In a new decision, the first on the subject by a federal appellate court, the Third Circuit has ruled in McMaster v. Eastern Armored Services Inc. that drivers who spend a portion of their work driving “covered” commercial motor vehicles (those over 10,000 pounds) and non-covered (those under 10,000 pounds) do not fall within the Motor Carrier Act exemption, and therefore must be paid overtime as required by the Fair Labor Standards Act (“FLSA”).  The Motor Carrier Act exemption had previously been construed to exempt interstate truck drivers (regardless of vehicle weight) from the overtime guarantees of the FLSA.  The Third Circuit (the federal appellate court whose decisions are binding in Pennsylvania, New Jersey, and Delaware) considered amendments to the FLSA contained in the Technical Corrections Act of 2008 (“TCA”), and found that Congress therein made:

“a plain statement that a “covered employee” is to receive overtime even where section 13(b)(1)—the Motor Carrier Act Exemption—would ordinarily create an exemption. We see no plausible alternative construction . . . Statutory construction points to one conclusion: ‘covered employees’ are entitled to overtime.”

Under the McMaster decision, employees who spend at least a “part” of their work week driving vehicles weighing less than 10,000 pounds are entitled to overtime pay for all time worked in excess of 40 hours in the week.  Employers who fail to pay overtime when it is due may be made to pay back wages of up to three years, in addition to attorney’s fees and other types of damages.

Collective actions by employees for overtime pay under the FLSA are on the rise.  This decision creates clear liability and therefore increased exposure for any business that employs drivers to transport property (including some delivery drivers) using vehicles weighing less than 10,000 pounds (e.g., smaller trucks and cars).