A U.S. district court recently dismissed the Western States Trucking Association’s challenge of California’s standard for classifying workers, saying it isn’t pre-empted by federal law.
Judge Morrison C. England Jr. for the U.S. District Court of the Eastern District of California ruled on Friday, March 29, that the California Supreme Court’s Dynamex decision, which created a new standard for determining whether a worker is an employee or an independent contractor, does not create an excessive burden to interstate commerce.
The trucking group contended that Dynamex was pre-empted by the Federal Aviation Administration Authorization Act, federal safety regulations, and the Commerce Clause.
“Western States’ claim that Dynamex invalidates the use of independent contractor drivers, and consequently affects interstate commerce is unavailing,” Judge England wrote. “California’s wage orders do not prohibit the use of such drivers. Instead, they simply provide a framework for establishing whether a given individual should be deemed an employee or an independent contractor.”
As part of the 2018 Dynamex decision, the California Supreme Court established the ABC test, which considers all workers to be employees unless the hiring business demonstrates that all of the factors are established:
A. That the worker is free from the control and direction of the hirer in connection with the performance of the work, both under the contract for the performance of the work and in fact.
B. That the worker performs work that is outside the usual course of the hiring entity’s business.
C. That the worker is customarily engaged in an independently established trade, occupation, or business of the same nature as that involved in the work performed.
Western States argued that the test fundamentally “discarded decades of settled California law” and “throws into question the legality of the entire trucking industry in California.”
The trucking group said its thousands of members could be forced to raise prices, reduce services, and/or limit available routes. Additionally, Western States said the ABC test discriminates against out-of-state and interstate trucking companies.
The court disagreed with Western States’ argument that Dynamex made it “impossible” for trucking companies to hire independent contractors.
“Nothing in Dynamex … precludes a motor carrier from hiring an independent contractor for individual jobs or assignments,” Judge England wrote. “Instead, all that is required if a carrier chooses to so hire is that the wage order’s requirements be satisfied.
“The mere fact that increased costs may result does not trigger pre-emption.”
The Western States Trucking Association said it plans to appeal the ruling.
“The case sets up the question of how a trucking company can use independent trucking contractors without violating the B-prong of the ABC test,” Western States wrote in its online newsletter on March 29.
“We are looking forward to our legal arguments being heard on appeal. We will be perfecting the appeal shortly and remain committed to taking this question to the U.S. Supreme Court if necessary.”
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