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January 13, 2006
Dear Name*,
This is in response to your letters requesting an opinion on the application of section 13(b)(1), 29 U.S.C.
§ 213(b)(1) (copy enclosed), of the Fair Labor Standards Act (FLSA) to your
client, a large beverage distributor located in Name*. The distributor operates a large complex of adjoining warehouses from which it
distributes beverages to customers within Name*. Slightly less nthan half of the beverages sold by the distributor are from manufacturers and
suppliers located outside the State of Name*.
The distributor’s suppliers ship the beverages by common carriers and virtually all the beverages arrive on
wooden pallets. Some are kept on the pallets for delivery to the distributor’s
customers and approximately one quarter of the beverages must be restacked and
repalletized by the distributor before delivery. For “those beverages that are
kept on the pallets for delivery,” the distributor’s drivers must collect the
pallets after delivery and return them to the distributor’s warehouse. Returning
pallets to the warehouse is a “significant part of each driver’s daily duties.”
The distributor returns “some of those pallets” to the suppliers of the
beverages and sells others on the open market in Name*. The distributor ships about one percent of the pallets to out-of-state
suppliers. With the exception of one or two of the 57 drivers, all of the
distributor’s drivers deliver a mix of beverages every day that come from both
out-of-state suppliers and in-state suppliers.
You estimate that about one percent of the distributor’s total beverages are received from the suppliers in
kegs. The distributor returns all of the empty kegs to the suppliers, including
to out-of-state suppliers, and you describe the collection of empty kegs as a
“significant part” of each driver’s daily duty. Some suppliers make their own
arrangements for the return of the kegs from the distributor’s warehouses and
the distributor arranges for returning the others. As with the returned
pallets, suppliers return your client’s deposit money upon return of the empty
kegs.
Section 13(b)(1) applies to “any employee with respect to whom the Secretary of Transportation has power to
establish qualifications and maximum hours of service pursuant to the
provisions of section 31502 of Title 49” (the “Motor Carrier Act” or “MCA”). The
Department of Transportation (“DOT”) has jurisdiction over the safety-affecting
employees of motor carriers when the employees operate in interstate commerce,
as defined in the MCA. There is no question that the distributor is a motor
carrier and that the drivers are safety-affecting employees. See 29
C.F.R. §§ 782.1-.3. The only issue is whether the distributor’s drivers
are operating in interstate commerce under the MCA, as interpreted by DOT. The
Wage and Hour Division’s enforcement position for section 13(b)(1) provides
that an intrastate leg of an interstate trip is in interstate commerce if it
“forms a part of a ‘practical continuity of movement’ across State lines from
the point of origin to the point of destination.” 29 C.F.R. § 782.7(b)(1);
see also WH Opinion Letter January 11, 2005 (copies enclosed).
The transportation of pallets and kegs from the customers to the warehouse for shipment back to the
out-of-state suppliers constitutes interstate commerce because it is part of a
practical continuity of movement from one state to another. The intrastate leg
of the shipment is merely a part of the continuous flow of products moving in
interstate commerce, because the ultimate out-of-state “destination was
envisaged at the time the transportation commenced.” Bilyou v. Dutchess Beer
Distribs., Inc., 300 F.3d 217, 224 (2d Cir. 2002). The court in Thomas
v. Wichita Coca-Cola Bottling Co., 968 F.2d 1022, 1025 (10th Cir. 1992)
(copy enclosed), stated that “[t]he regular pick up of empty containers
destined for out-of-state bottling facilities has been held to both place
employees in interstate commerce and exempt them from the overtime provisions
of the FLSA under the motor carrier exemption.” As the court recognized, the
key focus is not upon the amount of time employees spend handling the empty
containers, so long as there is interstate commerce. As you represent, the
delivery of pallets and kegs to customers and returning them to the warehouse
is a “significant part” of each driver’s daily duty. Those drivers who
regularly transport pallets and kegs, some of which are destined for
out-of-state suppliers, appear easily to fall within DOT’s jurisdiction, which
applies for a four-month period beginning on the date a driver could have been
called upon to, or actually did, engage in interstate commerce. DOT’s
jurisdiction ceases only if, at the end of the four-month period, the driver is
no longer engaged in interstate commerce or, in the regular course of his or
her employment, is no longer subject to making such a trip. See WH
Opinion Letters July 29, 2005 and August 17, 2004 (copies enclosed). Thus, these
drivers qualify for the section 13(b)(1) exemption. Consequently, an analysis
of the intrastate movement of the beverages to your customers is unnecessary to
determine the application of the section 13(b)(1) exemption to these drivers. See
Bilyou, 300 F.3d at 224. Your letter did not provide any information
regarding the work of the one or two drivers who do not deliver a mix of
out-of-state and in-state beverages (and pallets and kegs) on a daily basis, so
we are unable to assess their status under DOT’s four-month rule.
This opinion is based exclusively on the facts and circumstances described in your request and is
given based on your representation, express or implied, that you have provided
a full and fair description of all the facts and circumstances that would be
pertinent to our consideration of the question presented. Existence of any other
factual or historical background not contained in your letter might require a
conclusion different from the one expressed herein. You have represented that
this opinion is not sought by a party to pending private litigation concerning
the issue addressed herein. You have also represented that this opinion is not
sought in connection with an investigation or litigation between a client or
firm and the Wage and Hour Division or the Department of Labor. This opinion is
issued as an official ruling of the Wage and Hour Division for purposes of the
Portal-to-Portal Act, 29 U.S.C. § 259. See 29 C.F.R. §§ 790.17(d),
790.19; Hultgren v. County of Lancaster, 913 F.2d 498, 507 (8th Cir. 1990).
We trust that the above information is responsive to your inquiry.
Sincerely,
Alfred B. Robinson, Jr.,
Deputy Administrator
Enclosures:
FLSA § 13(b)(1)
29 C.F.R. § 782.7
Thomas v Wichita Coca-Cola Bottling Co
WH Opinion Letters January 11, 2005, July 29, 2005, and August 17, 2004
* Note: The actual name(s) was removed to preserve privacy in accordance with 5 U.S.C. § 552 (b)(7).
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