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A federal appeals court has overturned a lower court ruling and held that district sales managers for a bakery who frequently used their own cars to make deliveries are entitled to overtime under the Fair Labor Standards Act.
The plaintiffs worked as district sales managers for Baltimore-based Schmidt Baking Co. Inc. for a period after 2008, according to Friday’s ruling by the 4th U.S. Circuit Court of Appeals in Richmond, Virginia, in Ronald J. Schilling Jr.; Russell E. Dolan; Jonathan A. Hecker, individually and on behalf of other similarly situated employees v. Schmidt Baking Co. Inc.
Professional motor carriers such as Schmidt, which delivers its baked goods to restaurants, grocery stores and other small businesses, are generally exempt from the FLSA’s requirement that employers pay overtime for employees who work more than 40 hours per week, according to the ruling.
However, in 2008 Congress enacted the SAFETEA-LU Technical Corrections Act of 2008, which waived this exemption for motor carrier employees whose work, in whole or in part, affects the safety of vehicles weighing 10,000 pounds or less.
The plaintiffs filed suit in U.S. District Court in Baltimore claiming they were entitled to overtime under the FLSA because of the Technical Corrections Act and under Maryland law. The court ruled in Schmidt’s favor.
On appeal, a three-judge appeals court panel overturned the lower court ruling on the FLSA’s coverage. The central issue on appeal is whether the plaintiffs are ‘covered employees’ under the (Technical Corrections Act) entitling them to overtime compensation under the FLSA,” said the ruling.
While Schmidt operated a mixed fleet of trucks of varying sizes, plaintiffs spent between 65% and 85% of their time making deliveries, using their personal vehicles for between 70% and 90% of their deliveries, according to the ruling.
Schmidt argued that because the plaintiffs worked on a mixed fleet, or a fleet of vehicles weighing both more and less than 10,000 pounds, it was not obligated to pay overtime.
But the appeals court panel disagreed, citing the plaintiffs’ use of their personal vehicles. “There is nothing in the language or structure of the statute indicating that Congress intended to limit the reach of the (Technical Corrections Act) to exclude employees working on mixed fleets of vehicles,” said the ruling, in overturning the lower court decision, and holding the employees are entitled to overtime under the FLSA.
It upheld the lower court’s ruling dismissing the case under state law, on the basis it did not include an exception to the exemption.
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