Nuances of Virginia Workers’ Compensation Exclusivity of Remedy

The Virginia legislature established the Workers’ Compensation Act (the “Act”) and the Workers’ Compensation Commission in the early 1900s to address work-related injuries and to provide employees injured at work a quicker remedy than suing their employer (which previously was the sole option).  Workers’ compensation is essentially employer-funded insurance to provide an injured employee medical benefits, wage replacement, and even cash payments for permanent impairment—if the employee is hurt or rendered sick during the course of his employment.  The Act requires Virginia employers who have two or more part-time or full-time employees to provide workers’ compensation coverage for their injured employees’ medical treatment, lost wages, and permanent partial disability.  It is important to note that if a business hires subcontractors to perform the same trade, business or occupation, or to fulfill a contract of the business, the subcontractor’s employees are included in determining the total number of the employer’s two or more employees.

While workers’ compensation helps injured employees get medical care and wage replacement more quickly than they would by pursuing litigation, there is a benefit to employers as well.  An employer who provides the coverage is secure in the knowledge that there aren’t any non-economic damages like pain and suffering, loss of consortium, or loss of enjoyment of life, which can increase claim costs significantly, in workers’ compensation claims.  Also, workers’ compensation is an injured employee’s exclusive remedy for recovering damages related to work-related injury in most situations.  There are two exceptions.  First, if an employee is injured at work, and their employer should have had workers’ compensation coverage but did not, the employee is permitted to pursue a civil action.  Second, if an employee is sexually assaulted at work, he/she can pursue a civil action—whether his/her attacker is his/her employer or a co-worker.

This creates a “bar” on civil litigation for employees who do not fall into these two exceptions.  If an employee files a suit against an employer for a work-related injury and that employer provides worker’s compensation coverage, the employee’s suit should be thrown out.  Interestingly, workers’ compensation is also the exclusive remedy for any other person who was performing work similar to the employer’s trade, business, or occupation for the employer at the time of the workplace accident.  For example, if a roofing contractor hires a subcontractor to do roofing work and the subcontractor is injured on the job, the roofing contractor must provide him with coverage and the subcontractor must turn to workers’ compensation policy for his work-related injury as if the subcontractor was the contractor’s employee.

This also means that a contractor’s employee may not file a civil suit against a subcontractor for an injury related to the subcontractor’s work on the job—if the subcontractor was performing work similar to the employer’s trade, business, or occupation for the employer at the time of the workplace accident.  If the subcontractor was not a “stranger to the business” then the injured employee’s only remedy is workers’ compensation.  On the other hand, if the employee was injured by a subcontractor who was not performing work similar to the employer’s trade, business, or occupation for the employer at the time of the workplace accident, then the employee may file a civil suit against the subcontractor.  For example, a Ford (car manufacturer) employee can sue the manufacturer of a car door when the employee is injured by one of the manufacturer’s doors while the employee is engaged in the regular scope of his work manufacturing cars (because the door manufacturer is a “stranger to the business” of car manufacturing).

In sum, an employee involved in a work-related injury in Virginia must almost always turn to workers’ compensation for his/her damages.  Civil suits for work-related injuries filed against employers who provide workers’ compensation must be analyzed carefully to determine if they are barred under the Worker’s Compensation Act.

For more information about this article, please contact  Elena G. Patarinski at 804.932.1996 or epatarinski@fandpnet.com.

Delaware Case Law Update: Thirty Day Rule Offer

The Industrial Accident Board employs what is commonly referred to as a Thirty Day Rule.  In sum, the Thirty Day Rule requires all investigations be completed, witnesses identified, discovery exchanged, and settlement offer made thirty or more days from the hearing.  If the employer makes a settlement offer outside of the Thirty Day Rule that is equal or above the Board’s award, the claimant is not entitled to an attorney’s fee.

