Laws Differ on Motor Carrier Exemption

The Fair Labor Standards Act (“FLSA”) requires employers to pay most employees the statutory overtime rate of 1 ½ times regular wages for hours worked in excess of 40 in a single workweek. However, the under the federal Motor Carrier Act and similar state laws, many companies can take advantage of an exemption from overtime pay for certain truck drivers and employees in other positions related to commercial conveyances.  

An Appellate Court recently upheld a New Jersey Department of Labor and Workforce Development ruling that the state’s version of this exemption applies only to businesses primarily engaged in trucking or moving and storage, and not to companies that “transport goods incident to a different business purpose.” This was not good news for the giant furniture retailer Raymour and Flanigan, which was on the wrong end of the decision [In re Raymour & Flanigan Furniture, 405 N.J. Super. 367 (App. Div., March 2, 2009)]. The company argued that its trucking operation was completely separate from its retail furniture business, and that New Jersey’s narrowly-written trucking industry exemption therefore applied with respect to its transportation and distribution employees.  The Court disagreed, mandating that approximately 500 current and former delivery workers share more than $2 million in back overtime wages, much to the chagrin of the retailer.  

The impact of this case cannot be understated.  Under the FLSA, when federal and state wage laws are in conflict, employees must be given the benefit of the law that is the most favorable to them. In this case, while the truckers in question might have been covered by the federal exemption from overtime pay, the narrower New Jersey exemption did not cover them.  Not only New Jersey companies, but also other businesses across the nation must be careful to consider the state laws as well as federal laws when attempting to determine whether employees are entitled to overtime pay.