June 01, 2026|Franchise Frontlines
June 1, 2026 | United States District Court for the Southern District of Illinois | Slip Copy — Only the Westlaw Citation Is Currently Available (2026 WL 1520744)
Executive Summary
In a Memorandum and Order available only by its Westlaw citation (2026 WL 1520744), Judge J. Phil Gilbert of the United States District Court for the Southern District of Illinois granted in part and denied in part Federal Express Corporation’s motion for summary judgment in a Fair Labor Standards Act (FLSA) overtime suit brought by Willie Seals, a package-delivery driver who worked through independent service providers (ISPs) that contracted with FedEx. The core questions were whether Seals fell outside FLSA overtime coverage under the Motor Carrier Act (MCA) Exemption or instead qualified for its Small Vehicle Exception, whether any violation was willful for statute-of-limitations purposes, whether Seals could obtain equitable tolling, and how his flat daily-rate pay should be converted into a regular rate for overtime. FedEx argued that Seals was an exempt motor-carrier employee, that no violation was willful, that tolling did not apply, and that its damages methodology was correct; Seals countered that he was a “covered employee” who drove light vehicles at least in part, that any violation was willful, and that FedEx bore the burden on the exemption. The court held on this record that genuine disputes of material fact precluded summary judgment on the exemption, willfulness, and tolling, and it declined to decide FedEx’s joint-employer status because FedEx disclaimed moving on that issue; it granted summary judgment only on the damages method, holding that Seals’s daily rate must be divided by the total hours he actually worked each week under 29 C.F.R. § 778.112.
Relevant Background
The dispute began in August 2017, when a group of drivers who delivered FedEx packages sued under the FLSA in the District of Massachusetts seeking unpaid overtime. After that court limited its case to Massachusetts plaintiffs, the non-Massachusetts drivers filed Claiborne v. FedEx Ground Package System, Inc. in the Western District of Pennsylvania, where the court conditionally certified an FLSA collective; Seals opted into the collective on August 5, 2020. The court later decertified the collective and severed the opt-in plaintiffs’ individual claims for transfer to appropriate districts, and Seals’s case was transferred to the Southern District of Illinois because he lives in Belleville, Illinois. FedEx had filed its summary-judgment motion in the Western District of Pennsylvania in January 2025, though the motion and briefing did not reach the Illinois docket until October 2025.
Seals picked up and delivered FedEx packages for two separate periods between October 2017 and February 2020 out of FedEx’s Sauget, Illinois facility, working a total of 33 weeks and paid $125.00 per day. He was employed by two ISPs that contracted with FedEx—G Factor Transportation and Urbane Logistics—which owned some of the vehicles their drivers used and rented others; FedEx owned none of the vehicles. On some days Seals drove vehicles with a gross vehicle weight rating over 10,000 pounds (“MCA vehicles”) and on others he drove lighter vehicles of 10,000 pounds or less, though he did not know the weight rating of the specific vehicles he typically drove. FedEx captured “scanner data” that drivers entered each day and used it to monitor Department of Transportation compliance, but gaps in that data—including for rented vehicles the ISPs did not enter into FedEx’s maintenance records—left the weight of many vehicles unknown.
The scanner data showed that Seals drove a documented light vehicle in 4 weeks and drove either a documented light vehicle or one of unknown weight in 32 of his 33 weeks; he was logged “on duty” more than 40 hours in 22 of those weeks yet was paid only his daily rate with no overtime. Seals never complained to FedEx about the lack of overtime, and the ISPs annually certified to FedEx that they had complied with all applicable wage-and-hour laws, including the FLSA. Seals did not bring a state-law claim.
Decision
Applying Rule 56, the court construed the evidence in Seals’s favor and addressed FedEx’s MCA Exemption defense, under which § 13(b)(1) of the FLSA exempts drivers whose hours the Secretary of Transportation may regulate. The 2008 SAFETEA-LU Technical Corrections Act (TCA) created a Small Vehicle Exception restoring overtime for a “covered employee” whose work “in whole or in part” affects the safe operation of vehicles weighing 10,000 pounds or less. Because the evidence showed Seals drove a mixed fleet, the court held on this record that “a jury could find he was a ‘covered employee’ within the heartland of the Small Vehicle Exception,” and that exemption is “an all or nothing proposition” that cannot fluctuate week to week. Reciting that “exemptions from [the FLSA’s] coverage are to be narrowly construed against employers,” the court placed the burden on FedEx to show the Small Vehicle Exception did not apply—an allocation on which it acknowledged the Seventh Circuit had not ruled and other courts are split.
