- Motor Carrier Exemption Applies to Staffing Company and Its Truck Drivers, Fifth Circuit Holds
- September 30, 2010 | Authors: Paul DeCamp; Virginia Mixon Swindell; Teresa S. Valderrama
- Law Firms: Jackson Lewis LLP - Reston Office ; Jackson Lewis LLP - Houston Office
A staff leasing company stands in the shoes of its trucking-company clients for application of the Motor Carrier Act (“MCA”) exemption from Fair Labor Standards Act (FLSA) overtime, the federal appeals court in New Orleans has ruled. Songer v. Dillon Resources, Inc., No. 09-10803 (5th Cir. Sept. 3, 2010). The Court also held that the exemption applies to truck drivers who have not yet driven across state lines, but may be assigned to do so. Accordingly, the Court affirmed summary judgment for the employers.
As commercial truck drivers for Dillon Resources, Inc., a staff leasing company that hired and leased drivers, the plaintiffs worked for two interstate trucking companies, Sunset Logistics, Inc., and Sunset Ennis, Inc. Under the companies’ leasing agreement, Dillon and the Sunset companies considered themselves joint employers of the drivers.
The plaintiffs brought an FLSA unpaid overtime action against the three companies. The defendants argued they were exempt from paying overtime under the Motor Carrier Act. The plaintiffs conceded that the Sunset companies qualified for the exemption as they were interstate motor carriers, but argued that Dillon, the staff leasing company, was not an interstate motor carriers, and thus it was not exempt.
Motor Carrier Act
The Motor Carrier Act states that the FLSA’s overtime requirement “shall not apply ... to ... any employee with respect to whom the Secretary of Transportation has power to establish qualifications and maximum hours of service ....” 29 U.S.C. § 213(b)(1). For the MCA exemption to apply, the employees must be:
- employed by a motor carrier engaged in interstate commerce; and
- engaged in activities that directly affect the operational safety of motor vehicles in the transport of property in interstate commerce.
29 C.F.R. § 782.2(a)(1)-(2).
Staffing Company is a Motor Carrier
Rejecting the plaintiffs’ argument, the Court held that Dillon was a motor carrier subject to the jurisdiction of the Secretary of Transportation under the MCA by virtue of its joint-employer relationship with the Sunset companies. Failure to treat Dillon as an interstate motor carrier would result in inconsistent treatment of the joint employers, the Court said, and would circumvent the clear intent of the MCA to govern the conditions of interstate drivers’ employment.
Interstate Driving Expected
While the plaintiffs did not dispute that, as drivers, they were engaged in activities directly affecting the operational safety of motor vehicles, they challenged whether their activities involved the transport of property in interstate commerce.
Before each shift, these drivers received assignments from a dispatch service to carry loads from various pick-up locations for delivery to other locations. The type and number of their routes changed on a daily basis. Some assignments required out-of-state travel; others were within a single state. Only a small percentage of the Sunset companies’ loads actually were transported between states (5,980 of 222,000 loads, or 2.7%, in 2006; and 2,000 of 60,000 loads, or 3.3%, in 2007). Drivers could be terminated for refusing an assignment. No driver had a set route; rather, each driver could be required at any time to make either an intrastate or interstate trip. Four of the plaintiffs, though, had never driven an interstate route during their employment. Despite this, the Court affirmed application of the MCA exemption to all plaintiffs because every driver could have been assigned at any time to an interstate route.