Employment Law Daily Truckers operating between brewery and nearby warehouse covered by Motor Carrier exemption
Tuesday, April 26, 2016

Truckers operating between brewery and nearby warehouse covered by Motor Carrier exemption

By Dave Strausfeld, J.D. Truck drivers who made runs between a brewery and its warehouse located five miles away were exempt from overtime provisions of the FLSA under the Motor Carrier Act exemption. The truck drivers moved goods in interstate commerce, specifically when they backhauled shipments of hops, pallets, and empty kegs from the warehouse to the brewery, bringing them under the authority of the Secretary of Transportation, held the Tenth Circuit, affirming summary judgment for their trucking company employer. Moreover, their deliveries in interstate commerce similarly exempted them from overtime and other protections under Colorado’s Wage Order (Deherrera v. Decker Truck Line, Inc., April 21, 2016, McHugh, C.). Five miles each way. After delivering beer from the brewery to the warehouse, the drivers then loaded empty kegs, pallets, hops, and other materials from the warehouse onto their trucks and hauled them roughly five miles back to the brewery. Most of these “backhaul” or return-trip materials arrived at the warehouse from distributors or suppliers located outside the state. Interstate or intrastate? The drivers claimed they were entitled to overtime pay, while the trucking company took the position that they were exempt. Under the Motor Carrier Act (MCA) exemption to the FLSA, overtime pay requirements do not apply to any employee “with respect to whom the Secretary of Transportation has power to establish qualifications and maximum hours of service.” Boiled down, the question to be decided here was whether the drivers engaged in the interstate transportation of goods, because if so, they were subject to the Secretary of Transportation’s authority. Motor Carrier Act exemption applied. Storing goods temporarily in warehouses can blur whether the shipments are interstate, so it is necessary to look to the shipper’s “fixed and persisting intent” at the time of shipment, the court explained. Clearly, the final destination for the empty kegs, pallets, and hops at the time of shipment was the brewery; the court found (focusing in particular on the backhaul shipments). The hops, in particular, were indispensable to the brewing process and so must have been destined for the brewery at the time they were shipped. It followed that the drivers were engaged in interstate commerce when they transported backhaul shipments from the warehouse to the brewery. Bottom line: The drivers fell within the MCA exemption, as the district court held. Drivers’ arguments. The drivers took issue with district court’s failure to strictly adhere to a set of three factors—known as the MC-48 test—promulgated by the Interstate Commerce Commission for deciding when the MCA exemption applies, and recognized by the Tenth Circuit in its 1993 decision in Foxworthy v. Hiland Dairy Co. But “Foxworthy does not exclusively bind us to the factors from the MC-48 test,” the court stated here. First, Foxworthy considered factors beyond those identified in MC-48. Second, after Foxworthy, the two agencies charged with interpreting the meaning of the MCA exemption reached consistent interpretations of interstate commerce which looked to circumstances beyond those identified in MC-48, and the two federal agencies’ “harmonious interpretation is entitled to great weight.” Also exempt under Colorado’s Wage Order. The drivers also argued that they were entitled to overtime pay and other protections under Colorado’s Wage Order, which regulates wages, hours, and working conditions of certain employees in Colorado but explicitly exempts “interstate drivers.” The parties here both agreed that the “interstate drivers” exemption under Colorado’s Wage Order should be read in harmony with the meaning of interstate commerce under the MCA exemption to the FLSA. Thus, the appeals court’s finding that the drivers were exempt under the FLSA meant they were also exempt under Colorado’s Wage Order. In short, by backhauling materials from the warehouse to the brewery, the drivers were engaged in an intrastate leg of an interstate journey. Thus, the trucking company was properly granted summary judgment on their state and federal wage-hour claims.

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