Drivers who transport passengers from airports to locations within the same state can be subject to the FLSA’s motor carrier exemption, according to a recent decision by the Eleventh Circuit Court of Appeals, Abel v. Southern Shuttle Services, Inc., Case No. 10-10659 (11th Cir., September 21, 2010). The Abel decision is significant because it expands upon and clarifies the principles set forth in the Eleventh Circuit’s decision in Walters v. American Coach Lines of Miami, Inc., 575 F.3d 1221, 1226 (11th Cir. 2009), cert. denied, 130 S. Ct. 2343 (2010), which I reported on last year (and which I had the privilege to argue to the Eleventh Circuit on behalf of the employer).

The motor carrier exemption exempts from the FLSA’s overtime pay requirement “any employee with respect to whom the Secretary of Transportation has power to establish qualifications and maximum hours of service pursuant to the provisions of section 31502 of Title 49,” otherwise known as the Motor Carrier Act (“MCA”) exemption. 29 U.S.C. § 213(b)(1). The Eleventh Circuit has held that the MCA confers upon the Secretary of Transportation the authority to regulate the maximum hours of service of employees who are employed (1) by a common carrier by motor vehicle; (2) engaged in interstate commerce; and (3) whose activities directly affect the safety of operations of such motor vehicles.

The purpose of the motor carrier exemption is to avoid overlapping jurisdiction, and potentially conflicting rulemaking, of federal agencies. Where the Secretary of Transportation has the authority to regulate a driver’s hours of service, the Secretary of Labor cannot have jurisdiction over the same issue. Both Walters and Abel presented the question of precisely when the Secretary of Transportation has such authority.

In Walters, the Eleventh Circuit held that “[t]here are two requirements for an employee to be subject to the motor carrier exemption”: (1) “his employer’s business must be subject to the Secretary of Transportation’s jurisdiction under the MCA”; and (2) “the employee’s business-related activities must directly affect the safety of operation of motor vehicles in the transportation on the public highways of passengers or property in interstate or foreign commerce within the meaning of the Motor Carrier Act.”

The bus company in Walters was licensed by the DOT and performed some trips across state lines; for example, between Florida and Georgia. Therefore, the court held that prong 1 of the test was satisfied. However, because not all of the plaintiffs in Walters drove across state lines, the court also considered the employer’s argument that the plaintiffs’ transportation of passengers between local airports (where the passengers typically arrived from out of state) and local seaports (where the passengers embarked and disembarked cruise ships that sailed outside of U.S. waters) constituted driving in interstate commerce. The court held that that “purely intrastate transportation can constitute part of interstate commerce if it is part of a ‘continuous stream of interstate travel.’ For this to be the case, there must be a ‘practical continuity of movement’ between the intrastate segment and the overall interstate flow.” The court concluded that “[f]or cruise ship passengers arriving at the airport or seaport, [the bus company’s] shuttle rides would be part of the continuous stream of interstate travel that is their cruise vacation.” Thus, the motor carrier exemption applied.

But part of the Walters court’s rationale for applying the motor carrier exemption was that the company performed airport-to-seaport trips pursuant to contractual or “common” arrangements with cruise lines, which are arguably interstate carriers. At the time Walters was decided, this appeared to be a significant factor because earlier authority held that the Secretary of Transportation has jurisdiction over intrastate passenger-carrying trips only where there is a “through-ticketing” arrangement between the intrastate carrier and an interstate carrier for the “continuous passage” of the passengers. The Walters court left open the question of whether such contractual arrangements were essential to the application of the motor carrier exemption. But this is a critical question, because many companies that transport passengers on intrastate trips as part of interstate journeys do so in the absence of formal contractual arrangements with airlines or cruise lines.

Southern Shuttle Services, Inc. is one such company. It operates the “SuperShuttle,” which transports passengers to and from three South Florida airports to various locations throughout South Florida (for example, a home, officer or hotel). Many of Southern Shuttle’s reservations are made through travel websites on the internet. Travelers buy “package deals” from these internet travel companies that include hotel accommodations, airfare, and a voucher on the SuperShuttle for transportation to and from the airport. Southern Shuttle apparently does not perform any trips across state lines, and the Secretary of Transportation appears not to have exercised jurisdiction over the company (by licensing or auditing the company, for example). The primary question presented in Abel was whether the Secretary nevertheless has jurisdiction over Southern Shuttle (prong 1 of the two-part test set forth in Walters).

The Eleventh Circuit said yes, holding that “Southern Shuttle’s local transport of these package-deal travelers has a ‘practical continuity of movement’ with the overall interstate journey.” The court also held that “Southern Shuttle’s arrangement with internet travel companies to provide airport shuttle service for their package-deal customers meets the ‘common arrangement’ requirement discussed in Walters.” Answering the question left open in Walters, the court rejected Abel’s argument that the common arrangement must be with an interstate carrier to satisfy the interstate commerce requirement. Finally, as to prong 2 of the test, the court held that “[h]aving already concluded that Southern Shuttle’s airport shuttle service was transportation of passengers in interstate commerce that subjected it to the Secretary’s jurisdiction, we conclude that Abel’s activities in driving the airport shuttle also constitute interstate commerce.” Thus, Southern Shuttle established the applicability of the motor carrier exemption, and Abel was not entitled to overtime pay.

To be clear, Abel does not mean that any company that transports passengers to or from an airport can claim the motor carrier exemption. For example, a taxi ride to or from an airport at the beginning or end of an interstate journey ordinarily will be deemed a local trip that is not within interstate commerce. For the motor carrier exemption to apply, the employer must show that the trips are part of the “practical continuity of movement” with the overall interstate journey. This means that some type of common arrangement, under which the intrastate trip is bundled with one or more elements of the passenger’s trip across state lines, must be shown.