“The purposes of this rule are: (1) to encourage early settlement by employers before claimants’ attorneys must engage in substantial pre-hearing preparation, and (2) to prevent abuses by claimants’ attorneys, who do not accept valid settlement offers, and thereby force unnecessary Industrial Accident Board hearings.”[1]

In Teresa Holben v. Pepsi Bottling Ventures, the parties appeared before the Board on a dispute regarding the compensation rate for temporary partial disability benefits (“TPD”).  The Board agreed with the employer and awarded TPD based upon the average wage of the employer’s Labor Market Survey (“LMS”).  The employer made a Thirty Day Rule Offer for TPD that included a higher compensation rate than ultimately was awarded by the Board.  As such, the Board denied the claimant an attorney’s fee.  The Board ordered the employer to reimburse the claimant’s medical witness’ fees, as there was an award pursuant to 19 Del. C. § 2322(e).[2]

The claimant appealed the Board’s calculation of TPD and the decision not to award an attorney’s fee to the Superior Court.  The Superior Court affirmed the Board’s ruling on TPD but reversed and remanded the issue of an attorney’s fee to the Board.  The Superior Court concluded that the Thirty Day Rule Offer did not include an offer to pay medical witness’ fees, the claimant succeeded on the “issue” of recovering such fees, so an award of attorney’s fees was mandatory.[3]

The employer argued the triggering factor for attorney’s fees is the award of compensation; i.e. TPD.  The employer also noted the claimant had not incurred an expert’s fee until after the Thirty Day Rule Offer was sent and she had an opportunity to cancel her expert’s deposition without incurring a cancellation fee.

The Superior Court acknowledged “[t]here is reason to question, at some level, the right to recovery attorney’s fees as a cost simply because the claimant recovered a separate cost.”[4]  However, the Superior Court held the statute required an award of attorney’s fees.  The Superior Court also found the claimant was entitled to consider the settlement offer for a full 30 days and rejected the employer’s second argument.

The Superior Court’s Order is currently on appeal to the Delaware Supreme Court and raised concern in the Workers’ Compensation Bar.  The common practice of many attorneys in Delaware making a Thirty Day Rule Offer is not to include a medical witness’ fee.  However, if the claimant incurs a cancellation fee in conjunction with accepting the employer’s offer, those fees are generally reimbursed by the employer.  The Superior Court’s Order requires settlement offers to now include an offer for medical witness’ fees in order to avoid an award of attorney’s fees.  Pending a reversal of this Order, it is recommended that settlement offers now include an offer to pay the claimant’s expert’s cancellation fees incurred in conjunction with acceptance of a settlement offer.

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For more information about this article, please contact Robert S. Hunt, Jr. at 302.594.9780 or rhunt@fandpnet.com.

[1] State v. Drews, 491 A.2d 1136, 1139 (Del. 1985).
[2] (e) The fees of medical witnesses testifying at hearings before the Industrial Accident Board on behalf of an injured employee shall be taxed as a cost to the employer or the employer’s insurance carrier in the event the injured employee receives an award.
[3] Teresa Holben v. Pepsi Bottling Ventures, 2018 WL 6603792, at *1 (Del. Super. Ct. Dec. 13, 2018).
[4] Id at *9.

Comp College With F&P

Franklin & Prokopik recently launched “Comp College,” a customizable program that assists organizations in staying up to date on the latest in the workers’ compensation world.    Comp College offers the opportunity to build your own class schedule that meets the educational needs of employees.  Companies select criteria such as jurisdiction of interest, topics, time of day, and method of class delivery.  We are also able to offer HRCI and/or SHRM credits.  Ready to enroll?  Contact jshaikun@fandpnet.com to learn more about our course options.

A Limitation of the Commission’s Revisory Powers Explained: Montgomery County v. Gang, 239 Md. App. 321

A recent case from the Court of Special Appeals confirms the Maryland Workers’ Compensation Commission (“Commission”) may not retroactively adjust the rate of compensation of an award previously paid. Mr. Gang (“Claimant”), a public safety officer, received an award of permanent partial disability benefits in 2012 based on an incorrect rate of pay, given his status as a “public safety officer.”  In 2016, Claimant attempted to remedy the rate of pay by filing a Request for Document Correction with the Commission.  He did so, without consent from the employer/insurer. The Commission, thereafter, issued an amended award retroactively increasing the rate of pay.  In response, the employer/insurer requested a rehearing. Ultimately, the Commission granted the rehearing, but affirmed its prior decision to allow the increase under the “continuing jurisdiction” provision of the Act: L.E. §736.

