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Driver issuesLegal issuesNewsTruckingTrucking Regulation

Trucking’s California legal battles have conflation potential

The Teamsters union is confident that a Monday federal court decision upholding an award of $55 million in back wages to Wal-mart Stores’ (NYSE:WMT) drivers in California will withstand any challenge from a 1994 federal law preempting state trucking regulations. Events of the past two weeks, however, may have muddied the waters a bit.

In separate rulings since the start of 2020, two state judges said that trucking is entitled to a pass from AB5, a California law that makes it harder for companies to prove their workers are independent operators and not employees. That’s because the 1994 Federal Aviation Administration Authorization Act (FAAAA) exempts truckers from intrastate regulations, the judges reasoned. 

The Teamsters, in a filing Tuesday with the 9th Circuit Court of Appeals, called on the court not to confuse the two issues because they operate on separate tracks. The 1994 preemption law bars states from setting prices, mandating or barring certain routes or telling motor carriers what services they can and can’t offer. The state’s employment practices at issue in the Walmart case have no bearing on trucker rates, routes or services, the union said. Walmart should not be allowed to assert federal preemption to avoid what amounts to a separate state-mandated obligation, the union said.

Writing for a three-judge panel of the 9th Circuit, Judge Eugene E. Siler rejected Walmart’s federal preemption claim and ruled California’s state’s wage and hour rules fall outside the FAAAA’s jurisdiction. Using Judge Siler’s opinion as leverage, the Teamsters said that  AB5 falls under the state employment-practice classification because it is not a factor in determining rates, routes or services, the Teamsters said. Instead, the state law merely establishes a “test” to match workers to their particular circumstance of employment, the Teamsters said.

The panel’s ruling affirmed a district court decision supporting a $54.6 million jury award for driver time spent on 10-hour end-of-shift layovers, rest breaks and inspections. The jury found that Walmart exercised control over the drivers’ schedules during the layovers and other breaks. Under state law, employees must be paid a minimum wage covering the entire time they work under what is known as an employer’s “control.” 

The back wages would be added to the drivers’ salaries, arguably the most generous in all of trucking. The driver class has argued it should be paid the difference between a Walmart “layover fee” and the wage entitled to under state law. Walmart is weighing its legal options, but it has said its drivers are already well paid, especially in California.

As fate would have it, the battle between the state and the California Trucking Association (CTA) over AB5 will continue on Monday in the courtroom of Federal District Court Judge Roger Benitez, who last week blocked the enforcement of AB5 in the trucking industry, saying it was likely the FAAA law superseded the stat ruling. Earlier this week, Judge William Highberger of the Superior Court in Los Angeles said much the same thing: That the FAAAA preempts California imposing AB5 on the trucking sector. 

The Teamsters have opposed FAAAA from the start, though they didn’t put up a robust lobbying effort at the time. The preemption gives carriers the leeway to manipulate the legal system to shortchange drivers, the union has argued. The trucking industry, besides arguing the legal merits of the federal law, maintained that complying with state wage and hour rules comes at a price. Those costs are embedded into rate, route and service decision-making, thus having a material, if not direct, impact on the economics of their business, truckers have said. 

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Mark Solomon

Formerly the Executive Editor at DC Velocity, Mark Solomon joined FreightWaves as Managing Editor of Freight Markets. Solomon began his journalistic career in 1982 at Traffic World magazine, ran his own public relations firm (Media Based Solutions) from 1994 to 2008, and has been at DC Velocity since then. Over the course of his career, Solomon has covered nearly the whole gamut of the transportation and logistics industry, including trucking, railroads, maritime, 3PLs, and regulatory issues. Solomon witnessed and narrated the rise of Amazon and XPO Logistics and the shift of the U.S. Postal Service from a mail-focused service to parcel, as well as the exponential, e-commerce-driven growth of warehouse square footage and omnichannel fulfillment.

2 Comments

  1. Quote :

    “The trucking industry, besides arguing the legal merits of the federal law, maintained that complying with state wage and hour rules comes at a price. Those costs are embedded into rate, route and service decision-making, thus having a material, if not direct, impact on the economics of their business, truckers have said.  ”

    What a crock !

    With that sort of lack of reasoning why even pay truck drivers at all ? They should be allowed to bypass any sort of salary according to their misinterpretation of the FAAAA , Right ?

    If we are to use that sort of unreasonable argument , any sort of wage paid to a truck driver and or pilot comes at a price and weighs on a “rate/price” , route , and services , LOL ! This is so freaking ABSURD !

    REQUOTE their HOCUS POCUS argument :

    “”complying with state wage and hour rules comes at a price. Those costs are embedded into rate, route and service decision-making”

    ROTFLMAO ! Now try telling me with a straight face that their argument isn’t absurd beyond belief !

    THE FMCSA REGULATED HOS ! Those are WORK HOUR RULES ! THE FMCSA MANDATED THE ELD(log books) ! BOTH COME AT A PRICE & EFFECT ON PRICE/RATE , ROUTE , AND SERVICES ! Don’t imply that it’s ok t because it’s based on safety . IT EFFECTS PRICE just as much as STATE WAGE & HOUR RULES !

    SO STOP WITH THE HOCUS POCUS ! I can’t believe that JUDGES in the legal system haven’t seen through this CROCK !

    At least on January 29 2019 the third circuit court of appeals DID ! The FAAAA does not preempt the ABC Test !

    So it’s ok for the FMCSA to create laws that effect price/rates , route , and services , but not for states ???

    CLARIFICATION :

    Quote :
    Third Circuit Rules That FAAAA Does Not Preempt New Jersey’s ABC Test for Determining Independent Contractor Status

    “In finding the New Jersey test had no “direct” impact on prices, routes, or services, the Third Circuit observed that the ABC test makes no mention of carrier prices, routes, or services. Nor does the test single out carriers; it applies to all New Jersey businesses. Moreover, the Third Circuit noted that the test does not regulate carrier-customer interactions or other “production outputs,” addressing instead only employer-worker relationships. ”

    End quote !

    The Teamsters got it right .

    Quote :

    “The Teamsters have opposed FAAAA from the start, though they didn’t put up a robust lobbying effort at the time.

    The preemption gives carriers the leeway to manipulate the legal system to shortchange drivers, the union has argued. ”

    BINGO ! However not quite . Its “misinterpretation” is what does !

    However, not only carriers . O/O’s(Brokers) also hire drivers to drive their truck and misclassify them as “independent contractors” which by doing so also shortchanges drivers and in certain cases the government as well .

    The FAAAA( Federal Aviation Authorization Administration Act of 1994 ) should be redrafted/ratified to remove the ambiguity that is causing misinterpretation for which it is abusively being misused as a “carte blanche” too bypass wage laws that prevent legal system manipulation to shortchange drivers and the government out of income taxes .

    RATIFY Federal Aviation Authorization Administration Act of 1994(FAAAA) !!!

    GO TEAMSTERS GO !

    In my humble opinion ………..

    1. You are right on this one I do not always agree with you. The trucking companies lost this one when they brought in E logs and lobbying to make them a legal requirement.

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