This month’s expert is Laura E. Innes, Esq.,
with the law firm of Simpson, Garrity & Innes, PC, in
Virtually all of the California Wage Orders contain a “motor
carrier” overtime exemption that applies to two types of truck drivers: 1)
those who drive in interstate commerce and are therefore regulated by the U.S. Department
of Transportation (DOT) under the federal Motor Carrier Act, and 2) those who
drive certain types of trucks. Employers find the motor carrier exemption is obscure
and technical, particularly because it isn’t spelled out in the Wage Orders but
is only “explained” by way of referencing DOT and
will demystify the exemption, focusing this month on the interstate commerce
aspect of the exemption; next month I will explain the truck-based provision.
Interstate Exemption Rules
The Wage Orders exempt from overtime drivers who are covered by
hours of service restrictions issued by the DOT to implement the Motor Carrier
Act. The DOT rules, in turn, only apply to employees who drive in interstate
commerce. Note that a similar overtime exemption exists under the federal Fair
Labor Standards Act.
The overtime exemption applies to an employee who transports
property in interstate commerce. And it only applies on an employee-by-employee
basis, not to an employer in its entirety. Under DOT rules, as long as a person
drives in interstate commerce at least once every four months, he or she is
considered to be driving in interstate commerce.
400+ pages of state-specific, easy-read reference materials at your fingertips—fully updated! Check out the Guide to Employment Law for California Employers and get up to speed on everything you need to know.
What Is Interstate Commerce?
Although it is apparent that a driver transports property in
interstate commerce when he or she crosses state lines, the definition of “interstate
commerce” is much broader. For example, if goods originate out of state, and their intrastate transport is simply part of a longer
interstate journey, the intrastate delivery is part of interstate commerce for
DOT purposes.
However, courts have found that lengthy storage in a warehouse may
transform goods shipped from out-of-state into intrastate deliveries. What’s
more, if a business places orders with an out-of-state vendor to deliver goods
to specified intrastate customers, the fact that the goods are temporarily held
for processing at an intrastate warehouse doesn’t alter the interstate
character of the transportation chain that ends in the customer delivery. On
the other hand, if a company places orders with an out-of-state vendor, and the
orders are delivered to the company’s intrastate warehouse for future delivery
to unidentified customers, the transportation chain that ends in delivery to
the eventual customer is intrastate. This is called the “intrastate warehouse
rule.”
A person drives in interstate commerce under DOT rules if he or
she has to drive in interstate commerce as part of his or her regular
employment, or, even if the driver has not personally driven in interstate
commerce, if, because of company policy
and activity, thedriver could reasonably be expected to
drive in interstate commerce. Therefore, if an employer does interstate work
and assigns drivers randomly to that driving, all of its drivers are covered by the DOT rules.
But a driver isn’t covered if there’s no possibility of driving interstate or
the possibility is merely remote.
Was Employer an Interstate Carrier?
A case decided late last year by a
the exemption. Four employees of a
petroleum transportation company wanted to bring a wage and hour class action
suit against their employer, H.F. Cox. The company hauls gasoline and related
products, dispatching drivers from several terminals in the state. Most of Cox’s
routes are exclusively within
and some drivers never crossed state lines. The four employees filed a class action
on behalf of approximately 900 current and former Cox drivers, claiming they
were misclassified as exempt from overtime.
Cox argued that it was an interstate carrier, so the drivers
qualified for the motor carrier exemption. And even if some drivers weren’t
exempt, Cox argued, making that determination for each driver would require case-by-case,
individualized inquiries as to whether the driver actually crossed state lines.
Because the issues were so individual, Cox contended, the case wasn’t appropriate
to proceed as a class action, and class certification had to be denied.
The appeals court ruled that any of Cox’s drivers who drove across
state lines as often as once every four months were clearly covered by the
motor carrier exemption—and thus were ineligible for overtime. For the other
drivers, whether a driver qualified as exempt depended on the routes he or she
could have reasonably expected to drive and whether those routes were considered part of
interstate commerce even when wholly within
of whether these drivers qualified for exemption was amenable to class
treatment and that individualized determinations weren’t necessary. The court’s
conclusion was influenced by Cox’s having argued just two years earlier that
the drivers should be considered a class in the context of a U.S. Department of
Labor audit. In particular, the court noted, Cox in that audit didn’t argue for
applying the exemption on a driver-bydriver or route-by-route basis but instead
maintained that it assigned trips “indiscriminately” among its drivers.
The case now returns to the trial court for a determination of
whether these other drivers were indeed exempt.
Stay Tuned
In next month’s issue of CWHA, I will explain the
truck-based motor carrier exemption and provide tips on how to determine
whether a driver is eligible for one of these overtime exemptions.