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I 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.
 

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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.
 

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