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Western States Trucking Association’s FAAAA Preemption Argument Dismissed by California District Court

On March 29, the United States District Court for the Eastern District of California held that the Federal Aviation Administration Authorization Act (“FAAAA”) does not preempt the application of the Dynamex ABC Test to a motor carrier for purposes of determining whether owner-operators are considered employees under California’s Wage Orders. Western States Trucking Ass’n v. Schoorl, 2019 WL 1426304, *10 (E.D. Cal. Mar. 29, 2019).

In its ruling, the court reasoned that, although the decision in Dynamex applied the ABC Test to interpret the meaning of “engage, suffer, or permit to work” for purposes of California Wage Order No. 9, the definition was equally applicable “across the board to all wage orders” and that recent Ninth Circuit decisions applied, resulting in a decision that Dynamex is not preempted by the FAAAA. See Californians for a Safe and Competitive Dump Truck Transp. v. Mendonca and Dilts v. Penske Logistics, LLC. In so doing, the court specifically disagreed with the Central District of California’s decision in Alvarez v. XPO Logistics Cartage, LLC.

In its discussion, the court found that the rationale of Mendonca and Dilts applied, and that the generally applicable interpretation of the term “employ” as used in Dynamex “does not run afoul of the FAAAA simply because that interpretation may have some effect on transportation services.” The court then specifically held that the impact of Dynamex on prices, routes, and services of a motor carrier was indirect and insufficient to warrant preemption.

Without further guidance from an appellate court, it is difficult to predict where future courts will land regarding this developing split of authority addressing preemption. In the interim, any motor carrier utilizing owner-operators in California should consider taking steps to avoid becoming a misclassification litigation target and potentially reduce liability exposure in the event of a misclassification determination. For questions about the Dynamex, Western States, or Alvarez decisions, please contact Jim Hanson or Greg Feary.

For a more complete discussion of the Dynamex decision, please see our May 2, 2018 Transportation Law Alert and June 21, 2018 Transportation Law Alert, For a more complete discussion of the Alvarez decision please see our December 5, 2018 Law Alert.

Commercial Driver Qualifications

Maintaining driver files comes with a host of nuances that make it challenging for fleets to stay compliant. To this point, our subject matter experts have received countless requests for clarification on the topic. