifically, section 213(b)(1) of the FLSA provides that overtime requirements do not apply to "any employee with respect to whom the Secretary of Transportation has power to establish qualifications and maximum hours."

The employees over which the Secretary of Transportation has the powers described above are identified in the Motor Carrier Act. Specifically, 49 U.S.C. §31502 provides that the Secretary of Transportation may prescribe requirements for:

1. qualifications and maximum hours of service of employees of, and safety of operation and equipment of, a motor carrier; and
2. qualifications and maximum hours of service of employees of, and standards of equipment of, a motor private carrier, when needed to promote safety of operation.

Therefore, employees who are subject to the authority of the Secretary of Transportation, and who therefore qualify for the exemption, include employees of a "motor carrier" and, under some circumstances, a "motor private carrier." Prior to August 2005, the terms "motor carrier" and "motor private carrier" were defined by the Motor Carrier Act in 49 U.S.C. § 13 102(12) and (13) as follows:

Motor carrier — The term "motor carrier" means a person providing motor vehicle transportation for compensation.

Motor private carrier — The term "motor private carrier" means a person, other than a motor carrier, transporting property by motor vehicle when —

(A) the transportation is as provided in section 13501 of this title;

(B) the person is the owner, lessee, or bailee of the property being transported; and

(C) the property is being transported for sale, lease, rent, or bailment or to further a commercial enterprise.

Therefore, drivers and some related workers employed by motor carriers or motor private carriers, defined prior to August 2005 to include employers providing motor vehicle transportation, were subject to the Secretary of Transportation's regulation, and thereby exempt from the overtime requirements of the FLSA.

How a 2005 Law May Have Altered the Exemption

On August 10, 2005, the U.S. Congress enacted transportation reauthorization legislation titled the Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users (SAFETEA-LU). Section 4142 of the Act aimed to streamline the process for vehicle inspection at U.S. borders by allowing vehicles not subject to safety regulations to pass without inspection by safety inspectors. Section 4142 did so by amending the Motor Carrier Act's definitions of motor carriers and motor private carriers to cover only commercial motor vehicle transportation rather than motor vehicle transportation in general. Section 4142 reads as follows:

(a) Definitions Relating to Motor Carriers. — Paragraphs (6), (7), (12), and (13) of section 13102 of title 49, United States Code, are each amended by striking "motor vehicle" and inserting "commercial motor vehicle as defined in section 31132."

Unfortunately for many employers, amending the definitions of motor carrier and motor private carrier to include only commercial motor vehicle transportation also had the consequence of altering the classification of employees who are exempt under the FLSA's motor carrier exemption. Commercial vehicles are defined by 49 U.S.C. §31132(1):

(1) "commercial motor vehicle" means a self-propelled or towed vehicle used on the highways in interstate commerce to transport passengers or property, if the vehicle —

(A) has a gross vehicle weight rating or gross vehicle weight of at least 10,001 pounds, whichever is greater;

(B) is designed or used to transport more than 8 passengers (including the driver) for compensation;

(C) is designed or used to transport more than 15 passengers, including the driver, and is not used to transport passengers for compensation; or

(D) is used in transporting material found by the Secretary of Transportation to be hazardous under section 5103 of this title and transported in a quantity requiring placarding under regulations prescribed by the Secretary under section 5103.

As a result of SAFETEA-LU, the terms "motor carrier" and "motor private carrier" now include only commercial motor vehicle transportation. Therefore, only those employees driving, or working with, commercial vehicles are now exempt from FLSA overtime requirements. As defined above, commercial motor vehicles,with few exceptions, are those vehicles that weigh over 10,000 pounds. Restricting the FLSA's motor carrier exemption only to those employees who work with vehicles over this weight limit requires employers to pay FLSA overtime to many employees who had been exempt.

Since the enactment of SAFETEA-LU in August 2005 there have been a wide variety of opinions expressed on the impact of this seemingly unintended FLSA policy change. Adding to the uncertainty has been the lack of any guidance from the U.S. Department of Labor (DOL). DOL's regulations have not been modified to reflect any change in the law, nor has the agency even acknowledged the issue on its Web site. Being that SAFETEA-LU's language has considerable implications for countless employers and employees across the country, it is surprising that DOL has not focused on this issue to any significant degree. It appears DOL is waiting to see if Congress addresses its apparent mistake through subsequent legislation, thereby returning the motor carrier exemption to its pre-SAFETEA-LU scope.

