Pasadena California Business & Commercial Law Blog

In California, the ongoing litigation around the definition of an employee versus independent contractor and the rules for meal and rest breaks threaten to upend the trucking industry. While these issues are understandably garnering significant attention, there are others across the country that could also have a large impact. Currently, a case in Arkansas may leave the industry forced to undergo massive change.

In October 2018, a federal court in Arkansas took on a case against PAM Transport. The lawsuit centered on the time and activities drivers were required to be paid minimum wage for. Notably, this included time on the road sleeping that may normally be logged as off duty. PAM transport sought to have the case dismissed but their motion was denied.

As discussed previously on this blog, recent legal developments have complicated the business plans of trucking companies that use independent contractors as drivers. These have included the Dynamex decision that changed the 30-year-old test of whether a worker is an employee or an independent contractor, but appears applicable only in certain circumstances and for only certain legal claims. This was followed by lawsuits to invalidate Dynamex and a federal district court decision finding that Dynamex was pre-empted by federal law. Compounding this confusion, California passed a law late last year that exposed large retailers to new potential liability. The bill, SB 1402, meant companies could be jointly liable when they hire companies that have violated state employment laws. Now shippers could be liable for violations caused by the motor carriers they hire.

On December 21, 2018, the Federal Motor Carrier Safety Administration (FMCSA) granted petitions submitted by the American Trucking Associations (ATA) and the Specialized Carriers and Rigging Association (SCRA) requesting a determination that the State of California's Meal and Rest Break rules (MRB Rules) are preempted under 49 U.S.C. 31141 as applied to property-carrying commercial motor vehicle (CMV) drivers covered by the FMCSA's Hours of Service (HOS) regulations. Basically, ATA and SCRA argued that the MRB should not apply to commercial truck drivers because federal HOS rules already regulated driver breaks. The extensive public comments filed in response to the petitions and considered by the FMCSA can be found at the regulations.gov website.

Since April 30, 2018, when the California Supreme Court issued its decision in Dynamex Operations West. v. Superior Court, California motor carriers, as well as many other businesses, have been struggling to deal with the unexpected new "ABC test" for deciding who is an independent contractor and who is an employee. Under its problematic B prong, the new Dynamex test requires that for a person to be an independent contractor the work he or she does must be outside the usual course of the hiring entity's business. For a basic motor carrier, it is hard to argue that a truck driver is performing a service outside the usual course of the motor carrier's business. But now, a new Central District Court has found that federal law preempts Dynamex for determining the classification of truck drivers.