Shipping interstate or intrastate? It matters for overtime — Business Management Daily: Free Reports on Human Resources, Employment Law, Office Management, Office Communication, Office Technology and Small Business Tax Business Management Daily

Shipping interstate or intrastate? It matters for overtime

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Due to a legislative quirk, the Fair Labor Standards Act (FLSA) doesn’t cover many employees who deliver goods via the nation’s highways. Instead, the drivers are excluded under the FLSA’s motor carrier safety exemption. Work hour rules set by the Secretary of Transportation apply if drivers carry goods between states, and are not merely being shipped within the state.

But it’s not so simple: Each case is considered on its own merits. To claim the exemption, employers must be prepared to prove that the goods they are shipping will cross state lines, even if they temporarily pause at a warehouse within the state. As the following case shows, direct testimony about how the goods move is the best approach.

Recent case: Drivers for Souza’s Milk Transportation claimed they worked more than 40 hours per week without overtime pay. They sued, asking the court to compel the company to cover them under FLSA overtime rules. The company conceded their hours, but said it was engaged in interstate commerce, so its drivers weren’t covered by the FLSA.

To prove its case, the company’s owner testified that the dairy products the drivers moved from one location to another within California more often than not continued their journey to locations in other states.

The court said the owner’s testimony was proof the goods might be interstate commerce, and refused to award summary judgment to the drivers. (Rees v. Souza’s Milk Transportation, No. 05-00297, ED CA, 2007)

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