The U.S. Supreme Court will not review a previous ruling that said a federal law does not pre-empt California’s use of a test to determine if a truck driver is an independent contractor or an employee.
On March 18, the high court denied the California Trucking Association’s petition of a September 2018 ruling by the U.S. Court of Appeals for the Ninth Circuit in the trucking association’s case against California Labor Commissioner Julie Su.
At issue was the commissioner’s application of the Borello standard, which was used to assess truck drivers’ claims that they have been misclassified as independent contractors and denied certain benefits under the Labor Code. The California Trucking Association argued that the Borello standard disrupts the contractual arrangements between owner-operators and motor carriers, which is inconsistent with Congress’ deregulatory goals under the Federal Aviation Administration Authorization Act of 1994.
The FAAAA prevents a state from enacting or enforcing “a law, regulation, or other provision having the force and effect of law related to a price, route, or service any motor carrier … with respect to the transportation of property.”
The California Trucking Association contends that the federal statute compels the commissioner and the courts to accept contractual agreements between a motor carrier and a truck driver at face value.
In Judge A. Wallace Tashima’s opinion for the Ninth Circuit, however, he wrote that the Borello standard is not related to prices, routes or services and therefore is not pre-empted by federal law.
“It is sufficient to note that Congress passed the FAAAA to achieve two broad goals,” Tashima wrote. “First, it aimed ‘to even the playing field between air carriers and motor carriers.’ Second, Congress believed deregulation would address the inefficiencies, lack of innovation, and lack of competition by nonuniform state regulations of motor carriers.
“We have also detailed what was not intended by the FAAAA. Congress did not intend to pre-empt generally applicable state transportation, safety, welfare, or business rules that do not otherwise regulate prices, routes, or services.”
The trucking association argues that any state law that requires a motor carrier to use employees is pre-empted.
The court said that a test to determine whether an individual is an employee or an independent contractor doesn’t force a motor carrier to hire an employee.
“There is no allegation that if a current driver is found to be an employee the California Trucking Association’s members will no longer be able to provide the service it was once providing through that driver, or that the route or price of that service will be compelled to change,” Tashimi wrote. “At most, carriers will face modest increases in business costs or will have to take the Borello standard and its impact on labor laws into account when arranging operations.”
The Teamsters Port Division lauded the Supreme Court’s decision not to hear the trucking association’s case.
“In rejecting the California Trucking Association’s appeal, the highest court in the land has effectively closed the case on predatory trucking companies’ efforts to dodge taxes and steal the hard-earned wages of drivers through a scheme that illegally classifies drivers as independent contractors,” International Brotherhood of Teamsters Vice President Fred Potter said in a news release.
The California Trucking Association emphasized that the Supreme Court elects to hear a low number of cases each year.
“While the Supreme Court’s decision to not review our case is disappointing, it is not altogether surprising given that the court agrees to take less than 2 percent of the cases petitioning for a hearing,” California Trucking Association CEO Shawn Yadon said in a statement.
The trucking association will now move its attention toward its challenge of the California Supreme Court’s Dynamex decision, which adopted the ABC test to see if an individual is an employee or an independent contractor.
“The misclassification issue and the ability for truckers to be independent contractors continues,” Yadon said. “We remain hopeful our legal challenge to California’s more recent Dynamex ruling, which is an essential outright ban on independent contracting, will demonstrate to the court the dire impact the state’s quest to eliminate small-business trucking will have on interstate commerce.”
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