The Future of the Exemption

There have been two recent developments in the last several months regarding the motor carrier exemption. First, an August 2006 case out of the U.S. District Court for the Middle District of Georgia, Dell 'Orfano v. Ikon Office Solutions, Inc., 2006 WL 2523113 (M.D. Ga.), was what appears to be the first decision to recognize the altered language of the motor carrier exemption since the passage of SAFETEA-LU. In Dell'Orfano, the court held that an employer accused of miscalculating overtime wages owed to one of its employees could not claim the motor carrier exemption as a defense. The court relied on the altering language of SAFETEA-LU, in determining that because the employee drove a vehicle under 10,001 pounds, he was not exempt from the provisions of the FLSA for any work done after August 10, 2005. The court recognized the changed coverage of the motor carrier exemption by stating:

Effective August, 2005, the definition of "motor private carrier" was amended to cover only a person transporting property by "commercial motor vehicle." 49 U.S.C. § 13102(15). A "commercial motor vehicle" is defined as a vehicle with a weight of at least 10,001 pounds. 49 U.S.C. § 3 1132(1). It is undisputed in this case that Plaintiff drove a vehicle that weighed substantially less than 10,000 pounds. The record shows that Plaintiff was employed by IKON between April 2003 and January 2006. Therefore, the remaining issue is whether the motor carrier exemption bars Plaintiff's overtime claims between April 2003 and August 2005.

The second recent development regarding the motor carrier exemption is an effort in the U.S. Congress to return the exemption's coverage to its pre-SAFETEA-LU scope. H.R. 5576, the Fiscal Year 2007 Transportation, Housing and Urban Development, Judiciary, and Related Agencies Appropriations Bill, was passed by the House of Representatives with a 406 to 22 vote on June 14, 2006. The version passed by the House contained no language applicable to the motor carrier exemption, but once the legislation reached the U.S. Senate, a provision was added by the Senate Appropriations Committee in an effort to return the motor carrier exemption to its previous scope. When H.R. 5576 was eventually reported out of the Senate Appropriations Committee on July 26, 2006, after a 28-0 vote, it contained the following language:

SEC. 132. MOTOR CARRIER TRANSPORTATION.

(c) DEFINITIONS RELATING TO MOTOR CARRIERS- Paragraphs (6)(B), (7)(B), (14), and (15) of section 13102 of title 49, United States Code, are each amended by striking commercial motor vehicle (as defined in section 31132)' and inserting 'motor vehicle'.

Notably, Senate Report 109-293 describes the change to the language as a "correction," reinforcing the belief that Congress never intended SAFETEA-LU to impact the FLSA motor carrier exemption. Additionally, the backdated effective date of the correction contained in the bill, and the accompanying "clarification" provision, suggest the same. The relevant language reads as follows:

SEC. 132. MOTOR CARRIER TRANSPORTATION.

(f) EFFECTIVE DATE- The amendments made by this section shall take effect August 10, 2005, immediately following the date of enactment of the Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users Act (Public Law 109-59).

(g) CLARIFICATION- The amendments made by this section shall be applied and administered as if sections 4120(a)(1), 4120(b)(1), and 4142 of the Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users Act (119 Stat. 1733, 1747) (and the amendments made by such sections) had not been enacted.

The above provisions indicate that the drafters have attempted to send a strong message to the courts that claims by employees for back-pay based on the post

SAFETEA-LU motor carrier exemption should not be rewarded.

In response to the exemption-related language of H.R. 5576, it appears that at least one major interest group has mobilized against the provisions. The Teamsters Union has been actively lobbying against the language, sending a July 17, 2006, letter to the Senate Appropriations subcommittee responsible for the bill, condemning the latest provisions. The letter argues that the changes made by SAFETEA-LU "furthered important public policies that protect the health and safety of drivers who work long hours without basic overtime compensation ... and [Congress] should not undo the clear public benefits resulting from the 2005 bill's enactment."

As to whether the motor carrier exemption language will stay in H.R. 5576 for final passage, the outlook is uncertain. Much depends on the amount of noise, if any, made by interest groups opposing the provisions before the bill reaches the Senate floor, and eventually the conference committee. However, other than the Teamsters Union, it appears that this issue has flown under the radar of most workers' rights groups and like-minded members of Congress.

Yet, the full bill will not go to the Senate floor for a vote until mid-November at the earliest, and possibly much later. Several contentious issues, unrelated to the motor carrier exemption language, held the bill up from being presented for a full chamber vote prior to Congress going out of session in late September for the final campaign season push.

When Congress reconvenes in Washington around the week of November 13th, the Senate may or may not take up H.R. 5576. Much depends on the outcome of the fall elections. Because the Democrats have won control of both of the congessional chambers, it is likely that the Republicans will put off passage of the bill until next year. Another possible outcome would be for H.R. 5576 to be included in a larger omnibus bill, as the Republicans have done with several appropriations bills in the past few years. Putting multiple bills together in one larger vehicle makes for easier passage.

Whether or not the current corrective language to the Motor Carrier Act remains when H.R. 5576 is eventually enacted may supply a clearer understanding of the present state of the FLSA's motor carrier exemption. By its actions, Congress will likely indicate whether it intends for the exemption to be significantly narrowed as a result of SAFETEA-LU or if it merely made a mistake that needed correction. Hopefully, that indication will give the legal community, and their employer clients, firmer ground to stand on than what they have had over the last year.