BOSTON (CN) — At a time of spiraling inflation and high gas prices, the First Circuit showed little concern about an argument that America's supply-chain problems will be even worse if truck drivers must be paid for the time they spend on the road but not working.
"There’s something anti-common-sensical about what you’re saying,” U.S. Circuit Judge Kermit Lipez told attorney James Hanson, who represents the trucking industry. “You’re taking a position that defies common sense and is contrary to the longstanding position of the Department of Labor.”
Lipez is part of a panel in Boston that heard an appeal Wednesday in a class action against CRST, one of the country’s largest private trucking companies, by more than 9,000 drivers. The case has far larger ramifications than even that, however, because any ruling could affect a large percentage of the country’s more than 3.5 million truck drivers.
At the root of the case is a federal law that prohibits truck drivers from working more than 14 hours a day. To keep products moving briskly on long-haul trips, it’s common for shipping companies to use a tag team of two drivers who work 14-hour shifts. Drivers who are off-duty typically spend time in a sleeping berth where they can rest, as the name suggests, or engage in other activities like watching movies, preparing meals, reading and surfing the internet.
The question is how much of this off-duty time is “work time” that must be compensated at minimum wage. At oral argument Wednesday, the First Circuit seemed to indicate that it thinks truckers should be paid minimum wage for at least some of the off-duty time that they spend in their vehicles.
While the Labor Department decided back in 1943 that time in a sleeping berth should never be paid, it issued an opinion in 1964 that such time was compensable after eight hours during which it’s assumed that the employee is sleeping. The Trump administration reversed course in 2019 and went back to the 1943 rule, but the Biden administration undid the Trump policy just two years later.
Lower federal courts are split on the issue. The Ninth Circuit held that sleeping berth time should never be paid in an unpublished decision in 2017.
The American Trucking Associations Inc. warned the First Circuit meanwhile in an amicus brief that a decision diverging from the Ninth Circuit would “put motor carriers — who by the very nature of their business typically operate in multiple jurisdictions — in the impossible position of having to apply the same federal wage statute in conflicting ways in different parts of the country.”
The parties reached a contingent settlement below, and CRST agreed that if it loses its appeal it will pay the drivers $2.5 million in addition to future hourly compensation.
If the plaintiffs win, “it’s going to change the industry,” predicted Paul Taylor, chief trial attorney at the Truckers Justice Center in Burnsville, Minnesota.
The short-term effects will include higher consumer prices on a wide range of goods that move by truck, Taylor predicted, and consolidation in the industry as smaller carriers with lower margins are squeezed out. In the longterm, he thinks trucking companies will work to avoid the wage-and-hour laws by leasing trucks to drivers and then treating them as independent contractors.
Trucking could become “a gig economy,” he said. “You could see trucking companies working like Amazon.”
The legal issue is whether, after eight hours of sleep, the time in the sleeper berth is primarily for the employer’s benefit or the employee’s benefit.
“The presence of the employee in the berth is of benefit to you; it enhances efficiency,” Lipez told Hanson, who represents CRST and practices with the Scopelitis firm in Indianapolis.
“Given that the whole model assumes a benefit to the employer from the driver’s presence," asked Lipez, a Clinton appointee, "why doesn’t that obvious benefit to the employer answer the question here? I don’t understand that.”
Hanson said that berth time benefits drivers, too, because they’re paid by the trip, and using the berth allows them to complete more trips.
But U.S. Circuit Chief Judge David Barron was dubious on the latter point. “Any human bring would like eight hours of sleep," he said, "but, given a choice, no one would want to spend two hours in a sleeper berth."
Heather Johnson, arguing for the Department of Labor, agreed. “I can waste two hours on my phone if I’m stuck somewhere but that doesn’t mean I’m using the time effectively for my own purposes,” she said.
Barron, an Obama appointee, meanwhile recited the department requirement that, once a shift is over, drivers must take a mandatory 10-hour break, which is two hours longer than the eight-hour sleeping period. “The puzzle for me,” he said, is the two hours when drivers are in the truck but prohibited from working. He suggested that those hours weren’t compensable because they didn’t benefit the employer.
The plaintiffs’ lawyer, Hilary Schwab of Fair Work PC in Boston, noted that, during the two hours, drivers were still stuck in “a small, incredibly restrictive space,” and that they might have to help anyway in an emergency, such as if a truck gets “stranded in the Rockies.”
As Hanson complained, however, “that’s not something where there’s any evidence that it ever happened."
The judges gave the impression that they would hold that the 10-hour mandatory rest period wasn’t compensable but that any time after that had to be paid by the employer.
The average annual income for a truck driver in the U.S. is $43,252, according to the Census Bureau. More than 90% of truckers are male with a median age of 46; roughly 10% are veterans and 7% have college degrees.
CRST was founded in in 1955 by Herald and Miriam Smith who operated out of a refurbished chicken coop in Cedar Rapids, Iowa, that they bought for $125. The business is still family-run but it now has 4,500 trucks and annual revenues of $1.5 billion.
The company is no stranger to litigation. In 2007 it was sued by the U.S. Equal Employment Opportunity Commission over the sexual harassment of more than 250 female drivers. The company won the case and then demanded that the EEOC pay its attorney fees. In 2016 the U.S. Supreme Court unanimously held in the company’s favor, and the EEOC reimbursed it for $3.3 million in fees.