[author: Joanne Pearson]
The federal Fair Labor Standards Act (“FLSA”) provides an exemption from its overtime requirements for employees covered by the Motor Carrier Act. In essence, truck drivers of certain vehicles and support personnel involved in interstate commerce are exempt from overtime rules. Under a bill passed by the Maine Legislature and signed by the Governor this year, Maine law will now largely conform to the federal rule, making Maine companies more competitive and subject to less burdensome rules.
Under what is known as the motor carrier exemption ("MCE"), employers subject to the FLSA are not required to pay overtime to employees for whom the Secretary of Transportation has authority to regulate qualifications and maximum hours of service. In general, the MCE applies to employees who (1) are employed by a motor carrier or private motor carrier, (2) are drivers, helpers, loaders or mechanics whose duties affect the safety of operation of motor vehicles in transportation in interstate commerce, and (3) perform duties on motor vehicles weighing over 10,000 pounds.
Maine law provides a much narrower MCE from overtime for employees subject to the rules of the federal Secretary of Transportation. The Maine exemption covers only drivers and driver helpers. Only employees whose rate of pay is set by a collective bargaining agreement or by a federal contract are truly exempt. All other drivers and helpers must still be paid the “reasonable equivalent” of overtime. The statute does not define what “reasonable equivalent” of overtime means. While the Maine Department of Labor has promulgated rules for this purpose, the rules are complex and difficult to comply with.
Maine’s unique treatment of drivers has required companies doing business in multiple states to follow a different set of rules for its Maine drivers, including setting up different timekeeping and payroll systems. It also discouraged companies from basing interstate trucking operations in Maine. In response to these concerns, the Maine Legislature amended 26 MRS § 664 to largely conform Maine law to the FLSA. The amendment eliminates the “reasonable equivalent of overtime” requirement for interstate drivers and helpers who are also exempt under federal law as long as they are not paid on an hourly basis. The amendment also preserves the exemptions for drivers and helpers who have their rates of pay set by a collective bargaining agreement or a federal contract. Finally, the law requires the Department of Labor to review the impact of the change in overtime on divers and drivers' helpers and to determine whether the change in pay attracts new employers to the State of Maine. The DOL is required to report to the Legislature by January 15, 2014.
This is good news for Maine employers, especially those working in multiple states. For those employers currently paying on an hourly basis, nothing in the law prevents them from converting to a different system in order to take advantage of this change. A word of caution, however: the application of the MCE is complex and requires a fact based analysis, beyond the scope of this alert. As always, employers should take care before classifying an employee as exempt under the MCE or any other provision of Maine of federal law.