EXEMPTION OF LOADERS OF MOTOR VEHICLES FROM OVERTIME AND MINIMUM WAGE LAWS–PART ONE

This article is Part One in a two-part series of articles discussing the exemption of loaders from the wage-hour requirements of the Fair Labor Standards Act (FLSA). Businesses whose works load large trucks transporting goods in interstate commerce can defend themselves from overtime and minimum wage claims. Under the Motor Carrier Act exemption to the FLSA, loaders of trucks whose vehicle weight exceeds 10,001 pounds and meeting the “interstate commerce” requirement can be exempt from the overtime and minimum wage requirements of the FLSA. The Mavrick Law Firm has successfully defended many businesses against overtime and minimum wage lawsuits by means of the Motor Carrier Act Exemption in Miami-Dade, Broward, and Palm Beach Counties.

To understand the Motor Carrier Act exemption to the FLSA, it is important to understand its enactment vis-à-vis the FLSA. Enacted in 1935, the Motor Carrier Act authorized the Interstate Commerce Commission (ICC) to set the “qualifications and maximum hours of service” for employees of motor vehicle common carriers. See 49 U.S.C. § 304(a), which was later repealed. Congress transferred the ICC’s functions to the Secretary of Transportation with some revision of the statute, and this jurisdiction remains. See 49 U.S.C. § 31502(b). In 1938, Congress enacted the FLSA, which empowered the Secretary of Labor to regulate, inter alia, the maximum hours of covered employees. See 29 U.S.C. § 207(a)(1). Congress included the Motor Carrier Act Exemption to the FLSA to avoid potentially overlapping jurisdictions. In the following years, the United States Supreme Court issued a series of decisions interpreting the Motor Carrier Act Exemption.

In United States v. American Trucking Ass’ns, 310 U.S. 534, 60 S.Ct. 1059 (1940), the Supreme Court rejected the contention of interstate truckers that all their employees are exempt, concluding that the ICC’s jurisdiction to regulate maximum hours “is limited to those employees whose activities affect the safety of [motor vehicle] operation.” In Southland Gasoline Co. v. Bailey, 318 U.S. 44, 63 S.Ct. 917 (1943), the Supreme Court held that the Motor Carrier Act Exemption applies whenever the Secretary of Transportation has the authority to regulate the maximum hours of motor carrier employees, regardless of whether that authority has been exercised. It is therefore irrelevant that the Secretary of Transportation has never set maximum hours for motor carrier employees.

In Levinson v. Spector Motor Serv., 330 U.S. 649, 67 S.Ct. 931 (1947), the Supreme Court explained that before and after enactment of the FLSA, the ICC issued numerous reports and regulations dealing “so thoroughly and expertly with the safety of operation of interstate motor transportation as to entitle them to especially significant weight in the interpretation of [the Motor Carrier Act].” Following the Supreme Court’s decision in American Trucking, the ICC after extensive hearings ruled that motor carrier drivers, mechanics, loaders, and drivers helpers “perform duties which affect the authority conferred [by the Motor Carrier Act] to prescribe qualifications and maximum hours of service.” MC-2, 28 M.C.C. 125, 126 (1941).

In Levinson, the Supreme Court upheld the ICC’s conclusion that loaders affect safety of operation of motor vehicles on the public roadways:

The evidence makes it entirely clear that a motor vehicle must be properly loaded to be safely operated on the highways of the country. If more weight is placed on one side of the vehicle than on the other, there is a tendency to tip when rounding curves. If more weight is placed in the rear of the vehicle, the tendency is to raise the front wheels and make safe operation difficult. Further, it is necessary that the load be distributed properly over the axles of the motor vehicle.

The Levinson case clarified that the Motor Carrier Act Exemption applies even if a loader does not spend all or even most of his time on safety-affecting activities. To fall within the ICC’s (now the Secretary of Transportation’s) jurisdiction, it is enough that an employee devote “a substantial part of his [work] time to activities directly affecting the safety of operation.” In so ruling, the Supreme Court rejected the contrary position of the United States Department of Labor (DOL), appearing as amicus curiae (i.e., “friend of the court”):

It is important to recognize that, by virtue of the unique provisions of [the Motor Carrier Act Exemption], we are not dealing with an exemption to [the FLSA] which is to be measured by regulations which Congress has authorized to be made by the Administrator of the Wage and Hour Division, United States Department of Labor. Instead, we are dealing here with the interpretation of the scope of the safety program of the [ICC], under § 204 of the Motor Carrier Act, which in turn is to be interpreted in the light of the regulations made by the [ICC] pursuant to the [Motor Carrier] Act.

