Motor Carrier Exexmption For Tour Bus Drivers Who Do Not Cross State Lines
One of our blog readers has reached out to us with the question about the Motor Carrier Act Exemption (“MCA”). He wanted to know whether he was exempt from the federal overtime requirement of the Fair Labor Standards Act. Specifically, he asked us the following question:
I work as a tour bus driver for a small company in San Francisco, California. I drive a 40-passenger bus. During the entire course of my employment, I have never crossed state lines; all my trips were local within the Bay Area. I regularly work 9-12 hours per day or 50 hours per week. My manager tells me that I am not entitled to overtime compensation because I am exempt. Is this legal?
Answer: it is difficult to provide a yes-or-no answer to this question and we would have to review additional facts. The MCA exemption is a highly complex legal issue that deals with many factors and requires a fact-intensive analysis. The following post is written to provide general information about the MCA exemption by looking at the applicable federal law and federal court decisions in which the MCA exemption was interpreted and applied. This post does not intend to provide legal advice and if you are not sure about your exempt status, you should consult an employment attorney.
I. Legal Standard
The FLSA requires employers to pay employees at time-and-a-half for any time worked in excess of forty hours per week. See 29 U.S.C. § 207(a)(1). However, the act specifically exempts from this 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 the MCA. Id. § 213(b)(1). Congress created this exemption to eliminate any conflict between the jurisdiction exercised by the Department of Labor (“DOL”) over the FLSA and the mutually exclusive jurisdiction exercised by the DOT over the MCA. See Spires v. Ben Hill County, 980 F.2d 683, 686 (11th Cir. 1993).
California’s Industrial Welfare Commission Wage Orders No. 9, regulating wages, hours and working conditions in the transportation industry, excludes from its overtime pay requirements “employees whose hours of service are regulated by … the United States Department of Transportation Code of Federal Regulations, Title 49, Sections 395.1 to 395.13.” Cal. Code Regs. tit. 8, § 11090(3)(F)(1); id. § 11090(3)(H)(1)(1997). ). Therefore, if an employee is exempt from overtime under federal law, the employee is also exempt from overtime under California law.
The Secretary of Transportation has authority under the MCA “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.” Spires, 980 F.2d at 686. Therefore, to determine the applicability of the FLSA 13(b) (1) overtime exemption two questions must be answered:
(1) Is the employer subject to the jurisdiction of the DOT?
(2) Is the employee engaged in safety-related activities for a motor carrier in the interstate or foreign transportation of persons or property? 29 C.F.R. § 782.2, See Baez v. Wells Fargo Armored Serv. Corp.,938 F.2d 180, 181-82
The applicability of the motor carrier exemption “depends both on the class to which his employer belongs and on the class of work involved in the employee’s job.” Id Exemptions to the FLSA are to be construed strictly against the employer and in favor of the employee. Mitchell v. Ky. Fin. Co., 359 U.S. 290, 79 S. Ct. 756, 3 L. Ed. 2d 815 (1959). Furthermore, it is the burden of the employer to establish the applicability of the exemption. Reich v. Am. Driver Serv., Inc., 33 F.3d 1153 (9th Cir.1994).
The character of the employees’ activities, not the proportion of time spent engaged in activities directly affecting interstate commerce, is the key factor in determining the applicability of the exemption. Anderson v. Timber Products Inspection, Inc., 334 F. Supp. 2d 1258 (D. Or. 2004) However, the “interstate commerce” requirement is not met unless the amount of time devoted by employees to interstate transportation is substantial. Walling v. Comet Carriers, 151 F.2d 107 (C.C.A. 2d Cir. 1945) (three hours per week); West Ky. Coal Co. v. Walling, 153 F.2d 582 (C.C.A. 6th Cir. 1946) (”occasional” deliveries across state lines); Kimball v. Goodyear Tire and Rubber Co., 504 F. Supp. 544 (E.D. Tex. 1980) (1% of operations time).
