Written by attorney Lori Jeanne Costanzo

What is the Motor Carrier Exemption and to whom does it apply? by: Lori Costanzo

I. What is the CA Motor Carrier Exemption and to whom does it apply?

The California motor carrier exemption "is derived from a long-standing statutory scheme, found in both state and federal law." Collins v. Overnight Transportation Company (2003) 105 Cal.App.4th 171, 179. The California exemption expressly borrows and incorporates the text of federal safety regulations promulgated by the federal Department of Transportation (IWC Wage Order 4-2001, Para 3(K)(1), citing 49 CFR sections 395.1 et seq.) California's exemption, however, is even broader than its federal counterpart because it also exempts drivers who are regulated by "a parallel set of California regulations." Collins, 105 Cal.App.4th at 175.

Due to the similarity in origin and purpose, "Federal case law interpreting the FLSA [Motor Carrier] exemption is therefore instructive" in deciding whether an employee is sufficiently engaged in regulated activities to be exempt under California's own motor carrier provision. Watkins v. Ameripride Services (9th Cir. 2004) 375 F.3d 821, n.2; Building Materials & Const. Teamsters' Union v. Farrell (1986) 41 Cal.3d 651, 658 ("Federal decisions have frequently guided our interpretation of state labor provisions the language of which parallels that of federal statutes").

For example, the California Division of Labor Standards Enforcement ("DLSE") relies on the federal exemption case of Crooker v. Sexton Motors, Inc. (1st Cir. 1972) 469 F.2d 206, as authority for its enforcement position that a driver falls outside the exemption only where he "does not drive or operate a truck for any period of time during an entire workday." n11 (DLSE Enf. Man. § (emphasis added), citing Sexton Motors). To understand why the motor carrier ex-emption is applied so broadly, it is helpful to review its history and origins as part of a coherent safety regulation regime.

California’s motor carrier exemption applies to employees “whose hours of service are regulated by [. . .] the United States Department of Transportation Code of Federal Regulations, title 49, sections 395.1 to 395.13, Hours of Service of Drivers" See Wage Order No. 9-2001, subd. 3(l). Thus, drivers whose hours and requirements may be regulated by the Department of Transportation are exempt from the FLSA’s overtime requirements. [1] To be exempt, a driver must (1) drive a commercial motor vehicle [2]; and (2) transport goods in “interstate commerce." [3]

A driver satisfies the interstate commerce requirement when he transports goods across state lines. 29 CFR § 782.7(b). But even if a driver does not transport goods across state lines, he may satisfy the interstate commerce requirement if the delivery “is a practical continuity of movement" from the out-of-state point of shipment to the ultimate destination within the state. Walling v. Jacksonville Paper Co., 317 U.S. 564 (1943). Whether such a delivery qualifies as interstate commerce depends on “the essential character of the commerce, manifested by shipper's fixed and persisting transportation intent at the time of the shipment, and is ascertained from all of the facts and circumstances surrounding the transportation." Klitzke v. Steiner Corp., 110 F.3d 1465, 1469 (9th Cir. 1997) (citing Southern Pac. Trans. Co. v. ICC, 565 F.2d 615, 617 (9th Cir.1977)).

In Klizke, a carrier fulfilled customer orders by placing these orders with an out-of-state vendor. After receiving the goods in-state, the carrier delivered them to its customers. At no time did the carrier itself transport the goods across state lines. Analogizing this situation to Jacksonville Paper, the Ninth Circuit held that the carrier’s final distribution of the goods qualified as interstate commerce:

The rule of Jacksonville Paper governs here: even though the shippers did not know the goods' ultimate destinations, the orders were placed and the goods were shipped to satisfy contracts between Steiner and its customers that specified a final place of delivery within Oregon other than the Steiner warehouse. The goods were therefore in “continuous transportation" until delivered to Steiner's customers.

Klitzke, 110 F.3d at 1470.

On the other hand, if the “shipper has no fixed and persisting transportation intent beyond the terminal storage point at the time of shipment," the carrier’s delivery will not be considered interstate commerce. The Interstate Commerce Commission has held that there is no fixed and persisting intent where:

(i) At the time of shipment there is no specific order being filled for a specific quantity of a given product to be moved through to a specific destination beyond the terminal storage, and (ii) the terminal storage is a distribution point or local marketing facility from which specific amounts of the product are sold or allocated, and (iii) transportation in the furtherance of this distribution within the single State is specifically arranged only after sale or allocation from storage.

29 C.F.R. § 782.7. See also Baird v. Wagoner, 425 F.2d 407 (6th Cir. 1970).

II. Does the Motor Carrier Exemption Applies to Drivers Whose Hours Are Regulated by Title 13 of the California Code of Regulations.

In California, the motor carrier exemption also applies to employees “whose hours of service are regulated by “Title 13 of the California Code of Regulations, subchapter 6.5, section 1200 and following sections, regulating hours of drivers." See wage order No. 9-76, subd. 3(I). See also Collins v. Overnite Transp. Co., 105 Cal. App. 4th 171 (2003). Thus, a driver is exempt if he operates a commercial motor vehicle with a gross vehicle weight rating of 26,001 or more pounds. 13 Cal. Code Regs. § 1200.

Under this exemption, there is no interstate commerce requirement.

[1] See Klitzke v. Steiner Corp., 110 F.3d 1465, 1468 (9th Cir. 1997) (“For the statutory exemption to apply, the Secretary need not actually regulate the driver or his employer; it applies whenever the Secretary has the authority to regulate a driver's hours and safety.")

[2]A “commercial motor vehicle" is defined as a self-propelled vehicle used on the highways in interstate commerce to transport passengers or property and whose gross vehicle weight rating or gross vehicle weight exceeds 10,000 pounds. 49 U.S.C.A. § 31132 (West).

[3] See Johnson v. Hix Wrecker Serv., Inc., 651 F.3d 658, 660-61 (7th Cir. 2011). (“Ordinarily, the employees of a motor carrier that engages wholly in intrastate commerce are subject to the Secretary of Labor's jurisdiction, and consequently to the overtime and maximum hours provisions of the FLSA [. . .] In contrast, the employees of a motor carrier that engages in interstate commerce may come under the Secretary of Transportation's jurisdiction under the Motor Carrier Act.")

Additional resources provided by the author

12 CT 2858:10-2859:7; 2860:21-2861:6

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