Under amended MCA, managers driving small vehicles to fill in for regular drivers can get overtime
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Wednesday, November 22, 2017

Under amended MCA, managers driving small vehicles to fill in for regular drivers can get overtime

By Lorene D. Park, J.D.

Though professional motor carriers like the employer in this wage hour suit are generally exempt from the FLSA’s requirement that employers pay overtime wages, Congress in 2008 waived the Motor Carrier Act (MCA) exemption for motor carrier employees whose work, in whole or in part, affects the safety of vehicles weighing 10,000 pounds or less. Because the plaintiffs regularly filled in for delivery drivers using their personal small vehicles, the Fourth Circuit concluded that they were protected by this recent waiver from the exemption, and were therefore entitled to overtime wages for hours worked in excess of 40 hours per week. Though the dismissal of their FLSA claims was reversed, dismissal of their separate claims under Maryland wage law was affirmed (Schilling v. Schmidt Baking Co., Inc., November 17, 2017, Keenan, B.).

The three plaintiffs worked as district sales managers for Schmidt Baking, which provides baked goods to restaurants, grocery stores, and other small businesses across several states. Schmidt entered into contracts with independent operators who executed some deliveries with “box trucks” weighing over 10,000 pounds. Schmidt also maintained a limited number of company vehicles of various sizes, including trucks weighing over 10,000 pounds.

Plaintiffs filled in for delivery drivers using personal vehicles. When operators were unable to complete deliveries, the plaintiffs often filled in. Indeed, they spent between 65 percent and 85 percent of their time each week on deliveries, most often using their own vehicles weighing under 10,000 pounds. The plaintiffs were nonexempt salaried employees and, though they often worked over 40 hours a week, they were paid at a regular rate for all hours and were not paid overtime. Believing the failure to pay overtime was unlawful, the plaintiffs filed this suit under the FLSA, the Maryland Wage and Hour Law (MWHL), and the Maryland Wage Payment and Collection Law (MWPCL). The district court dismissed their suit and the plaintiffs appealed.

Motor carrier exemption. Reversing the dismissal of the FLSA claim, the Fourth Circuit first gave a brief history of the FLSA and the MCA exemption, which provides that FLSA overtime requirements don’t apply to employees subject to regulation by the Secretary of the Department of Transportation (DOT). In 2005, Congress amended the MCA with SAFETEA-LU, under which the MCA applies only to carriers using “commercial motor vehicles,” meaning those weighing at least 10,001 pounds. Those who operate vehicles weighing less are not subject to DOT regulation so the MCA exemption wouldn’t apply under the 2005 amendment.

2008 amendment. In June 2008, Congress enacted the SAFETEA-LU Technical Corrections Act (TCA), which reinstated the pre-SAFETEA-LU definition of “motor carrier” and restored the DOT’s authority to regulate motor carriers regardless of weight. But the TCA also amended the FLSA to narrow the class of employees covered by the MCA exemption. TCA Section 306(a) states that “[S]ection 7 of the Fair Labor Standards Act [imposing overtime compensation requirements] . . . shall apply to a covered employee notwithstanding section 13(b)(1) of that Act [the MCA Exemption].” Thus, even if an employer is subject to the DOT’s jurisdiction, it may still have to pay overtime wages if employees meet the TCA’s definition of “covered employee.”

Plaintiffs were covered by TCA. Here, the plaintiffs met the TCA’s definition of a “covered employee,” which includes an individual who is employed by a motor carrier and whose work, “in whole or in part,” is defined as a driver, and affects the safety of operation of motor vehicles weighing 10,000 pounds or less, and who performs duties on motor vehicles weighing 10,000 pounds or less. Schmidt argued that because the plaintiffs worked a mixed fleet, they were subject to the MCA exemption from overtime. But the plaintiffs claimed they spent 70 percent to 90 percent of their time making deliveries in small vehicles and were therefore entitled to overtime wages. Pointing to the phrase “in whole or in part,” and refusing to establish a strict definition of the phrase “in part,” the appeals court agreed with the plaintiffs.

“There is nothing in the language or structure of the statute indicating that Congress intended to limit the reach of the TCA to exclude employees working on mixed fleets of vehicles,” explained the Fourth Circuit. “Likewise, if Congress had intended to exclude mixed fleet employees from the FLSA’s overtime compensation requirements, it could have made that intent explicit in Section 306(c)(3), by defining a ‘covered employee’ as an employee ‘who exclusively performs duties on motor vehicles weighing 10,000 pounds or less.’ But, again, Congress did not do so.”

Plaintiffs entitled to overtime. With this in mind, and observing that the purpose of the FLSA is remedial in nature, with exemptions to be construed narrowly, the appeals court held that the plaintiffs were entitled to FLSA overtime wages for hours worked in excess of 40 hours per week. They spent most of their time making deliveries in vehicles that indisputably weighed under 10,000 pounds; their routes included interstate trips; and none of the vehicles were designed to transport eight or more passengers or used to transport hazardous materials.

State-law claims fail. That said, the claims under the MWHL were properly dismissed. While the FLSA and Maryland statutory schemes are largely congruent, that was not the case when it came to the TCA’s exception to the MCA exemption; Maryland had no such exception.

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