Greetings transportation managers. The following commentary constitutes the second of three installments that collectively highlight what transportation managers should consider in analyzing whether trucking-industry dispatchers are "exempt" from receipt of overtime compensation under the federal Fair Labor Standards Act ("FLSA"). In that regard, I posted the first installment on June 30, 2011, and I hope you enjoyed it. Today's blog post focuses on: (1) the U.S. Department of Labor's position concerning whether dispatchers are exempt from overtime; and (2) several illustrative court decisions that address the topic and arrive at divergent conclusions.

U.S. Department of Labor's Position

The U.S. Department of Labor ("DOL") recently revised its Field Operations Handbook ("FOH")(on November 29, 2010), which is an internal guidance manual that DOL agents rely upon when investigating alleged wage and hour violations, including those concerning so-called "misclassification" of workers as "exempt" from overtime compensation. Through the FOH, the DOL articulates its internal, administrative interpretations of applicable laws and regulations. The current FOH fails to articulate the DOL's internal position concerning whether trucking-industry "dispatchers" are properly designated as exempt from overtime. However, the predecessor FOH (specifically, Chapter 22, dated August 28, 1987) does set forth the DOL's internal position - that under most circumstances, dispatchers should not be designated as exempt from overtime pay requirements.

According to the DOL, "[i]t is possible...for a dispatcher to be exempt as an executive employee where the facts show that his primary duty is the management of the terminal or a subdivision thereof and he meets all other requirements..." of the pertinent regulation. In my experience, the overwhelming majority of "dispatchers" are not vested with the authority necessary to be properly characterize them as "executive" employees (e.g., regularly directs the work of two or more full-time employees, authority to hire and fire). Thus, (rightly or wrongly) transportation managers more frequently rely upon the so-called "administrative" exemption, with mixed levels of success.

According to the DOL, the "administrative" exemption is likely to be inappropriate in the case of "dispatchers" because "[d]ispatchers who apply their knowledge in following prescribed procedures and techniques are not exercising discretion and independent judgment within the meaning of the..." regulations. The DOL further writes, in pertinent part:

Truck dispatchers' duties of routing trucks and assigning drivers are, for the most part, dependent upon their knowledge of types of trucks required for various kinds of goods, their knowledge of the city and suburbs, and their knowledge of the locations of various factories and buildings. Such duties do not ordinarily involve discretion and independent judgment at the level contemplated by the..." regulations.

Court decisions have, however, looked at this differently in some situations.

Lack of Judicial Consensus

Whether a particular dispatcher is, or group of dispatchers are, "exempt" from receipt of overtime compensation is a highly fact driven proposition. For this reason, courts in those few jurisdictions that have grappled with the issue are not in accord. The below sampling of judicial opinions confirms that there is no "one-size-fits-all" answer to the "exemption" question.

1. Rock v. Ray Anthony International, LLC (11th Cir., May 26, 2010). The court addressed whether a dispatcher for a crane rental company qualifies as exempt from overtime under the "administrative" exemption to the FLSA. The court concluded that the dispatcher was appropriately characterized by his employer as exempt from overtime pay. The court determined that the dispatcher's duties of: (1) customer communication; (2) choosing the appropriate crane for specific jobs; (3) assigning operators to cranes; (4) overseeing other employees: (5) preparing and reviewing job tickets; (6) and maintaining the crane rental schedule were duties consistent with the requirement that an exempt employee's primary duties directly relate to the management or general business operations of the employer and that he or she exercise discretion and independent judgment. The court concluded that the dispatcher effectively managed the crane rental department of his employer's business, and was exempt from overtime.
2. Iaria v. Metro Fuel Oil Corp. (U.S. District Court for the Eastern District of New York, Jan. 30, 2009). On Metro Fuel's motion for summary judgment, the court addressed whether dispatchers for a heating oil delivery company are exempt from overtime under the "administrative" exemption to the FLSA. The dispatchers primary duties entailed: (1) routing heating oil deliveries; (2) tracking the drivers throughout the day; and (3) handling calls from customers when customer service personnel were unavailable. According to the court, "...plaintiffs' [dispatchers'] duties relate more directly to the service and product that Metro Fuel provides - the delivery of fuel for heating - than they do to servicing the business," and thus, "[t]he tasks performed by [the dispatchers] were not administrative tasks of the type every business must undertake...." The court also relied on Chapter 22 of the FOH (above) in support of their conclusion that Metro Fuel's dispatchers did not exercise discretion and independent judgment. Therefore, Metro Fuel could not, for purposes of summary judgment, show that its dispatchers were not exempt from overtime pay.
3. Alvarez v. Key Transportation Service Corp. (U.S. District Court for the Southern District of Florida, Mar. 3, 2008). On Key's motion for summary judgment, the court addressed whether dispatchers for a "chauffeured ground transportation services company" are exempt from overtime under the "administrative" exemption to the FLSA (analyzing job duties common to trucking-industry dispatchers). The dispatcher involved performed the following primary duties: (1) dispatching drivers to assigned jobs and ensuring timely arrival; (2) monitoring traffic, weather and airport flight delays; (3) interacting with customers, drivers and airport personnel; (4) maintaining records; (5) customer service; (6) reporting vehicle malfunctions to management; (7) locking up the premises; and (8) minor custodial and repair work. The court concluded that the foregoing duties did not constitute those directly related to management or general business operations of Key Transportation, and that the dispatcher did not exercise discretion and independent judgment. Thus, for purposes of summary judgment, Key Transportation did not establish that the dispatcher was exempt from overtime.

Although transportation managers always strive for clarity, the foregoing commentary confirms that whether dispatchers are "exempt" is anything but clear. To that end, managers are encouraged to resist taking the common "one-size-fits-all" approach to classifying dispatchers. Instead of making blanket generalizations based on job titles or salaried status alone, a thorough, fact-specific analysis is strongly recommended. "Misclassification" mistakes often prove costly, as will be explored in the final installment concerning the proper analysis of whether dispatchers are "exempt" from overtime.

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