It is the nature of both the employer’s and the employee’s activities that is determinative of this exemption. 29 C.F.R. § 782.2(a). It is insufficient for an employer attempting to obtain an exemption to show that its operations have a substantial effect on interstate commerce; rather, the employer must show both that it is a carrier and in interstate commerce. 29 C.F.R. § 782.2(a). Thus, the fact that some of an employer’s employees are subject to the Department of Transportation’s jurisdiction does not mean that thereafter all employees of the same job classification automatically will be exempt from Department of Labor jurisdiction, and thus will not be subject to FLSA overtime pay requirements. Dole v. Circle A Const., Inc., 738 F. Supp. 1313 (D. Idaho 1990). Factors to consider, in determining whether the motor carrier exemption applies to an entire class of employees when only a few are involved “in interstate commerce,” are: (1) the proportion of interstate to intrastate employee activity; (2) the method by which a carrier assigns the interstate activity to its employees; and (3) the overall nature of the carrier’s business. Kosin v. Fredjo’s Enterprises, Ltd., 1989 WL 13175 (N.D. Ill. 1989).
It is not necessary for an employer to apply for or obtain a certificate of exemption from the Secretary of Transportation in order to be entitled to the FLSA exemption. Bumgarner v. Joe Brown Co., 376 F.2d 749 (10th Cir. 1967).
A. Is this a Commercial Motor Vehicle covered by the MCA?
In 2005, the SAFETEA–LU amended the definition of “motor private carrier” to mean “a person, other than a motor carrier, transporting property by commercial motor vehicle (as defined in section 31132).” 49 U.S.C. § 13102(15) (2005) (emphasis added). Section 31132 defines a “commercial motor vehicle” as one which:
(A) has a gross vehicle weight rating or gross vehicle weight of at least 10,001 pounds, whichever is greater;
(B) is designed or used to transport more than 8 passengers (including the driver) for compensation;
(C) is designed or used to transport more than 15 passengers, including the driver, and is not used to transport passengers for compensation; or
(D) is used in transporting material found by the Secretary of Transportation to be hazardous under section 5103of this title and transported in a quantity requiring placarding under regulations prescribed by the Secretary under section 5103. 49 U.S.C. § 31132(1).
B. Is the employer subject to the jurisdiction of the DOT?
The MCA indicates that the Secretary has this power for, inter alia, all transportation described in 49 U.S.C. § 13501. See 49 U.S.C. § 31502(a)(1). Section 13501 in turn provides the Secretary with jurisdiction “over transportation by motor carrier” in various contexts, including between places in different states, between places in the same state if the transport passes through another state, and between the United States and a foreign country to the extent that the transportation occurs in the United States. Id. § 13501(1)(A), (B), (E). The motor carrier exemption applies only to those employees over whom the Secretary of Transportation has this authority. See29 C.F.R. § 782.2(a).
In Morrison v. Quality Transports Servs., Inc., 474 F. Supp. 2d 1303, 1309 (S.D. Fla. 2007), the court held that an employer was subject to the jurisdiction of the DOT where it is a carrier whose transportation of property or passengers is subject to the Secretary’s jurisdiction under the Motor Carrier Act based on the following: 1) QTS holds a USDOT license, 2) QTS operates vehicles whose weight and/or passenger capacity falls within the authority of the Federal Motor Carrier Safety Administration (FMCSA), and 3) QTS was subject to regulation by the FMCSA including regular inspections by USDOT. QTS also held two insurance policies, one of them for the amount required for interstate carriers. See also, Baez v. Wells Fargo Armored Serv. Corp.,938 F.2d 180, 181-182 (issuance of ICC permit indicated that Secretary had already exercised jurisdiction over carrier; provided bus service that crossed state lines and derived about 4% of its revenue from those trips; held itself out as an interstate motor carrier.); Walter v. American Coach 575 F.3d 1221 (11th Cir. 2009) (ACLM was licensed by the DOT, has the FMCSA authorizations necessary to be an interstate motor carrier, and was audited in the past by the DOT. The court noted the fact that a company holds these kind of authorizations indicates that the DOT has exercised jurisdiction over it.) Morris v. McComb, 332 U.S. 422 (1947) (found a business to be subject to MCA jurisdiction when about 3.65% of its total trips stemmed from interstate commerce, along with 4% of its revenues. 332 U.S. at 427, 433-34).
But See Turk v.Buffets, Inc., 940 F. Supp. 1255, 1261-62 (N.D. Ill. 1996) and Kimball v. Goodyear Tire & Rubber Co., 504 F. Supp. 544, 549 (E. D. Tex.1980) (holding that truck drivers were not exempted from the overtime provision where only 0.17% of trips were interstate).
