Intrastate truck drivers for one of the largest distributors in the United States have fallen under the interstate overtime pay exemption due to loopholes in the law. Now, truckers are telling the Ninth Circuit that the courts have got it all wrong.
The dispute involves truck drivers for Berkshire Hathaway-owned McLane Foodservices’ Riverside, Calif., distribution center. Despite drivers claiming that they drive “exclusively” in California, they have been exempt from overtime pay.
Per federal law, interstate truck drivers are exempt from overtime pay. Intrastate truck drivers, on the other hand, are not. However, how that law has been interpreted by the courts has included some intrastate truckers in the exemption.
The Ninth Circuit Court of Appeals ruled that intrastate truck drivers are part of interstate commerce if the load they carry was originally shipped from out of state. If the intrastate route is just the last part of the delivery, they remain exempt.
In this case, McLane ordered products from out-of-state suppliers to deliver to restaurants mostly within California. Inbound shipments to the Riverside warehouse come from a different carrier. About half of those shipments are managed by McLane’s in-house brokerage. McLane’s drivers execute outbound shipments from the warehouse.
Between the two lead plaintiffs in the class-action lawsuit, nearly 900,000 cases were delivered within California. More than half of those cases came from suppliers outside of the state. Once the products reached the Riverside warehouse, they were stored for less than two weeks before reaching their final destination.
A district court found that the distribution center acted as temporary storage for products en route to a specified destination on an interstate journey. Essentially, the warehouse may interrupt the interstate journey, but it does not end it.
Thus, the intrastate truck drivers were seen as completing that interstate journey, exempting them from overtime pay.
McLane’s drivers are appealing the decision. They argue that the district court focused on the wrong shipper. It all comes down to when the interstate journey ended.
The district court found that McLane was the relevant shipper in deciding the beginning and end of the journey. McLane acted as a middleman between restaurants and suppliers. Specifically, it fulfilled the needs of restaurant clients by ordering and reselling products from out-of-state suppliers. That created an interstate journey from the out-of-state supplier to the restaurants within California.
However, the intrastate truck drivers argue that the suppliers are the relevant shippers. Before reaching McLane’s Riverside warehouse, the products were owned by the suppliers, who had complete control of the transportation.
The final destination of the suppliers’ products was McLane’s Riverside warehouse, not the restaurant. In fact, the suppliers did not care what happened to their products after reaching McLane’s warehouse. Once there, the title of the goods was transferred to McLane. That, the intrastate drivers argue, is where the interstate journey ends.
In past cases, the Ninth Circuit ruled that if goods are headed to an unspecified customer, the transport is intrastate. Conversely, if there is a predetermined customer, it is interstate commerce. The district court said McLane fulfilled specific orders, so the final destination was predetermined.
But the intrastate truck drivers disagree. They state that McLane’s interstate shipments are based on sales forecasts, not specific client orders. When products arrive at the warehouse, they enter general inventory, waiting for customer orders.
In this view, the final destination for the out-of-state suppliers is McLane, and there is no fixed destination after that. Therefore, the interstate journey ends at the Riverside distribution center, resetting the transaction and making the delivery intrastate.
Lifting the overtime exemption
Though other courts have made similar rulings, confusion remains. A bill in Congress could clarify this issue.
The Fifth Circuit Court of Appeals ruled on a similar case in October 2024. The court found that intrastate oil tanker drivers in Texas are exempt from overtime pay since the oil they are dropping off at a pipeline is destined to an out-of-state refinery.
In that case, Judge Andrew Oldham pointed out that the Department of Transportation relies on a 1971 interpretive rule despite statutory changes since. That has caused confusion in the courtroom.
“It is unclear how the 1971 rule comports with the text of the relevant statutes,” Oldham stated. “And it is unclear how our precedents comport with the 1971 rule, which says nothing about factors like the good’s ultimate destination or the shipper’s state of mind. Incoherent as they might be, the precedents bind us.”
Understanding what constitutes an interstate journey may be irrelevant if the overtime pay exemption is removed. The Guaranteeing Overtime for Truckers Act aims to do just that.
Known as the GOT Truckers Act, HR1962 and S893 would amend the Fair Labor Standards Act of 1938 to remove the motor carrier overtime pay exemption.
The Owner-Operator Independent Drivers Association supports the GOT Truckers Act and launched a campaign on its Fighting For Truckers website.
“The Fair Labor Standards Act denies truck drivers guaranteed overtime pay,” OOIDA wrote. “Unlike nearly all other blue-collar employees, this exemption means truckers aren’t guaranteed time-and-a-half pay if they work more than 40 hours a week because of traffic, bad weather or delays at loading docks. Since many truckers are often only paid for the miles they drive, they don’t get fair pay for all of the hours they work. The FLSA exemption only serves to devalue a trucker’s time.” LL
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