In a recent decision, the Fifth Circuit Court of Appeals, in Allen v. Coil Tubing, held that a court should look at whether the duties of a class of employees—rather than the duties of individual or some sub-set of employees—substantially affect the safety of interstate transportation, and affirmed a district court’s ruling that employees of an oil well service company were exempt from the overtime provisions of the Fair Labor Standards Act (“FLSA”) under the Motor Carrier Act (“MCA”).
Under the FLSA, employers are required to pay overtime compensation to any employee working more than forty hours a week. The MCA, however, exempts any employer from paying overtime compensation to an employee when (1) the employer engages in interstate commerce (i.e. is subject to Department of Transportation (“DOT”) jurisdiction) and (2) the employee’s activities affect the safety of interstate transportation.
In Allen, Plaintiffs alleged that they worked more than forty hours a week and that their employer, Coil Tubing Services, L.L.C. (CTS), wrongfully denied them overtime pay in violation of the FLSA.
Granting summary judgment in favor of CTS, the district court held that on a company wide basis, CTS’s employees engaged in safety-affecting interstate activities, and thus the MCA exemption applied. In coming to its conclusion, the district court first analyzed the positions held by a cross-section of the Plaintiffs and found that five of the positions had similar enough job duties to be grouped together into a class it termed Field Service Employees (“FSEs”). The district court then looked at all FSEs within CTS and found that because seven percent of projects required these employees to drive across state lines and the duties were assigned indiscriminately, the activities of the FSEs class directly affected the safety of interstate transportation. Plaintiffs subsequently appealed.
The sole issue on appeal was whether an employee-by-employee, district-by-district or company-wide analysis was the proper approach in measuring whether the interstate activities of the FSEs substantially affected the safety of interstate transportation.
The Court of Appeals first noted, however, that by adhering to the decision of the Fifth Circuit in Songer v. Dillon, the district court properly measured whether the activities of CTS’s employees had a substantial, direct effect on the safety of interstate transportation when it concluded that the FSEs had a reasonable expectation of crossing state lines given their duties.
The Court of Appeals then found that precedent (namely the Fifth Circuit’s decision in Songer) and relevant Department of Labor regulations require a court to analyze and measure employees’ activities by class, not by geography or even individually. Thus, the Court of Appeals found that the district court correctly analyzed CTS’s employees by class on a company wide basis instead of by geography as advocated by Plaintiffs. In support of its finding, the Court of Appeals noted that when CTS divided itself into six geographic districts, those districts operated under a single DOT number, solicited and accepted projects outside their areas, borrowed personnel and equipment from another, and therefore were not separate entities.
In a strongly worded dissent, Judge Dennis chided the majority for misreading and misapplying the law and disregarding the factual evidence in favor of creating legal fictions. Turning to the history of the Act itself, Judge Dennis emphasized that the MCA (and legal precedent) require courts to analyze whether an employee’s job duties are reasonably likely to affect the safety of interstate transportation on an individual basis, not by a group or class based analysis.
The Fifth Circuit’s decision allows employers to look at an entire class of employees to see if, as a group, their activities substantially affect the safety of interstate transportation, rather than looking at just a single employee or sub-group of employees working at a particular location or in a geographic area. Consequently, the MCA exemption may apply to employees whose duties rarely or never affect the safety of interstate transportation. Employers in the Fifth Circuit who have evaluated employees and determined they did not meet the MCA exemption should take another look if the reason was that the employee’s job duties were not reasonably likely to affect the safety of interstate transportation.