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Intrastate Drivers Completing Interstate Movement Qualify for Overtime Exemption

    Client Alerts
  • January 08, 2010

Section 13(b)(1) of the Fair Labor Standards Act provides an exemption from overtime requirements for drivers and related workers under the jurisdiction of the Secretary of transportation.  Most frequently, this exemption is used for drivers and mechanics working on interstate shipments.  However, as demonstrated by a new decision from the Seventh Circuit Court of Appeals, drivers who never cross state lines can still qualify for the exemption in some circumstances.

In Collins v. Heritage Wine Cellars, Ltd., the plaintiffs transported wine from a Chicago warehouse to retail stores throughout Illinois.  The wine was delivered to the Chicago warehouse by outside trucking companies under the direction of the importer, Heritage.  The drivers claimed that because they exclusively drove intrastate routes, they were not under federal DOT's jurisdiction, and therefore, the Section 13(b)(1) exemption did not apply.

The Seventh Circuit disagreed, affirming dismissal of the plaintiffs' claims, despite the fact that Heritage never registered as an interstate carrier with DOT.  The court concluded that the drivers were subject to federal jurisdiction because they were simply the final leg of an interstate shipment.  DOT has the power to regulate such movements, even if it declines to do so.

The Seventh Circuit's decision rested on the degree to which the wine was altered during its storage in the Chicago warehouse.  At some point, the interstate nature of the movement can end if there is substantial change to the product during storage.  In this case, the wine was not processed, relabeled, or even deliberately aged while in storage.  The plaintiffs claimed that removal of shrink wrapping and storage of the wine interrupted the interstate movement.  The court concluded that this did not outweigh the fact that the wine was ordered and stored with delivery to final retail customers firmly in mind.

Employers claiming the Section 13(b)(1) exemption for final delivery drivers should carefully analyze the nature of the movements, storage and processing of the cargo in order to make certain that the movements meet the requirements for DOT jurisdiction of a continuous interstate shipment.