Despite the overtime exemption provided by the Motor Carrier Act, interstate trucking employers who operate “mixed fleets” – those with vehicles both over and under 10,000 pounds – may owe overtime pay to drivers of the smaller vehicles, the Fourth Circuit Court of Appeals recently ruled. Schilling v. Schmidt Baking Co., 2017 U.S. App. LEXIS 23257 (4th Cir. Nov. 17, 2017). The Fourth Circuit has jurisdiction over Maryland, North Carolina, South Carolina, Virginia and West Virginia.
Generally, the Motor Carrier Act (“MCA”) exemption excludes from the FLSA’s overtime pay obligations any employee over whom the Secretary of Transportation has the power to establish qualifications and maximum hours of service. In 2008 Congress enacted the Technical Corrections Act (“TCA”), excepting from the MCA exemption (i.e. making eligible for overtime pay) most individuals employed by a motor carrier or motor private carrier whose work “in whole or in part” affects the safe operation of motor vehicles weighing 10,000 pounds or less on public highways in interstate commerce. However, Congress did not define the phrase “in whole or in part” and over the ensuing years trial courts generally fell into two camps when applying the phrase: (1) if the driver spends more than a “de minimis” amount of time driving smaller vehicles, then the TCA exception applies and the driver is entitled to overtime pay; or (2) if the driver spends any meaningful amount of time driving larger vehicles, then the TCA exception does not apply and the driver is exempt from overtime pay. The DOL has taken an even more employee-friendly position, issuing guidance stating that a driver is entitled to overtime for any week in which he spends any time driving a vehicle weighing 10,000 or less pounds.
In 2015, the Third Circuit Court of Appeals (with jurisdiction over Pennsylvania, New Jersey, Delaware and the Virgin Islands) addressed the issue head-on in McMasters v. Eastern Armored Services, Inc., 780 F.3d 167 (3rd Cir. 2015). In that case the Third Circuit, while noting the fact that Congress failed to define “in whole or in part,” concluded that regardless of what the phrase means at its minimum, it certainly includes drivers who spend half of their time driving the smaller vehicles (which essentially was the case in McMasters). Agreeing that this was the proper analysis, in Schilling the Fourth Circuit reversed the trial court’s dismissal of the plaintiffs’ overtime claims under the MCA exemption, similarly concluding that where, as was the case here, the drivers allegedly spent 70% to 90% of their time driving smaller vehicles, the TCA exception would apply and the drivers would be entitled to overtime.
In light of Schilling and McMasters, interstate trucking employers who operate mixed fleets must be careful not to assume that the MCA exemption will automatically preclude their drivers from eligibility for overtime and consider whether there are practical ways to minimize their risk of overtime claims. Moreover, such employers must consider any applicable state law, as not all states have adopted the MCA exemption (or the TCA exception in those that have).