The employer/insurer appealed the matter to the Circuit Court for Montgomery County where argument focused on the interpretation of the Commission’s revisory powers under L.E. §736.  to “readjust for future application the rate of compensation.”  The court affirmed the decision of the Commission and the employer/insurer appealed the decision to the Court of Special Appeals (“COSA”).

The Court of Special Appeals reversed the Circuit Court’s decision, highlighting that the Commission’s change to the rate of compensation was not based on statutory considerations such as aggravation or diminution.  Instead, it was an adjustment of an award previously paid and, as such, beyond the Commission’s revisory powers.  Allowing the same, in addition to improperly extending the statute, would also serve to impermissibly extend the five-year statute of limitations, on re-openings.

This decision makes clear if there is an error in an award, the request for correction must be done so within a reasonable time period.  The Commission’s revisory powers are limited and not all encompassing.  This decision is also a reminder that a Request for Document Correction is only to be used when the “correction” is agreed upon by all parties.

For more information about this article, please contact April Kerns at 410.230.2975 or akerns@fandpnet.com.

Statutory Employers: What Could Go Wrong? Charlie Jeffreys v. The Uninsured Employer’s Fund, et al.

A historic building in Virginia is to be renovated.  A historical society in Virginia, directed by someone living in California, operating as an “auxiliary” of a church in Virginia, hires an unlicensed contractor who then hires a second worker.  What could possibly go wrong?  Here is what went wrong: a worker is injured on the job then files workers’ compensation claims against the director, the historical society, and the church — none of whom have insurance.  The Supreme Court of Virginia (SCVA) addressed the issue of statutory employment and one such scenario, in the case of Charlie Jeffreys v. The Uninsured Employer’s Fund. (____ S.E.2d ____) 2019 WL 620314.

The facts, summarized: The Harvey School Historical Society (“the Historical Society”) was founded and directed by Ms. Annie Mosby, a California resident.  The Historical Society’s mission was to “purchase, restore, preserve, and maintain” the Harvey Colored School in Pittsylvania County, Virginia.  The Mount Lebanon Missionary Baptist Church (“the Church”) allowed the Historical Society to meet in the Church, but provided no financial support nor exercised any control over the Historical Society. Mosby hired Mr. William Johnson, an unlicensed contractor, to renovate the school.  Mosby was briefly on site at the beginning of the project but did not exercise any control over Johnson’s activities. Johnson hired Mr. Charlie Jeffreys with Mosby’s permission, but Johnson was exclusively the manager of Jeffreys.  Jeffreys was injured on the job site and filed a workers’ compensation claim against: (1) Mosby, (2) the Church, and (3) the Historical Society – but not Johnson.  NONE of the three defendants had workers’ compensation insurance so the Uninsured Employers’ Fund was made a party.  Jeffreys contended each defendant was his statutory employer per Code §65.2-302 because he had been performing work within their trade, business, or occupation.

After some back and forth between the Commission and the Court of Appeals, none of the defendants were found to be Jeffreys’s direct employer or statutory employer. Jeffreys appealed the issue of statutory employment to the SCVA, which, upon analyzing the statutory employment provision of the Code, affirmed the Court of Appeals’ decision.

The statutory employment relationship is addressed in Code §65.2-302. There are three relevant sections, summarized below:

A). When any person (“owner”) undertakes to perform work which is a part of his trade, business or occupation and contracts with any other person (“subcontractor”), for performance of work normally undertaken by the owner, the owner shall be liable for workers’ compensation benefits for the subcontractor. Section A is also known as the “normal-work test,” which asks the question of whether the activity of the subcontractor is normally done by employees of the owner rather than a subcontractor or independent contractor. The example given by the SCVA in this regard was a roofing company hiring an independent contractor to fix a roof. In this scenario, the roofing company is the statutory employer of the independent contractor.