C. Does the employee “directly affect the safety of operation of motor vehicles …in interstate … commerce?
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.” Purely intrastate transportation can constitute part of interstate commerce if it is part of a “continuous stream of interstate travel.” Chao v. First Class Coach Co., Inc.,214 F.Supp.2d. 1263, 1272 (M.D.Fla. 2001). For this to be the case, there must be a “practical continuity of movement” between the intrastate segment and the overall interstate flow. Walling v. Jacksonville Paper Co., 317 U.S. 564, 568 (1943); see also Bilyou v. Dutchess Beer Distribs., Inc., 300 F.3d 217, 223 2d Cir. 2002)
1. A through-ticketing arrangement
A through-ticketing arrangement may qualify an employer and its drivers for the MCA exemption where the transportation is part of a through-ticketing or other common arrangement between the motor carrier and the air carrier. Some courts found the requirement to be met even when there is no through ticketing agreement so long as there is evidence of a contractual connection between the motor carrier and the interstate carrier.
Chao v. First Class Coach Co., 214 F. Supp. 2d 1263, 1271 (M.D. Fla. 2001) – “I-Ride” drivers who drove trolley-buses exclusively within Florida (near Orlando and Disney World) were found to be exempt from the FLSA’s overtime requirement. The “I-Ride” service is provided pursuant to a contract between First Class and a local municipal taxing district. Payment for I-Rides could be made in two ways. First, a passenger might pay the fare upon boarding the trolley. Second, a group may purchase tickets covering the cost for its members; these purchases are sometimes made out of state in advance of the riders’ travels to the Orlando area. The court found that I-Ride” service constituted interstate transportation by virtue of the fact that at least 5-10% of the “I-Ride” users, intending to visit the Orlando area, purchase their I-ride passes out of state and in advance of their arrival. For the purpose of the interstate transportation determination, the court finds no meaningful distinction between the throughticket arrangement in United Transp., 111 F. Supp. 2d at 519 and the out of state sale and purchase of “IRide” tickets. As an alternative theory, the court found that the fact that the “I-Ride” drivers are subject to being called upon to drive interstate routes at any time is also adequate to exempt them from the FLSA’s overtime provisions. The court reject the DOL’s 4-month rule.
Abel v. Southern Shuttle Services, Inc., 631 F.3d 1210 (2011) Shared-ride airport shuttle’s intrastate transport of passengers to and from airport constituted interstate commerce, for purposes of determining whether shuttle operator fell within jurisdiction of Secretary of Transportation, and thus shuttle driver fell within Motor Carrier Act (MCA) exemption to FLSA’s overtime provision; many shuttle passengers had either just flown from, or were about to fly to, places outside of state, internet travel companies provided their package-deal customers with vouchers for free airport transportation on shuttle, which operator used to invoice internet travel companies for payment, and driver engaged in activities that directly affected safety of operation of motor vehicles in transportation of passengers on public highways. The court found the following facts to be particularly persuasive:
Many of Southern Shuttle’s passengers to and from the airport have either just flown from, or are about to fly to, places outside the state of Florida. A large portion of Southern Shuttle’s reservations are made via travel websites on the internet. Travelers buy package deals from these internet travel companies that include hotel accommodations and airfare in addition to transportation to and from the airport. The internet travel companies provide their package-deal customers with a voucher for free airport transportation, which the customers use to board Southern Shuttle’s airport shuttles. Southern Shuttle then uses the collected vouchers to invoice the Furthermore, 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. Indeed, Southern Shuttle’s voucher system resembles in many respects the voucher system the bus company used for cruise ship passengers in Walters. In sum, we conclude that Southern Shuttle has shown that it is subject to the Secretary of Transportation’s jurisdiction under the MCA.
Pennsylvania Pub. Util. Comm’n v. United States, 812 F.2d 8, (D.C. Cir. 1987) (finding that a motor carrier had a common arrangement with an air carrier when it “operated pursuant to an explicit contract” with the airline, and that this was sufficient for the ICC to find the motor carrier’s activities to be in interstate commerce, despite the absence of a through-ticketing agreement).
