3rd Cir.: Company Exempt from Overtime Claims of Drivers

By Jeffrey L. Rhodes Jun 11, 2015
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A motor coach company that required its drivers to meet the federal Motor Carrier Act (MCA) safety requirements and randomly distributed interstate routes did not have to pay any of its drivers overtime, the 3rd U.S. Circuit Court of Appeals ruled.

The company, Krapf’s Coaches Inc., maintains a fleet of buses and shuttles that transport passengers on set routes within and outside its home state of Pennsylvania. Between 2009-12, the majority of its trips remained in the state of Pennsylvania, although a portion of its revenue—between 1 percent and 9.7 percent—came from interstate trips.

One of Krapf’s drivers, Joseph Resch, brought a collective action suit under the Fair Labor Standards Act (FLSA) and the Pennsylvania Minimum Wage Act to recover unpaid overtime compensation for himself and other drivers. Resch claimed that many Krapf drivers seldom or never drove interstate routes, and thus Krapf could not claim the MCA exception to these laws applied. This exception carves out workers in positions subject to regulation by the Federal Motor Carrier Safety Administration (FMCSA) of the U.S. Department of Transportation (DOT) as separate from workers covered by the FLSA and many state overtime laws. The FMCSA regulates positions that perform activities that affect the safety of interstate transportation of people or property in vehicles weighing over 10,000 pounds. As a result, companies need not pay these workers overtime; rather, the FMCSA sets limits on the number of hours and days these employees can work to ensure public safety.

Resch claimed that most Krapf drivers did not qualify as workers whose activities affect the safety of interstate transportation because only 1.3 percent of Krapf’s trips crossed state lines. Resch argued that the regulations to the FLSA required the court to perform an “individualized analysis” into each driver’s actual number of trips driven interstate, and determine from this inquiry whether the FLSA or the FMCSA regulations should apply to that driver.

Krapf sought to dismiss the case before trial on a motion for summary judgment by presenting evidence that all drivers were eligible for and could be assigned an interstate route at Krapf’s discretion. Krapf thus required that all drivers have a commercial driver’s license, comply with FMCSA drug testing requirements, submit to regular DOT physical examinations, provide a pre-employment “safety performance history record” and maintain the required safety handbooks in their vehicles. Based on this evidence, the district court granted Krapf’s motion and dismissed the case for all of the drivers.

On appeal, the 3rd Circuit agreed and further reasoned that courts must decide whether the FLSA or MCA covers drivers on the whole, and not on an individualized basis, as Resch argued. Because the “individualized analysis” described by the law only analyzes what the class of employees could be reasonably expected to do, the court cannot make an individual inquiry within the class of drivers as to coverage. Rather, the entire category of driver becomes exempt from overtime eligibility if the employer distributes interstate routes indiscriminately to drivers, all drivers are eligible for an interstate route and no drivers are entirely excluded from the possibility of driving an interstate route.

Because Krapf met these criteria for coverage of its drivers by the MCA, none of the drivers could claim overtime under the FLSA or the Pennsylvania Minimum Wage Act.

Resch v. Krapf's Coaches Inc., 3rd Cir., No. 14-3679 (May 12, 2015).

Professional Pointer: The MCA exemption often applies in the transportation industry. Employers whose businesses involve transporting people or property over interstate routes should review their policies to make sure that they comply with all DOT regulations.

Jeffrey L. Rhodes is the managing partner of the civil division of Albo & Oblon LLP, a business and employment law firm in Arlington, Va.

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