Ninth Circuit: California State Law Governs Employment Classification of Truck Drivers

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Employers with CA Employees in the Motor Carrier Industry

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September 10, 2018

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In California Trucking Association v. Su, the Ninth Circuit stated that the Federal Aviation Administration Authorization Act (FAAAA) did not preempt California’s Labor Commissioner from using a state common law test to determine whether truck drivers are misclassified as independent contractors, because the test used is not related to prices, routes, or services. There, the California Trucking Association (CTA) filed suit against the Labor Commissioner claiming that owner-operator truck drivers are independent contractors, and asked the court for a declaration that federal law preempted the Commissioner from using the state’s standard.

The Ninth Circuit stated “the FAAAA does not preempt state laws that affect a carrier’s prices, routes, or services in only a ‘tenuous, remote, or peripheral . . . manner’ with no significant impact on Congress’s deregulatory objectives.” Moreover, “the scope of the [FAAAA’s] pre-emption must be tempered by the presumption against the pre-emption of state police power regulations,” including laws that implement California’s traditional labor protection powers (e.g., meal and rest periods, minimum wage, etc.).

Although CTA sued over use of the Borello test, the Ninth Circuit stated that the recently decided Dynamex case had no impact on the ruling because none of the parties argued that it did. Interestingly, Dynamex applies to employee classifications for wage and hour claims, but stated that Borello may still apply to other types of claims, such as failure to reimburse business expenses. It is unclear if the Ninth Circuit would have a different view of Dynamex; nonetheless, employers are recommended to follow both state classification standards unless the court rules otherwise.

Action Items

  1. Have independent contractor classifications reviewed for compliance with state rules.
  2. Subscribers can call our HR On-Call Hotline at (888) 378-2456 for further assistance.

Disclaimer: This document is designed to provide general information and guidance concerning employment-related issues. It is presented with the understanding that ManagEase is not engaged in rendering any legal opinions. If a legal opinion is needed, please contact the services of your own legal adviser.

© 2018 ManagEase

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