In a companion case to Levinson, the Supreme Court in Pyramid Motor Freight Corp. v. Ispass, 330 U.S. 695, 67 S.Ct. 954 (1947), held that whether a particular employee falls within an exempt class, such as loader, “is to be determined by judicial process.” The Supreme Court further explained that:

In contrast to the loading activities in the Levinson case, the mere handling of freight at a terminal, before or after loading, or even the placing of certain articles of freight on a motor carrier truck may form so trivial, casual or occasional a part of the employee’s activities … that his activities will not come within the kind of “loading” which is described by the [ICC] and which, in its opinion, affects safety of operations.

The final Supreme Court decision relevant to construing the Motor Carrier Act Exemption is Morris v. McComb, 332 U.S. 422, 68 S.Ct. 131 (1947), where the Supreme Court held that the ICC had jurisdiction to regulate the maximum hours of all randomly assigned drivers and mechanics of a motor carrier whose operations were only 3-4% in interstate commerce, and therefore the Motor Carrier Act Exemption applied to those employees. As in Levinson, the Supreme Court rejected the DOL’s contrary contention.

Thereafter, the DOL issued regulations interpreting the Motor Carrier Act Exemption set forth at 29 C.F.R. § 782.5. The regulations (at § 782.5(a)) define “loader” under the Motor Carrier Act to mean “an employee of a carrier [under the Motor Carrier Act] … whose duties include … the proper loading of his employer’s motor vehicles so that they may be safely operated on the highways of the country.” The regulations explain that a loader’s work “directly affects ‘safety of operation’ [of a motor vehicle] so long as he has responsibility when such motor vehicles are being loaded, for exercising judgment and discretion in planning and building a balanced load or in placing, distributing, or securing the pieces of freight in such a manner that the safe operation of the vehicles on the highways in interstate commerce will not be jeopardized.”

Most recently, the United States Court of Appeals for the Eighth Circuit in Williams v. Central Transport International, Inc., 830 F.3d 773 (8th Cir. 2016), rejected the DOL’s reference to “exercising judgment and discretion” set forth in 29 C.F.R. § 782.5(a) as “not the governing standard.” Citing the Supreme Court’s decision in Levinson, the Eighth Circuit in Williams explained that the DOL has no authority to define what employees are subject to the Secretary of Transportation’s jurisdiction and therefore fall within the MCA Exemption … Accordingly, we give no weight or deference to the DOL’s regulation purporting to define who is an exempt loader.” Williams explained that:

the DOL regulation, 29 C.F.R. 782.5(a), is contrary to the Supreme Court’s governing standard. The ICC asserted jurisdiction over loaders because “a motor vehicle must be properly loaded to be safely operated on the highways” … “What the [ICC] intended to cover was the physical act of loading freight in a safe manner.” … “[L]oaders, even if closely supervised, remain within I.C.C. jurisdiction.” … Thus, Pyramid’s de minimus exception “is not based upon whether the worker was supervised in activities that have an undeniable, direct effect on safety,” such as loading a trailer bound for interstate travel. … [¶] Based on the Supreme Court’s controlling precedents, we conclude that, if an employee spends a substantial part of his time (as defined in Levinson, Pyramid, and Morris) participating in or directing the actual loading of a motor vehicle’s common carrier’s trailers operating in interstate or foreign commerce, the Secretary of Transportation has the authority to regulate that employee’s hours of service and the MCA Exemption applies, regardless of the employee’s precise role in the loading process.

A recent decision by the United States District Court for the Southern District of Florida in Mendoza v. Quirsch Foods Co., 2017 Wage & Hour Cas.2d (BNA) 348 (September 30, 2017), agreed with the analysis in Williams, stating in pertinent part that the court “finds the decision in Williams v. Central Transport International, Inc. … to be persuasive.”

Several other federal appellate and district courts also have rejected the DOL’s authority to issue a regulation purporting to define who is an exempt loader under the Motor Carrier Act Exemption. Packard v. Pittsburgh Transportation Co., 418 F.3d 246 (3d Cir. 2005); Troutt v. Stavola Bros., 107 F.3d 1104 (4th Cir. 1997); Benson v. Universal Ambulance Serv., Inc., 675 F.2d 783 (6th Cir. 1982); Khan v. IBI Armored Servs., Inc., 474 F.Supp.2d 448 (E.D.N.Y. 2007).

Peter Mavrick has represented many South Florida businesses in their successful defense against employment law claims, including claims brought in Fort Lauderdale, Miami, and Palm Beach. This article does not serve as a substitute for legal advice tailored to a particular situation. Peter T. Mavrick can be reached at: Telephone: 954-564-2246; Address: 1620 West Oakland Park Boulevard, Suite 300, Fort Lauderdale, Florida 33311.