B). When any person (“contractor”) contracts to perform work for another which is not part of the trade, business or occupation of the other person and contracts with any other person (“subcontractor”) for execution of that work, then the contractor shall be liable for workers’ compensation benefits for the subcontractor. Section B is also known as the “subcontracted-fraction test,” meaning the original business is not in the same “trade, business or occupation” as the hired contractor/subcontractor. The example given by the Court in this scenario is a bank contracting with a general contractor to build a home, and the general contractor relies on subcontractors (such as carpenters, masons, plumbers, etc.) to complete the task.  The general contractor, not the banker, is the statutory employer of the subcontractors’ employees.

C.) When a subcontractor in turn contracts with another (sub-)subcontractor for part or all of the work undertaken by the first subcontractor, then the owner or contractor shall be liable for workers’ compensation benefits in the same way imposed in sections A and B.

This case focused primarily on subsection A of Code §65.2-302. In analyzing statutory employment under this section, one must identify the nature of the owner/contractor and whether they are a governmental/public utility entity or a private entity.  The SCVA writes that a “private entity, unlike a governmental entity or a public utility, has broad discretion to choose its activities and, thus, to define its own unique nature […] whereas a private business entity is essentially self-defining in terms of its trade, business, or occupation, a public utility has duties, obligations, and responsibilities imposed upon it by statute, regulation, or other means.”  This may then make the assessment regarding what the trade, business, or occupation of a private entity more difficult than that of a governmental entity or a public utility.

Here, the SCVA affirmed the Court of Appeals’ findings that, though the Historical Society’s purpose was to restore the school, the members only raised funds and awareness of the project and encouraged community support.  None of the members intended to actually move, construct, or restore anything.  It was not part of the Historical Society’s “trade, business or occupation” per Code §65.2-302.  Therefore, Jeffreys could not prove that the Church, Mosby, and the Historical Society were in the “trade, business, or occupation” of construction.

Takeaway: when looking to establish whether there is a potential statutory employer per Code §65.2-302, you must first assess whether the original contracting entity is public or private, and then whether it is engaging in its usual “trade, business or occupation.”

 

For more information about this article, please contact Jennifer Helsel at 571.612.5932 or jhelsel@fandpnet.com.

Workers’ Comp Team Spotlight – R. Cameron Legg and Lee Lawler

Cameron Legg joined Franklin & Prokopik as an associate attorney in March of 2017. He concentrates his practice in Maryland workers’ compensation defense.

Cameron is originally from the Baltimore area and is a graduate of the George Washington Carver Center for Arts and Technology. While in high school, Cameron showed a talent for acting and starred in some commercials. He appeared in a commercial for college and an Army training video.

Cameron attended college at Towson University, graduating in 2005. He majored in Business, with plans to attend law school. While at Towson, Cameron played golf as a hobby and experienced one of his greatest accomplishments in the sport – his first and only hole-in-one while playing at Pine Ridge Golf Course.

In 2007 Cameron began law school at the University of Baltimore School of Law. While in law school, Cameron wrote for the Intellectual Property Journal and was on the International Law Moot Court Team. He was also very involved in the sports activities of the school. He won the school’s golf tournament three years in a row, his flag football team won the school’s flag football tournament two years in a row, and he played softball. Cameron graduated in 2010, magna cum laude.

From 2010-2011, Cameron clerked for the Honorable Stephen Waldron in the Circuit Court for Harford County. After his clerkship, he joined the State’s Attorney’s Office in Harford County where he worked for five years. While employed with the State’s Attorney’s Office, Cameron successfully prosecuted countless misdemeanors and felonies ranging from simple drug possession to homicide.  He drafted a bill, that ultimately became a law in Maryland, creating the crime of tampering with evidence.

Cameron brings the same intensity he possessed as a prosecutor to his handling of workers’ compensation matters.  He is very detail oriented and an excellent legal researcher, which allows him to identify nuanced legal defenses for his claims and deliver results to clients.

Outside the office, Cameron enjoys spending time with his wife, two sons, and daughter. Although he spends most of his free time with his family, Cameron still enjoys an occasional round of golf and playing softball.