The court rejected FedEx’s argument that Seals’s light-vehicle work was de minimis, finding that his documented light-vehicle driving on 8 of 135 workdays—about 5.9%—“is not de minimis under a reasonable understanding of the phrase.” It also rejected FedEx’s contention that Seals’s own testimony could not defeat summary judgment, explaining that “a self-serving affidavit is an acceptable method for a non-moving party to present evidence of disputed material facts” when based on personal knowledge, and that the scanner data corroborated his account of long weeks. Because a reasonable jury could find Seals worked over 40 hours in some weeks without overtime and was not exempt, the court denied summary judgment on liability.
On the statute of limitations, the court held that a jury could find FedEx acted with reckless disregard—supporting the three-year willful-violation period rather than two years—because FedEx “had access to and regularly reviewed the scanner data” showing more-than-40-hour weeks and light-vehicle use yet “failed to investigate further,” even though the ISPs paid Seals, certified compliance, and Seals never complained. It declined to disturb the Western District of Pennsylvania’s earlier equitable-tolling order as “law of the case,” found FedEx’s belated jurisdictional argument waived because raised for the first time in reply, and, in any event, saw disputed fact issues on Seals’s diligence. Notably, the court expressly declined to decide whether FedEx was Seals’s joint employer with the ISPs, because FedEx disclaimed moving for summary judgment on that question, and left it “for the jury.”
FedEx prevailed on one point. The court held that Seals’s flat $125.00 daily rate must, under 29 C.F.R. § 778.112, be converted to a regular rate by “totaling all the sums received at such day rates … in the workweek and dividing by the total hours actually worked,” not by a presumed 40-hour week. It rejected Seals’s argument that the daily rate should be divided by 40 absent proof it was intended to cover more hours, reasoning that the weekly-salary rule of § 778.113(a) does not apply to day-rate workers and that the scanner data—showing days on which Seals was on duty fewer than eight hours yet still paid the full daily rate—indicated his pay was “without regard to the number of hours worked.” The court accordingly granted summary judgment for FedEx on the damages method.
Looking Forward
Although Seals arose from FedEx’s ISP delivery model rather than a franchise, its reasoning may inform how courts approach franchisors and branded multi-unit systems that operate through independent contractors, area operators, or similar intermediaries and that pay field workers on a flat daily or per-stop basis. The decision is a reminder that, on this record, interposing a separate contracting entity did not by itself resolve the employment question: the court left the joint-employer issue for the jury—though only because FedEx chose not to move on it, not because the court found joint employment. Systems relying on contractor structures should not assume the structure alone forecloses a joint-employer theory, and may wish to be prepared to show, through contemporaneous documentation, that the intermediary—not the brand—controls hiring, discipline, pay, scheduling, and day-to-day work.
The exemption and willfulness rulings are cautionary on records and burdens. Because this court placed the burden on the employer to negate the Small Vehicle Exception and treated a 5.9% share of light-vehicle days as more than de minimis, employers that rely on the MCA Exemption may find it prudent to keep precise, contemporaneous vehicle-assignment and hours records so the exemption can be defended on the documents rather than left to a jury’s reading of disputed testimony. The willfulness holding underscores the limitations exposure that can accompany wage claims: the court reasoned that an employer’s access to compliance data—here, scanner data showing long weeks—could support a reckless-disregard finding where the employer “failed to investigate further,” notwithstanding contractor certifications and the worker’s silence. A branded system that collects operational or timekeeping data from its contractors may want to consider how that same data could later be characterized as notice, and to document good-faith compliance efforts.
The clearest employer-favorable takeaway is the damages methodology. This court held that a daily-rate worker’s regular rate is computed by dividing weekly day-rate pay by all hours actually worked under § 778.112—an approach that yields a lower regular (and overtime) rate than a 40-hour divisor—and resolved that question as a matter of law even while liability went to the jury. Employers and franchisors that pay drivers, technicians, or other field personnel a flat daily rate may want to confirm their overtime calculations follow this actual-hours method and that their time records make the total-hours figure defensible. The court’s closing observation—that likely damages “in the neighborhood of $15,000” made the case a poor candidate for trial and warranted settlement—is also a practical reminder that disciplined recordkeeping and a correct pay methodology can narrow exposure and strengthen a defendant’s settlement posture even where liability remains contested.
Thomas O’Connell is a Partner at Buchalter LLP and Chair of the firm’s Franchise Practice Group. For questions about this article or media inquiries, you can contact Tom at toconnell@buchalter.com.
This article is based solely on the opinion of the Court in this matter. The author has not conducted any independent investigation into the facts. For the avoidance of doubt, each statement related to the law and facts in this article is drawn from the Court’s opinion in this case. It was drafted with the assistance of an artificial intelligence system. AI systems can make mistakes, including in describing legal authority. Readers should independently confirm any legal authority before relying on it.
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