Owner Operators - The Grapevine

New Overtime Rules
You might have missed it, but Congress passed a law, which may change the way you do business. There are significant potential consequences from the amendment to the so-called Motor Carrier Exemption to the Fair Labor Standards Act. Historically, before the passage of this law, employees of public or private motor carriers who are drivers, drivers' helpers, loaders, or mechanics, whose work could arguably affect the safety of operation of motor vehicles in interstate commerce, are not entitled to overtime due to something called the 13(b)(1) or Motor Carrier exemption.

Back in June, Congress changed the law and severely limited the application of that exemption. Now, it appears that what is critical is to determine whether those employees are or are not entitled to overtime is the type of vehicle they are either driving, loading, or working on. Before this Act, an employer could argue that as long as the employer was a motor carrier, it did not matter whether these types of employees performed work on "motor vehicles" or "commercial motor vehicles." Now, according to this new law, the type of vehicle those particular employees work on is critical and will determine whether or not they will be subject to overtime.

In this new law, the term "commercial motor vehicle" includes the following vehicles:

  • Vehicles weighing ten thousand one (10,001) pounds or more
  • Vehicles designed or used to transport more than eight (8) passengers (including the driver) for compensation
  • Vehicles designed or used to transport more than fifteen (15) passengers without compensation
  • Vehicles used in transporting hazardous materials

If a vehicle does not fit into one of these four categories described above, it is a "motor vehicle."

Simply put, from June 6, 2008 forward, any driver, driver's helper, loader, or mechanic whose work, in whole or in part affects the safety of operation of motor vehicles will be subject to overtime.

The critical reference to "whose work in whole or in part," suggests that an employee who may historically have been exempt from overtime, who performs any duties on "motor vehicles" is now entitled to overtime unless some other exemption is applicable besides the Motor Carrier Exemption. An example might illustrate how the exemption could be lost. Suppose, for example, shop mechanics perform work on a variety of "commercial motor vehicles," but on occasion perform work on "motor vehicles." Because they worked "in part" on "motor vehicles," they would lose their exemption from overtime and would be entitled to statutory overtime.

The change is significant and will affect such industries as trucking, limousine carriers, and other "motor carriers" both public and private.

Before this law, the 13(b)(1) exemption applied to those employees who worked only some portion of the week as a driver, driver's helper, loader, or mechanic if their work affected the safety of operation of "motor carriers" in interstate commerce. It was irrelevant how much of the employee's time was actually devoted to such safety-affecting work in the particular work week. Furthermore, the employee was not entitled to overtime even in a work week when the employee performed no work directly affecting the safety of operation of "motor vehicles" in interstate commerce (i.e., crossing state lines or completing an intrastate leg of an interstate trip).

The new law appears to change that analysis. From June 6, 2008 forward, an employer will have to break down the duties of its drivers, driver's helpers, loaders, or mechanics perform. The overtime exemption dramatically changes if one of those employees occasionally performs duties on a "motor vehicle," as opposed to a "commercial motor vehicle." Thus, the employee would apparently be entitled to overtime for the entire week in which he performed any work on a "motor vehicle." On the other hand, if the employee did not work on any "motor vehicles," but restricted himself to work on "commercial motor vehicles," then no overtime would be owed and the 13(b)(1) exemption would be preserved.

The next question is what these industries should do to maintain the exemption. I would suggest assigning a particular employee or group of employees to work on motor vehicles, such as part-time workers or anyone who wouldn't work more than 40 hours per week or simply, contract out this type of work.

California Safety Director and Four Drivers Sentenced in False Log Book Scheme

On July 21, 2008 in the U.S. District Court, Fresno, California, five defendants were sentenced after pleading guilty for false statements and aiding and abetting relating to their false driver's log book scheme. Sukhwinder Singh, Tarsem Singh Pahal, Bhinder Singh Raju, Daljit Singh, and Jaspreet Singh were sentenced for keeping false driver's log books while employed as truck drivers for Nijjar Brothers Trucking, Inc. of Madera, California. Mr Sukhwinder Singh, the company's Safety Director, was sentenced to six-month's home detention and twenty-four-month's probation. The remaining defendants were sentenced to three-month's confinement, three-month's home detention, and twenty-four-month's probation. In addition, all defendants were ordered not to work in the trucking industry unless approved by the Probation Office.

During the OIG investigation, a driver for Nijjar Brothers Trucking, Inc caused a four-vehicle collision, killing a father and his 13-year-old son and seriously injuring six others. The driver, Baljinder Singh, had been driving for at least nineteen hours. He was subsequently convicted and sentenced for falsifying his logbook entries and served time in jail. As part of a sentencing agreement, the owners of the trucking company were required to inactivate their DOT numbers, dissolve the company, and each pay a fine of $50,000. The OIG investigation was conducted with assistance from the FMCSA and the California Highway Patrol.