Lee F. Lawler joined Franklin & Prokopik as a paralegal in March of 2018.  His work is focused in the area of workers’ compensation defense.

Lee attended Towson University, where he majored in marketing and was the starting pitcher for Towson’s baseball team.  Lee had the opportunity to travel all over the country for his games, which he enjoyed thoroughly, while maintaining a full-time course load for his major.

After graduating in 2016, Lee spent time in Thailand for a post-graduate trip before returning to Maryland to begin his professional career.

Prior to joining F&P, Lee worked as a mortgage lender for Corridor Mortgage Group.  Though he enjoyed the position, he felt that due to rising mortgage rates and the decline in the housing market that pursuing a career in the legal field would be a better fit.

Lee has quickly proven to be an asset to the firm. He demonstrates strong analytical skills and enjoys problem solving, bringing these talents to bear when preparing his cases.

In his spare time, Lee plays softball (including for the F&P team) and other recreational sports and also enjoys working out.  Lee has plans to attend law school in the coming year so we may see him as an attorney in the future!

F&P on the Road

Steve Marshall attended the DRI Products Liability Seminar in Austin, TX from February 5 – February 8.

Lynn Fitzpatrick and Jennifer Helsel attended the Virginia Workers’ Compensation Commission Inn or Court Annual Meeting in Charlottesville, VA from March 12 – March 13.

Lynn Fitzpatrick was inducted into the College of Workers’ Compensation Lawyers at the ABA 2019 Workers’ Compensation Midwinter Seminar and Conference in Coral Gables, FL from March 14 – March 16.

Skip Crawford, Renee Bowen, and Andrew Stephenson attended the ABA Transportation Megaconference in New Orleans from March 20-22.  Andrew presented The Top Ten List:
Recent legal and regulatory developments affecting truck litigation and operation.

Bert Randall will be presenting at Captive Resources, CGI Captive in St. Louis, MO on April 9 and in Nashville on April 11.

Sarah Lemmert will be presenting at Captive Resources, NCI Captive in Salt Lake City, UT on April 11.

Tamara Goorevitz will be presenting “Lawyers: A necessary evil in the supply chain or a blessing!?” at the TIA Capital Ideas Conference and Exhibition in Orlando, FL from April 10-13.

Steve Marshall will attend the Magna Legal Services Seminar in Las Vegas, NV on April 20 – April 22.

Andrew Stephenson and Renee Bowen will be presenting at the Trucking Claims Boot Camps in Dallas, TX, Denver, CO, Chicago, IL, Atlanta, GA, Orlando, FL,  Morrisville, NJ, and Steve Marshall will be presenting in London, England. Boot Camps are held from April 3 – July 1.

The Uncertain Future of CSA Scores and Safety Rating

To the extent that courts continue to impute liability to brokers for the negligent acts of the contracted motor carriers, the problem is compounded by the current, uncertain state of the FMCA’s system for collecting motor carrier data and publishing safety assessments of motor carriers.  Ever since the FMCSA, in 2010, first instituted Compliance, Safety, Accountability (“CSA”), the program by which the FMCSA measures motor carriers’ safety performance, it has been subject to a range of criticism from key stakeholders.  Following a mandate from the Fixing America’s Surface Transportation Act (“FAST Act”) of 2015, the FMCSA authorized a replacement of the CSA’s Safety Management System (“SMS”), and authorized the National Academy of Sciences (“NAS”) to conduct a thorough study of the efficacy and integrity of the CSA program.   In particular, the NAS was tasked with addressing various key criticisms of the system, such as how to collect more and better data regarding motor carrier safety, the need for a better and more statistically sound data-collection methodology than the SMS, and the need for better user interface for stakeholders to access information and results on the FMCSA’s websites.

