Recently, the U.S. Court of Appeals for the Seventh Circuit (which covers Wisconsin, Illinois and Indiana) concluded that an Indianapolis tow-truck company failed to carry its legal burden to prove that one of its drivers is exempt from overtime compensation under the so-called "motor carrier exemption" to the Fair Labor Standards Act's ("FLSA"). The case is Johnson v. Hix Wrecker Service, Inc., No. 09-3023 (7th Cir., July 1, 2011).

Without delving into the nuts and bolts (or perhaps, in this case, the crumpled fenders and broken glass), the motor carrier exemption to the FLSA generally provides that certain employees are not entitled to overtime compensation if:

1. The employer is a "Motor Carrier" (or "Motor Private Carrier"), as defined by statute:
2. The employee is a driver (or occupies another of the enumerated positions—e.g., loaders or mechanics) whose duties affect the safety of operation of motor vehicles in transportation on public highways in interstate or foreign commerce; and
3. The employee is not covered by the so-called "small vehicle exception."

In Hix Wrecker Service, even though the tow-truck driver at issue worked twelve-hour shifts, presumably in excess of forty hours each workweek, Hix Wrecker Service classified him as exempt from overtime under the motor carrier exemption. In the decision, the Court reaffirmed that trucking companies carry the legal burden to demonstrate that employees are exempt from the FLSA's overtime requirements. The Court concluded that Hix Wrecker Service did not carry this burden, because it failed to show that the tow-truck driver engaged in interstate commerce within a "reasonable" period of time prior to the time at which his exempt status was scrutinized. The tow-truck company primarily supported the exempt status of its driver through an affidavit, through which it asserted that it "routinely" provided out-of-state services to its customers. This statement, in the Court's opinion, was too vague to assess whether the tow-truck driver actually engaged in interstate commerce for a "reasonable" period prior to the time at which his exempt status was challenged—and thus, precluded a conclusive finding of exempt status. The Court remanded the case to the lower court for further proceedings.

In light of Hix Wrecker Service, trucking companies are encouraged to evaluate whether certain employees are properly classified under the motor carrier exemption. Trucking companies that choose to designate certain employees as exempt under the motor carrier exemption should consider clarifying the scope and frequency of "interstate" business through applicable policy documents, job descriptions and employment agreements.

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