Intrastate Passenger Trips Can Trigger FLSA's Motor Carrier Exemption, Rules Eleventh Circuit

By Richard Tuschman

Drivers who transport passengers from airports to locations within the same state can be subject to the FLSA’s motor carrier exemption, according to a recent decision by the Eleventh Circuit Court of Appeals, Abel v. Southern Shuttle Services, Inc., Case No. 10-10659 (11th Cir., September 21, 2010). The Abel decision is significant because it expands upon and clarifies the principles set forth in the Eleventh Circuit’s decision in Walters v. American Coach Lines of Miami, Inc., 575 F.3d 1221, 1226 (11th Cir. 2009), cert. denied, 130 S. Ct. 2343 (2010), which I reported on last year (and which I had the privilege to argue to the Eleventh Circuit on behalf of the employer).

The motor carrier exemption exempts from the FLSA’s overtime pay 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 section 31502 of Title 49,” otherwise known as the Motor Carrier Act (“MCA”) exemption. 29 U.S.C. § 213(b)(1). The Eleventh Circuit has held that the MCA confers upon the Secretary of Transportation the authority 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.

The purpose of the motor carrier exemption is to avoid overlapping jurisdiction, and potentially conflicting rulemaking, of federal agencies. Where the Secretary of Transportation has the authority to regulate a driver’s hours of service, the Secretary of Labor cannot have jurisdiction over the same issue. Both Walters and Abel presented the question of precisely when the Secretary of Transportation has such authority.

In Walters, the Eleventh Circuit held that “[t]here are two requirements for an employee to be subject to the motor carrier exemption”: (1) “his employer’s business must be subject to the Secretary of Transportation’s jurisdiction under the MCA”; and (2) “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.”

The bus company in Walters was licensed by the DOT and performed some trips across state lines; for example, between Florida and Georgia. Therefore, the court held that prong 1 of the test was satisfied. However, because not all of the plaintiffs in Walters drove across state lines, the court also considered the employer’s argument that the plaintiffs’ transportation of passengers between local airports (where the passengers typically arrived from out of state) and local seaports (where the passengers embarked and disembarked cruise ships that sailed outside of U.S. waters) constituted driving in interstate commerce. The court held that that “purely intrastate transportation can constitute part of interstate commerce if it is part of a ‘continuous stream of interstate travel.’ For this to be the case, there must be a ‘practical continuity of movement’ between the intrastate segment and the overall interstate flow.” The court concluded that “[f]or cruise ship passengers arriving at the airport or seaport, [the bus company’s] shuttle rides would be part of the continuous stream of interstate travel that is their cruise vacation.” Thus, the motor carrier exemption applied.

But part of the Walters court’s rationale for applying the motor carrier exemption was that the company performed airport-to-seaport trips pursuant to contractual or “common” arrangements with cruise lines, which are arguably interstate carriers. At the time Walters was decided, this appeared to be a significant factor because earlier authority held that the Secretary of Transportation has jurisdiction over intrastate passenger-carrying trips only where there is a “through-ticketing” arrangement between the intrastate carrier and an interstate carrier for the “continuous passage” of the passengers. The Walters court left open the question of whether such contractual arrangements were essential to the application of the motor carrier exemption. But this is a critical question, because many companies that transport passengers on intrastate trips as part of interstate journeys do so in the absence of formal contractual arrangements with airlines or cruise lines.

Southern Shuttle Services, Inc. is one such company. It operates the “SuperShuttle,” which transports passengers to and from three South Florida airports to various locations throughout South Florida (for example, a home, officer or hotel). Many of Southern Shuttle’s reservations are made through travel websites on the internet. Travelers buy “package deals” from these internet travel companies that include hotel accommodations, airfare, and a voucher on the SuperShuttle for transportation to and from the airport. Southern Shuttle apparently does not perform any trips across state lines, and the Secretary of Transportation appears not to have exercised jurisdiction over the company (by licensing or auditing the company, for example). The primary question presented in Abel was whether the Secretary nevertheless has jurisdiction over Southern Shuttle (prong 1 of the two-part test set forth in Walters).

