Last Friday, the Fourth Circuit Court of Appeals issued an opinion covering the Motor Carrier Act exemption from overtime under the Fair Labor Standards Act. Fourth Circuit Opinion. It’s important obviously for employers who use delivery drivers, but there’s also a larger point to take from the opinion that makes it blog worthy. That, and the fact that the Fourth Circuit covers South Carolina and North Carolina, are why this case appears in Lawyall.com. The sassiest, coolest, most readable employment law blog since Al Gore invented the internet.
Some historical legal context first. In the midst of the Great Depression, Congress enacted the FLSA to combat the “evils and dangers resulting from wages too low to buy the bare necessities of life and from long hours of work injurious to health.” S. Rep. No. 75–884, at 4 (1937). So, stimulus, not trickle-down. To that end, the FLSA establishes a federal minimum wage and requires employers to pay “a rate not less than one and one-half times the regular rate” to employees who work more than 40 hours in a single workweek. 29 U.S.C. §§ 206(a), 207(a)(1). But the FLSA exemptscertain employees from its overtime protections, including the Motor Carrier Act exemption—any employee with respect to whom the Secretary of Transportation has the power to establish qualifications and maximum hours of service,” meaning, any employee subject to the MCA. See 29 U.S.C. § 213(b)(1); see also 49 U.S.C. §§ 31502(b), 13102. Basically, if you drive trucks for motor carriers, you don’t get overtime. I’ve oversimplified the breadth of the exemption, but it will do for this post.
Clear so far? Then, in 2005 and 2006, Congress passed a waiver to the MCA exemption to overtime that means that delivery drivers who use vehicles weighing less than ten thousand pounds aren’t subject to the MCA exemption from overtime: they get overtime if they work more than forty hours in a workweek, even if their employer is a motor carrier, even if they drive, and even if they are paid a salary. In fact: that’s the point. Read on.
So, the case the Fourth Circuit decided involved three district sales managers (they don’t sound like employees entitled to overtime, right?) who more than occasionally had to make deliveries of product their assigned delivery drivers were too overwhelmed to make. May I pause here, digress, and introduce the company they worked for? Because it’s a bakery, but it’s also a motor carrier, which is always interesting. Make the product, deliver the product.
Schmidt Baking Co. began in 1886. I haven’t researched the company at all, but its website claims that Elizabeth Mimms crossed the Atlantic in 1873 to pursue the American Dream, married another German immigrant Peter Schmidt in 1874, quickly gave birth to six kids and to the company that survives today. Seriously, their words. Which I like. A lot.
Elizabeth baked delicious loaves of bread in her kitchen and Peter delivered them fresh every day by horse and buggy. Word spread quickly about “Mrs. Schmidt’s bread.” It was uncommonly delicious, and as the list of satisfied customers grew, so did the fledgling company.
I became really hungry reading the website, and I would love to try their products, but they don’t distribute in the Carolinas, alas. Cuz I think it would kill in the Carolinas.
Peter’s horse and buggy undoubtedly weighed-in at fewer than ten thousand pounds. Were his district sales managers borrowing his seventeenth century ride today, the legal result would be the same. The present day fleet Schmidt used was a “mixed fleet” of box trucks and other vehicles, some weighing more and some less than ten thousand pounds. But what persuaded the Fourth Circuit panel was that the plaintiffs in the case often used their own personal vehicles to make the deliveries—and they weighed less than ten thousand pounds and fell within the 2005/6 waiver. And you can imagine it. The dedicated drivers are out making deliveries, but they aren’t going to make it back to pick up the product in time to get it out to the other customers, so the district sales managers, responsible to ensure that all deliveries are made no matter what, hop in their own cars and get it done.
That’s why the Fourth Circuit gave the district sales managers a “win” and remanded their FLSA case back to the district court. Lawyall.com will follow the case to see what happens.
Okay, so what was that “larger point” I was alluding to earlier that is beyond trucking companies and food companies who also deliver their own products? It’s that salaried, exempt employees do sometimes perform non-exempt work. Employers need to exercise caution here because depending on the circumstances, an obligation to pay overtime can arise. Managers can perform non-exempt work without falling outside the exemption, but often it’s a question of degree, quantity. And if you’ve simply given someone a title, you’re really ignoring the rules in the first place. Duties matter. The most.
Check out the basics in Should You Be Paying Your Managers Overtime. But remember, those are the general rules. Be sensitive to situations where you are either requiring or permitting exempt employees to perform non-exempt work, and in what amounts/time periods. It could matter. A lot.