Employment & Labor Insider

In a significant win for employers in the transportation and logistics industries, the U.S. Court of Appeals for the Seventh Circuit recently reaffirmed that drivers may fall within the Motor Carrier Act exemption to the Fair Labor Standards Act, even when their routes never cross state lines. The exemption will apply as long as the in-state transportation of goods is part of a continuous interstate journey.

Background 

In Stingley v. Laci Transport and Johnson v. Bosman Trucking, shuttle truck drivers brought class and collective claims alleging that the trucking companies failed to pay overtime wages in violation of the FLSA and Illinois law. (The two cases were later consolidated.)

The plaintiff drivers transported trailers of auto parts between storage lots and a nearby assembly plant for Ford Motor Company, all of which were in the Chicago area, in Illinois.

Although the drivers never crossed state lines, the parts they moved were manufactured in other states and were temporarily staged at Illinois storage lots before being delivered to the Illinois assembly plant. The district court ruled in favor of the employers, and a three-judge panel of the Seventh Circuit agreed.

When intrastate transportation qualifies as "interstate"

The FLSA generally requires overtime pay for hours worked in excess of 40 in a workweek. However, the MCA exemption applies to certain drivers whose work falls under federal transportation safety regulations, which generally apply to interstate truck drivers. The Seventh Circuit panel emphasized that even local in-state routes can qualify as "interstate" if they are one step in a larger, continuous movement of goods across state lines.

The key issue was whether the drivers’ routes between storage lots and the assembly plant, all in Illinois, were part of a continuous interstate movement of goods that included the states where the parts were originally manufactured and from which they were shipped.

Several facts were important to the court’s finding that the MCA exemption applied. Ford shipped parts from out of state based on anticipated production needs. The storage lots were used only to stage parts briefly, typically for a few days, before final delivery to the assembly plant. The parts were not altered or processed while in storage, and Ford maintained control over where and when they moved. Taken together, those facts showed that the storage step was just a temporary pause in an ongoing interstate journey, not the end of it.

The drivers argued that the storage lots and the assembly plant should have been treated as a single location, or as they called it the “Ford Assembly Campus.” Under that interpretation, the interstate movement would have ended when the parts reached the storage lots.

However, the district court and the Seventh Circuit noted that the storage lots and the assembly plant were miles apart and that transportation between them required travel on public roads. Records also identified the assembly plant – not the storage lots – as the final destination of the shipments. Simply being “close” was not enough for the facilities to be one unified final destination.

Good news for employers

This decision confirms that the MCA exemption may apply even when drivers operate entirely within one state.    

Although determining whether goods are traveling in a continuous interstate journey is very fact-intensive, the Seventh Circuit’s decision provides helpful clarity for employers managing complex supply chains. When local transportation of goods is part of an ongoing and continuous interstate shipment, the MCA exemption may apply, reducing exposure to overtime claims from intrastate drivers.

We will continue to monitor developments in this area of law and will provide further updates and analysis as they become available. If you need guidance, please contact any member of Constangy’s Wage and Hour Compliance & Litigation Practice Group.