In a recent Federal Arbitration Act ("FAA") decision, the United States Supreme Court unanimously made getting to arbitration more difficult for trucking companies. In Oliveira v. New Prime, the Supreme Court determined that it was for a court, not an arbitrator, to decide if the exemption in Section 1 of the FAA applies. More importantly for truckers, the Court decided that the Section 1 exemption applied to all truck drivers, whether employees or independent contractors. This means the FAA cannot be used to compel arbitration of claims involving truck drivers.
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.
As discussed previously on this blog, the Dynamex Operations West v. Superior Court decision upended California's independent contractor market with a new test for whether a worker will be considered an employee. The new test was particularly problematic for the trucking industry. As such, several cases have arisen to challenge the Dynamex decision. The Western States Trucking Association (WTSA) challenged the case. Additionally, a recent California District Court decision determined federal law pre-empts Dynamex. Of course, there is a still a long way to go before Dynamex's fate is decided.
Backed by many in the trucking industry, the Environmental Protection Agency is planning to implement new limits on commercial truck emissions. The new limits appear to be in response to California pushing ahead with laws of its own.
Manbang, China's "Uber-for-Trucks" is securing funds to support expansion of its driverless program, and the company has already invested in a Silicon Valley driverless truck start-up. While the company is still establishing itself in China, it's success or failure could be a signal for similar companies in the United States.
Governor Jerry Brown recently signed SB 1402, which quickly has shippers, particularly larger retailers, facing new levels of potential liability. The bill means retailers will now be held jointly liable when the trucking companies they hire for port drayage services violate state employment laws.
Larson & Gaston recently won a major transportation law defense victory on behalf of one of its motor carrier clients. Four of the carrier's owner-operators filed claims with California's Division of Labor Standards Enforcement (DLSE), claiming to be employees of the motor carrier rather than independent contractors. This is a common accusation in the ongoing wave of litigation overtaking the transportation industry. The drivers sought over $500,000 in damages and penalties. L&G, on behalf of its carrier client, petitioned to compel arbitration of the claims pursuant to the arbitration clauses appearing in the independent contractor agreements. The drivers opposed, arguing that the arbitration clauses were unenforceable because they were unconscionable and therefore their claims should be resolved at DLSE Berman hearings
AB 621 (Amnesty for Converting Independent Contractor Drayage Drivers to Employees)
Senate Bill 588 (Labor Commissioner's Enforcement of Judgments)