Court_of_Appeals_3rd_Circuit_SealCo-authored by Abad Lopez and Noah Finkel

The Third Circuit put a screeching halt to the contention that drivers must actually cross state lines to be exempt from overtime under the Motor Carrier Act (“MCA”). In Resch v. Krapf’s Coaches, Inc., the court ruled that drivers were exempt from overtime based on the mere possibility of driving across state lines. In a broad interpretation of “interstate commerce” under the MCA, the court ruled that it does not matter whether the driver in question actually makes an interstate run, so long as the driver is subject to being assigned to such a run at any time.

The case was filed as a collective action by drivers for Krapf’s Coaches Inc. (“KCI”) alleging that they had been improperly denied overtime wages.  KCI provided bus and shuttle services on set routes—out of thirty two set routes, only four crossed state lines. In fact, during the class period, the share of total revenue from KCI’s interstate routes fluctuated between 1.0% to 9.7%, and of the total trips that plaintiffs drove, only 1.3% required them to cross state lines. Indeed, several plaintiffs never made a single out-of-state run. Not surprisingly, plaintiffs argued that since the company derived such a small percentage of its revenue from interstate routes, they were not subject to the MCA exemption, and thus should be paid overtime.

Conceding that they were employed by a motor carrier and, as drivers of motor vehicles, were subject to U.S. Department of Transportation (“DOT”) regulation, the only dispute was whether plaintiffs—many of whom rarely or never crossed state lines—satisfied the requirement of engaging in activities “in interstate commerce” within the meaning of the MCA. In finding for KCI, the court ruled that, despite the small percentage of routes that crossed state lines, there only need be a “reasonable expectation” that the plaintiffs might have to cross state lines during the course of their duties. Further, since KCI retained the sole discretion to assign any driver to any route, including any interstate routes, those drivers could at all times reasonably expect to engage in interstate commerce. The character of their duties, which required drivers to be available to make interstate runs at any time, made them exempt from overtime under the MCA.

KCI’s involvement in interstate commerce, albeit relatively slight, allowed it to take advantage of a provision in the MCA which exempts workers subject to oversight by the DOT from overtime protections. The court made abundantly clear that the character of the duties—if such duties require interstate travel—are far more relevant  than the amount of time an employee may spend actually performing those duties. Indeed, many courts find drivers exempt under the MCA even without the possibility that they would cross state lines. In those cases, drivers are found to be exempt if their duties are part of a “practical continuity of movement of goods or people” in a larger interstate journey. Thus, even some drivers who would never be expected to cross state lines may qualify for the MCA exemption.