The NAS, comprised of a 12-member elite panel of researchers, published its report in mid-2017 at the end of a 15-month study.  The NAS concluded that generally the SMS system for identifying high-risk motor carriers was “conceptually sound” and had good overall goals, but it recommended sweeping changes, including a more detailed, “more statistically principled approach” to data measurement in the form of an alternate methodology to SMS, called “Item Response Theory” (“IRT”), a data measurement model that has been successfully used to analyze a range of social issues.  Under the SMS, safety scores relied on seven Behavior Analysis and Safety Improvement Categories (or “BASICs”).  The NAS recommended that the FMCSA adopt this new methodology model, but suggested that the agency take its time testing and incorporating it into its current system.  The FMCSA has signaled its adoption of the IRT system, and one year into its evaluation of its two-year planned study of IRT, the agency has said that it is making progress, but that it is too soon to say whether the new methodology could improve on the CSA program.  The agency said it will complete its full evaluation by the Fall of 2019.

One issue of concern is that the new system, even if statistically improved, involved greater complexity that will create challenges for stakeholders used to the simpler (if substantially flawed) CSA system.  Another concern for stakeholders in the transportation industry is precisely which data will be collected moving forward, and whether the data-collection methods will accurately reflect which motor carriers are at-risk carriers, and which are not.

For example, many motor carriers have complained that in the past, drivers have not been given credit for “no violation” or “clean” roadside inspections by federal inspectors, whereas their negative inspection results do get recorded.  In addition, much concern has been voiced from the industry that safety results published by the FMCSA tend to misrepresent the safety risks of motor carriers by failing to eliminate “non-preventable” crashes from the agency’s safety scores.  In response, the FMCSA instituted a Crash Preventability Demonstration Program in August 2017, whereby motor carriers could file requests for data review (“RDRs”) with the agency, regarding motor carrier crashes where the carrier’s driver was clearly not at fault.  As of now, the new program has experienced some growing pains. However, this is one sign that the agency has become more responsive to legitimate concerns from within the trucking industry that the safety ratings made public by the FMCSA mislead the public into thinking that a motor carrier presents a higher risk to safety than it actually does.

For more information regarding this article, contact Stephen J. Marshall.

Changes to Driver Qualifications

The commercial transportation industry continues to experience a shortage of qualified drivers and the issue has risen to one of the industry’s top concerns. The driver shortage can be attributed to a multitude of factors, including continued industry expansion and retirement of older drivers without sufficient interest from younger potential drivers to replace them.  In an effort to combat the driver shortage plaguing the commercial transportation industry, the Federal Motor Carrier Safety Administration (“FMCSA”) has implemented a number of changes to driver qualifications with the goal of increasing the number of individuals who qualify to become commercial drivers.

One such recent change relates to the requirements of a driver’s physical health. Previously, insulin-dependent diabetic drivers were prohibited from operating commercial vehicles in interstate commerce without an exemption from FMCSA.  However, the FMCSA recently issued a final rule to allow certified medical examiners the discretion to decide whether an insulin-dependent diabetic driver is qualified to drive without seeking an exemption.  Beginning November 19, 2018, medical examiners are now able to issue a diabetic driver a one-year medical certification if the driver’s primary health care provider submits a completed assessment form indicating the individual maintains a stable insulin regimen and proper control of his/her diabetes to the medical examiner.

In addition to changes in regulations related to a driver’s physical health, the increased shortage of drivers has led to a rejuvenated push to lower the CDL age requirement.  Under current law, individuals must be at least 21 to drive a commercial vehicle interstate; however, some states allow individuals under 21 to driver intrastate. In March 2018, the DRIVE-Safe Act was introduced in the House of Representatives and introduced in August 2018 in the Senate. The DRIVE-Safe Act would allow individuals age 18 to 20 who possess a CDL to drive interstate upon completion of 240 hours of on-the-road experience with an experienced truck driver and certain safety features such as automatic active-breaking systems.  The DOT is also launching a three-year pilot program to permit individuals age 18 to 20 who possess the U.S. Military equivalent of a CDL to operate large trucks in interstate commerce.

While the FMCSA is looking to increase the number of qualified drivers, it is also maintaining its focus on ensuring that drivers are adhering to established safety regulations and standards.  Part of ensuring safe roadways is ensuring that commercial drivers are free from drugs and alcohol.  To that end, commercial drivers are required to undergo drug tests, including pre-employment, random, and, under some circumstances, post-accident drug tests.  As of January 1, 2018, four new drugs have been added to the DOT drug testing panel requirements: hydrocodone, hydromorphone, oxymorphone, and oxycodone.