The Eleventh Circuit said yes, holding that “Southern Shuttle’s local transport of these package-deal travelers has a ‘practical continuity of movement’ with the overall interstate journey.” The court also held that “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.” Answering the question left open in Walters, the court rejected Abel’s argument that the common arrangement must be with an interstate carrier to satisfy the interstate commerce requirement. Finally, as to prong 2 of the test, the court held that “[h]aving already concluded that Southern Shuttle’s airport shuttle service was transportation of passengers in interstate commerce that subjected it to the Secretary’s jurisdiction, we conclude that Abel’s activities in driving the airport shuttle also constitute interstate commerce.” Thus, Southern Shuttle established the applicability of the motor carrier exemption, and Abel was not entitled to overtime pay.

To be clear, Abel does not mean that any company that transports passengers to or from an airport can claim the motor carrier exemption. For example, a taxi ride to or from an airport at the beginning or end of an interstate journey ordinarily will be deemed a local trip that is not within interstate commerce. For the motor carrier exemption to apply, the employer must show that the trips are part of the “practical continuity of movement” with the overall interstate journey. This means that some type of common arrangement, under which the intrastate trip is bundled with one or more elements of the passenger’s trip across state lines, must be shown.


 

Bus Company Prevails in FLSA Motor Carrier Exemption Case

Port of MiamiI am pleased to report that the United States Court of Appeals for the Eleventh Circuit has affirmed the district court's summary judgment in favor of our client, a bus company, in a case involving the motor carrier exemption.  The case is Walters v. American Coach Lines of Miami, Inc. (11th Cir., July 23, 2009).

 I first reported on this case and discussed the basics of the motor carrier exemption in a September 2008 post.  My EBG colleague, Brian Molinari, recently summarized the Walters decision in a post on the Prima Facie Law Blog.

A quick refresher:  The motor carrier exemption is one of several exemptions from the Fair Labor Standards Act which generally requires employees engaged in commerce to be paid at least time and a half for the time worked above forty hours in one week. The motor carrier exemption provides:

The provisions of section 207 [maximum hours] of this title shall not apply with respect to. . . 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 section 31502 of Title 49.”  29 U.S.C. § 213(b)(1). 

49 U.S.C. section 31502 grants “the Secretary of Transportation the power to regulate the qualifications and maximum number of hours for employees of motor carriers engaged in interstate transportation.”

The principal question in Walters was whether the ACLM's drivers, by driving trips to and from local airports and seaports, all of which are in Florida, were engaged in interstate transportation so as to trigger the Secretary of Transportation's jurisdiction over them.  If so, the motor carrier exemption would apply, and the drivers would not be entitled to overtime pay.

In answering that question in the affirmative, the court's opinion breaks some new ground in the Eleventh Circuit, which covers Florida, Georgia and Alabama. Among the court's holdings are the following:

  • The Secretary of Transortation's jurisdiction is not limited to transportation that crosses state lines, but extends to transporation that is part of the broader concept of "interstate commerce."
  • Purely intrastate transportation can constitute part of interstate commerce if it ispart of a “continuous stream of interstate travel."
  • The "incidental-to-air" exemption does not limit application of the motor carrier exemption. The court held that this exemption to the Secretary of Transportation's jurisdiction applies to economic regulation, not to safety regulation. Thus, the Secretary of Transportation has jurisdiction to prescribe safety regulation for transportation that is "incidental-to-air," i.e. within 25 miles of an airport.

