Under the Fair Labor Standards Act (FLSA), 29 U.S.C. § 203 et. seq, employees of companies that are engaged in interstate commerce or have at least $500,000 revenue are generally entitled to overtime pay beyond 40 hours in a work week - unless certain exemptions apply. As most business owners should know, “interstate commerce” is defined extremely broadly to apply to almost every company. Since nearly every business buys products from another state, contracts with out-of-state companies, has a website that can be accessed out of state, or has out-of-state customers, businesses should generally assume that they are covered under the FLSA.

As noted above, the FLSA contains a number of exemptions to its overtime requirements. For example, most salaried employees are exempt (so, if you hold a salaried position, you’ll likely not get very far asking your boss to pay you extra for staying late to finish that project). As another example, most retail/service employees are exempt under 29 U.S.C. § 207(i), which exempts certain retail and service employees from the overtime requirement if they are paid largely on commission and earn an average of at least 1.5x the minimum wage.

Plaintiffs’ attorneys can easily target local trucking companies for FLSA cases, since local intrastate truckers can fall within a gap in the FLSA’s enforcement regime. Truckers who drive from state-to-state for national companies are generally exempt under the Motor Carrier Exemption (more on that later). But truckers who are paid by milage, hour, or commission for local companies, and who deliver goods entirely within the state, might not qualify in many instances. And if the company sets fair wages under the assumption that no additional overtime will be paid, the automatic 1.5x multiplier on hours over 40 can be financially devastating.

Carriers and trucking companies likely do not qualify for the retail sales exemption, which applies to an establishment that “typically . . . sells goods or services to the general public” and “serves the everyday needs of the community in which it is located.” 29 CFR 779.318(a) (emphasis added). Typically, a motor carrier or trucking company does not sell its services directly to the general public, and although it serves an important social role in a broader sense, it does not directly cater to the everyday needs of the local community in the same way a grocery store or barber shop would. In fact, prior to May 2020, federal regulations expressly listed common carriers and supporting businesses (including truck stops) as not qualifying as retail or sales businesses, and, although the specific list of non-exempt businesses was removed, the section was expressly reserved and courts have generally not extended the exemption.

Fortunately, the FLSA provides an exemption specifically for trucking companies that are otherwise subject to the jurisdiction of the Department of Transportation, known as the Motor Carrier Exemption. The analysis is done on an employee-by-employee basis. Generally speaking, drivers, driver helpers, mechanics, and loaders are exempt from the FLSA overtime requirements if they work with vehicles (over 10,000 lbs) transporting goods across state lines, goods that originated out-of-state, or goods that are destined for out-of-state. The Department of Transportation has interpreted the Motor Carrier Exemption to apply to drivers actively engaged in such interstate work, drivers who have worked in such interstate work within the past four months, and drivers that reasonably could have been called upon to perform such work within the past four months. The last category is somewhat amorphous. A business can certainly argue that its drivers are part of a “driver pool” that could all perform the same interstate work, even if some drivers end up only taking goods within state lines, although these arguments would be assessed by a court on a case-by-case basis.

Wage/hour lawsuits can have massive financial implications for companies, and the rules are complex and highly fact-dependent. The potential for strict liability and attorney fee payouts makes FLSA claims a perfect target for enterprising plaintiffs’ attorneys. Because of these risks, it is important that companies, especially trucking companies, have an attorney review their wage and overtime policies in the context of their specific business (which can change over time) before a lawsuit is filed and it’s too late to fix any problematic policies.

If you have questions about this article, or about wage and overtime policies in general, please contact Matthias Kaseorg (mkaseorg@setlifflaw.com) at 804-377-1273 or Steve Setliff (ssetliff@setlifflaw.com) at 804-377-1261.