Currently, urinalysis is the only federally-approved drug testing method for commercial drivers. However, the FMCSA is moving towards permitting drug testing through hair sampling. Proponents of the hair sampling method point to the method’s longer detection window, increased accuracy, and decreased ability to cheat the drug test as benefits. On October 28, 2018, President Trump signed into law the SUPPORT for Patients and Communities Act which directs the Secretary of Health and Human Services to provide an estimated date for completion of the final guidelines for hair follicle drug testing under the FMCSR.  Although the precise situations in which the hair sampling method will be permitted and the precise guidelines for same are not yet determined, it is clear that hair sampling will soon be a permissible drug testing method in at least some circumstances under the FMCSR.

For more information regarding this article, please contact Ellen Stewart at 410.230.2670 or estewart@fandpnet.com.

Browne, et al. v. PAM Transport; Eat, Drink, and Be Wary: Hidden Costs in the Sleeper Berth After New FLSA Ruling

A recent decision issued in Browne, et al. v. PAM Transport, a class action lawsuit brought under the Fair Labor Standards Act (“FLSA”), may signal further national litigation and additional labor costs for time commercial drivers spend off the road.  In the US District Court for the District of Arkansas, a group of truck drivers sued their employer, P.A.M. Transport (“PAM”), alleging they should have been paid for 16 hours out of every 24-hour period pursuant to the FLSA, even though DOT regulations require drivers to spend no more than 14 hours on the road.

The FLSA recognizes that certain employment positions require employees to have periods of down time where they are not necessarily actively performing any employment duties.  The FLSA mandates that employers pay those employees an amount at least equal to minimum wage for those periods of down time. Typically, this applies to receptionists, firefighters, waiters, or other employees who respond to variable workloads. In the context of the transportation industry, the FLSA payment mandate applies to drivers who must wait at certain pickup and delivery points to be loaded and unloaded. For employees who are required to be on duty for 24-hour periods, the FLSA requires employers to pay their employees for their down time, including time spent eating and sleeping, during the full 24-hour period. An employer and employee can enter into an agreement that permits a maximum of eight hours in a 24-hour period to be unpaid. However, an employer must compensate an employee who is required to be on duty for 24-hour periods for a minimum of 16 hours under the FLSA, regardless of whether the employee spends more than eight hours eating and sleeping.  In the absence of any agreement to exclude any portion of the 24-hour period from an employee’s compensation, an employer must compensate the employee for the full 24 hours.

It is against this backdrop of the FLSA that a group of truck drivers sued their employer, PAM, alleging that PAM was required under the FLSA to pay them for a minimum of 16 hours of every 24-hour period, even where some of those 16 hours were spent in the sleeper berth.  The US District Court for the District of Arkansas was tasked with determining whether a commercial truck driver who is in the sleeper berth and therefore “off duty” for purposes of the Federal Motor Carrier Safety Regulations (“FMCSR”), is still “on duty” for purposes of application of the FLSA and therefore entitled to payment of at least minimum wage for time spent in the sleeper berth.

In parsing out the applicable FMCSR and FLSA provisions, the court ultimately determined that commercial drivers not “on duty” under FMCSR hours of service regulations are, in fact, “on duty” for FLSA purposes and therefore entitled to compensation for time spent in the sleeper berth.  In reaching its decision, the court determined that the purpose of the FMCSR is to “make our roads safe,” while the FLSA regulations govern issues related to compensation. Therefore, the court determined that the FLSA provisions as to whether a driver is “on duty” should apply in order to determine appropriate compensation.

While this order is not binding on other courts, it is an indication of potential additional litigation and future risks related to employer liability.  The Browne case highlights the importance of motor carriers having an agreement in place with their employee drivers to exclude the eight hours permitted under the FLSA for time spent in the sleeper berth from a driver’s compensation, in order to reduce the amount of time and wages potentially at issue.

For more information regarding this article, please contact April Kerns at 410.230.2975 or akerns@fandpnet.com.