Freight Company Supervisor Was Not Entitled to Overtime Pay

By Joanne Deschenaux October 9, 2020
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The transportation supervisor at a freight company was not entitled to overtime pay because his duties were directly related to the general business operations of the employer and he regularly exercised discretion and independent judgment, a California appeals court ruled.

As a result, the supervisor was an administrative employee exempt from California's overtime pay requirements, the court said.

The employer is a nationwide freight transfer company. Part of its business is to transport milk, and the company's procedures must take into account that milk is a perishable product. The company has multiple terminal locations throughout California. It picks up milk from farms and delivers it to various plants and creameries where the milk is processed into different types of dairy products.

The employer coordinates dairy pickups and plant deliveries through dispatchers, who use a computer software program that displays the various routes, plant wait times, farm pickup sites and delivery sites.

The employee worked for the employer as a transportation supervisor between April 2012 and July 2015, overseeing approximately 40 truck drivers per shift who picked up milk from farms and delivered it to creameries for processing. Each truck driver had approximately four routes to complete on a shift. As a supervisor, the employee used a software program to determine the most efficient way for drivers to complete these pickups and deliveries.

He kept track of drivers' start times to ensure they did not exceed their 14-hour driving limit. He also participated in disciplinary decisions by signing citations and meeting with drivers to go over discipline reports.

The employee did not attend management meetings and did not have the authority to implement his own system of delivery or pickups; he was required to work through the software program.

Administrative Exemption

California employees are entitled to overtime pay if they work more than eight hours a day or 40 hours a week, unless an exemption applies.

Under the California Industrial Welfare Commission's Wage Order 9, which governs workers in the transportation industry, employees in an executive, administrative or professional capacity are not entitled to overtime compensation. Employees are considered "administrative" employees if:

  • They perform office or nonmanual work directly related to their employer's management policies or general business operations.
  • They regularly exercise discretion and independent judgment.
  • They perform under only general supervision and work along specialized or technical lines requiring special training, experience or knowledge.
  • They are primarily engaged in exempt duties.
  • They earn a monthly salary of at least two times the state minimum wage for full-time workers.

The employee claimed that he did not meet the first two prongs of the test for the administrative exemption to apply. First, he argued that his job duties were not directly related to the employer's general business operations.

The phrase "directly related" to management policies or general business operations describes activities relating to the administrative operations of a business as distinguished from production work, the court said.

Although the employee did not plan the initial designation of routes, he would rearrange the routes to meet myriad variables that arose during a shift. This required significant planning to meet the needs of the customers. The employee was the highest-ranking supervisor on the night shift, and he was charged with running the operations of the terminal during that time.

The employee oversaw approximately 40 drivers on his shift. He was authorized and expected to monitor driver attendance, call drivers in to work, send drivers home if necessary, resolve their complaints, ensure that they got meal breaks and issue correction reports for driver infractions.

Thus, the court concluded that the employee's duties as a transportation supervisor were directly related to the employer's general business operations.

The parties also disputed whether the employee's tasks as transportation supervisor met the second element of the administrative exemption, which requires that an exempt employee regularly exercises discretion and independent judgment.

The employee's dispatching duties involved significant exercise of discretion and independent judgment on matters of significance, the court said. He did not simply dispatch drivers to meet specific time frames and customer needs. He had to assess how that could be done with an evolving number of variables and by choosing from different alternatives to accomplish all the necessary objectives.

The court concluded that the employee was an exempt administrative employee and not entitled to overtime pay

Richardson v. Ruan Transport Corp., Calif. Ct. App. No. F076850 (Sept. 8, 2020).

Professional Pointer: Determining whether an employee is exempt depends on that employee's actual job duties, not the employee's job title or the employer's description of the worker's duties.

Joanne Deschenaux, J.D., is a freelance writer in Annapolis, Md. 

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