The motor carrier exemption is complicated and has been the subject of much litigation. For employers in the Eleventh Circuit, the Walters decision clarifies several key issues. Still, the opinion leaves open a couple of issues:

  • Does a company have to engage in more than de minimus interstate transportation, where it has the appropriate federal licensing and indisputably performs some transportation crosses state lines? The court declined to answer this question, finding that even if such a test applied, ACLM engaged in more than de minimus interstate transportation.
  • Do airport-to-seaport trips constitute interstate commerce if they are not performed pursuant to formal contractual arrangements with airlines or cruise lines? The court declined to answer this question, finding that even if such a test applied, ACLM had contractual arrangements with cruise lines to transport passengers on its buses.
     

Litigation of these open issues is bound to occur as the proliferation of FLSA lawsuits continues. But for now, Walters is the latest word on the status of the motor carrier exemption in the Eleventh Circuit.
 

A Primer on the FLSA Motor Carrier Exemption

The motor carrier exemption is one of several exemptions from the Fair Labor Standards Act which generally requires employees engaged in commerce to be paid at least time and a half for the time worked above forty hours in one week. The motor carrier exemption provides: “The provisions of section 207 [maximum hours] of this title shall not apply with respect to. . . 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 section 31502 of Title 49.” 29 U.S.C. § 213(b)(1).

In other words, the jurisdictions of the Secretary of Labor and the Secretary of Transportation are mutually exclusive. If the Secretary of Transportation has the authority to regulate a driver’s qualifications and maximum hours of service, the motor carrier exemption applies.

49 U.S.C. section 31502 grants “the Secretary of Transportation the power to regulate the qualifications and maximum number of hours for employees of motor carriers engaged in interstate transportation.”

The Department of Labor’s regulations explain that the Secretary of Transportation may establish maximum hours and qualifications of service for employees, and thereby trigger application of the motor carrier exemption, if two requirements are met: first, an employee must be employed by a carrier whose transportation of passengers is subject to the Secretary of Transportation’s jurisdiction under section 204 of the Motor Carrier Act; second, an employee must engage in activities of a character directly affecting the safety of operation of motor vehicles in interstate or foreign commerce within the meaning of the Motor Carrier Act. See 29 C.F.R. section 782.2. The regulations further explain that  that “[t]he work of an employee who is a full-duty or partial-duty ‘driver,’ ..., directly affects ‘safety of operation’ ... whenever he drives a motor vehicle in interstate or foreign commerce within the meaning of [the Motor Carrier Act.]” 29 C.F.R. section 728.3(b).

In short, to determine the applicability of the motor carrier exemption, two questions must be answered: (1) Is the employer subject to the jurisdiction of the Department of Transportation? and (2) Is the employee engaged in safety-related activities for a motor carrier in the interstate or foreign transportation of persons or property?

What does "interstate or foreign transportation" mean? Transportation across state and international borders counts, but so does transportation within a single state "where it forms a part of a practical continuity of movement across State lines from the point of origin to the point of destination.” 29 C.F.R. § 782.7(a)

My firm is currently representing a charter bus company in an FLSA collective action involving the application of the motor carrier exemption. Most of the 63 plaintiffs have never driven across state lines. However, in ruling on the company's motion for summary judgment, the court found that 45 of the plaintiffs had driven, or could reasonably have been expected to drive, in-state routes that are part of the practical, continuous interstate (or international) movement of passengers.  In particular, pursuant to contracts with cruise lines or their agents, with tour operators and travel agents, and with other entities that charter buses, the drivers regularly transport passengers to and from South Florida cruise ship terminals, where the passengers embark on, or debark from, international cruises. The court found that these airport-seaport trips are in the continuous stream of interstate commerce, even though the routes themselves do not cross state lines.  Thus, applying the motor carrier exemption, the court dismissed the overtime claims of the plaintiffs who drove these routes, or could reasonably have been expected to do so.

The 18 remaining plaintiffs, whose overtime claims were not dismissed, claim that they are not exempt because they mainly drive bus shuttles for local universities. Their case is scheduled for trial in January 2009.  The court's order on summary judgment is reported at 2008 WL 2967170.