Walter v. American Coach 575 F.3d 1221 (11th Cir. 2009). For cruise ship passengers arriving at the airport or seaport, ACLM’s shuttle rides would be part of the continuous stream of interstate travel that is their cruise vacation. The Royal Caribbean patrons, in particular, would have no reason to have any alternate view since the fee for the shuttle ride would either be bundled as part of their cruise vacation package or would be included on the bill for their Royal Caribbean shipboard account.
United Transp vs. Orange Newark Elizabeth Bus. Inc., 111 F.Supp.2d 514 (N.J. D. 2000) (when a passenger is able to use a single ticket for interstate and intrastate travel, the passenger intends to travel interstate. The carriers, regardless of whether they operate exclusively intrastate, are an integral part of the “practical continuity of movement” of the passengers across state lines. The percentage of [defendant’s] passengers who are using [bus passes which allowed interstate travel] is irrelevant….)
Walter v. American Coach 575 F.3d 1221 (11th Cir. 2009). America Coach had a formal agreement with Royal Caribbean since September 2006 to transport passengers between hotels, airports, and seaports. Under this arrangement, ACLM did not operate as an independent part of the cruise passengers’ overall transportation, even though it involved a distinct mode of transport from the plane flight and cruise ship.
United Transportation Union Local 759 v. Orange Newark Elizabeth Bus, Inc., 111F.Supp.2d 514 (D.N.J.2000). The issue in United Transportation was whether a transportation company’s bus route that was driven entirely within the State of New Jersey, but which transported passengers to train stations and bus stations which then transported the same passengers to other states, entitled the company to the 13(b) (1) exemption. Under a New Jersey program, passengers could use the transportation company’s pass for both bus and rail transportation out of the state using other carriers. This through-ticketing arrangement entitled a passenger to travel intrastate on the company’s bus and interstate by bus or rail using other carriers. The intrastate transportation provided by the company was part of the interstate movement of passengers and therefore the 13(b) (1) exemption applied, even though only a small percentage of the passengers took advantage of the through-ticketing program allowing travel across state lines.Id. at 520.
Southerland v. St. Croix Taxicab Association, 315 F.2d 364, 368 (3d Cir. 1963). In Southerland, travel arrangements had been made for tourists visiting the Virgin Islands prior to their departure from the mainland. The prearranged travel included prepaid taxi transportation from the airport to the hotel upon arrival and back to the airport for departure. The court concluded that under these facts the taxi transportation was an “integral part of [the tourists’] all-expense interstate journey.” 315 F.2d at 369.
Charter Limousine, Inc. v. Dade County Board of County Commissioners, 678 F.2d 586 (5th Cir.1982). The court held that prearranged limousine service provided for transportation of passengers arriving from out of state was within the stream of interstate commerce.
Plaintiff worked as a commission-paid driver for Aventura Limousine, a full-service transportation company that provides transportation in and around South Florida. Like other Aventura Limousine drivers, Plaintiff drove out-of-state customers to and from the airport, seaport, and other locations within South Florida.
Packard v. Pittsburgh Transp. Co., 418 F.3d 246 (3d Cir.2005). The employer in Packard provided transportation to the elderly and disabled in Allegheny County, which included trips to train and bus stations and to the airport. Id. at 248-49. The Third Circuit concluded that this transportation service did not fall within the Secretary’s jurisdiction because it was not “in practical continuity with a larger interstate journey.” Id. at 258. The Third Circuit noted that the transportation of the elderly and disabled in Packard “involves no joint fare or ticketing arrangement, and no prior arrangement of any kind, contractual or otherwise, with the railroads, airlines, or other companies.” Packard, 418 F.3d at 258. The Third Circuit cited “through ticketing” as “one example of a common arrangement involving both intra and interstate portions of passenger transport” but concluded that it was “not the only means of establishing that passenger transport operating intrastate is in practical continuity with a larger interstate journey.” Id. ). Highlighting the “lack of coordination with other transportation,” such as through “a prepackaged tour,” the Third Circuit concluded that the transportation service in Packard was “purely intrastate.
Rossi v. Associated Limousine Servs., Inc.,438 F.Supp.2d 1354, 1361 (S.D. Fla. 2006) (finding the employer was not subject to the jurisdiction of the Secretary of Transportation. Employer’s reliance solely on its contract with Boston Coach as evidence of a through-ticketing arrangement whereby interstate business was solicited was not sufficient because the employer failed to demonstrate what percentage, if any, of its business was derived from this arrangement. A through-ticketing arrangement must be between the motor carrier and air carrier for continuous passage in order to render the motor carrier’s operation interstate transportation.)
