California motor carriers lose round in fight over deciding full-time employees

The United States Court of Appeals, Ninth Circuit, in San Francisco (Photo: Shutterstock)

Trucking coalition sought to take one tool from regulators in determining who is and is not an independent contractor

California motor carriers lost a round against the state’s labor board after an appeals court says a standard for determining full-time employees does not violate federal law.

The case, California Trucking Association v. Julie Su, is part of the industry’s efforts to ensure as broad a scope as possible for defining drivers as independent contractors rather than full-time employees.

Independent contractors, the CTA argues, are under threat from recent legislation that seeks “a one-size-fits-all business model that does not reflect today’s realities of Californians who are choosing to work independently to make more money or for flexibility.”

The threat includes the May decision from the California Supreme Court that it is up to the employer to follow a standard test for establishing whether an employee is full time or an independent contractor.

The California Department of Industrial Relations, though, has sometimes classified drivers as full-time employees in deciding some labor disputes. Specifically, it uses the “Borello” standard to classify drivers and determine whether they are eligible for full-time benefits or not.

Two years ago, the CTA filed suit against Su, the one non-political commissioner at the Department, alleging that the state’s Borello standard was in violation of the Federal Aviation Administration Authorization Act (FAAAA), which deregulated intrastate trucking.

A lower court dismissed the original complaint, but the CTA appealed last year.

In a decision this week siding with the Department of Labor Relations, the Ninth Circuit Court of Appeals says the FAAAA’s main goal was to level the playing field between airlines and trucking in terms of moving goods and “prevent[ing] states from undermining federal deregulation of interstate trucking through a patchwork of regulations.”

The appellate court also ruled that the FAAAA did not intend to preempt any state rules that do not otherwise regulate prices, routes, or services.

“Its driving concern was preventing States from replacing market forces with their own, varied commands, like telling carriers they had to provide services not yet offered in the marketplace,” the court ruled.

“The FAAAA does not preempt the Commissioner from using the Borello standard with respect to motor carriers because this generally applicable, common law test is not related to motor carriers prices, routes or services,” the court said in its ruling.