Cartun v. Carey Int’l, Inc., et al., Case No. 04-21074-CIV-UUB. The Court found that the motor carrier exemption did not apply to a limousine company where the evidence was insufficient to demonstrate that it was a party to a through-ticketing arrangement with an air carrier.
D. Reasonably expected to be called on to make interstate runs.
Even drivers who do not transport goods in interstate commerce are subject to the jurisdiction of the Secretary of Transportation if, as part of their regular duties, they reasonably could be expected to be called on to make interstate runs.
Morris v. McComb (1947) 332 U.S. 422, 433–434. Under § 204 of the Motor Carrier Act, 1935, the Interstate Commerce Commission has power to establish qualifications and maximum hours of service with respect to drivers and mechanics employed full time, as such, by a common carrier by motor vehicle, when the services rendered through such employees by such carrier in interstate commerce are distributed generally throughout the year, constitute 3% to 4% of the carrier’s total carrier services, and the performance of such services is shared indiscriminately among such employees and mingled with their performance of other like services for such carrier not in interstate commerce.
Bell v. H.F. Cox, Inc., 209 Cal.App.4th 62 (2012). Drivers employed by trucking company were within the motor carrier exemption from the Fair Labor Standards Act’s (FLSA) overtime compensation requirement, even if the company advertised for drivers for “local” hauls, since the drivers were indiscriminately assigned to interstate routes and all of the drivers reasonably could be expected to be called on to drive an interstate route, where all of the company’s drivers and trucks were qualified for interstate hauls, and some drivers had been randomly assigned to interstate routes. Fair Labor Standards Act of 1938, § 13(b)(1), 29 U.S.C.A. § 213(b)(1); 49 U.S.C.A. § 31502(b).
Garcia v. Pace Suburban Bus Service, a Div. of Regional Transp. (N.D.Ill.1996) 955 F.Supp. 75, 77 In Garcia, the employer operated a strictly intrastate transportation service in the Chicago area but also operated a charter service and an airport service, both of which involved interstate transportation. The plaintiff in Garcia was a driver who had driven only intrastate routes and sought overtime compensation under the FLSA. As in the instant case, the issue was whether the employer was entitled to an exemption from the overtime requirements under 13(b) (1). In determining the applicability of the exemption, the court considered the fact that the plaintiff had not been called upon to drive interstate routes in the past. Of course, this factor alone weighed against enforcement of the exemption. However, the court’s inquiry continued to take into account that: 1) upon hiring, the employer required the employee to sign a form acknowledging that he may be called upon to drive for the company’s interstate charter service; 2) the employer required its drivers to comply with the Federal Motor Carrier Safety Regulations and maintain all DOT forms; 3) that the employer maintained its vehicles in accordance with ICC regulations; and 4) that the FHA regularly conducted audits in which it determined that all drivers were subject to federal safety requirements. After consideration of all of these factors, the Garcia court determined that the exemption applied and the plaintiff was not entitled to overtime pay under the FLSA.
Vidinliev v. Carey International, Inc. 1:07-CV-762-TWT, 2009 WL 2848344 (N.D. Ga. Aug. 31, 2009). The limo drivers were exempt from the FLSA’s overtime provisions because Carey International, Inc. has made the required showing of interstate commercial motor vehicle transportation. Carey Atlanta’s drivers made thirty interstate trips in commercial vehicles from August 10, 2005 to May 2, 2008. During any four-month period from August 10, 2005 to May 2, 2008, Carey Atlanta’s drivers made at least one interstate trip in a commercial motor vehicle. (Id.) Even though many of the drivers did not make one of those interstate trips, any of them could have reasonably been expected to do so. “[A]ny driver, including the Plaintiffs, could have been called upon to drive a commercial motor vehicle . . . across state lines or otherwise, at any time.” Drivers “are required to follow Carey International’s assignment procedures, and specifically, are not allowed to reject rides assigned by the dispatch.
See also, Walters v. American Coach Lines of Miami, Inc. (S.D.Fla.2008) 569 F.Supp.2d 1270, 1292, affd. (11th Cir.2009) 575 F.3d 1221.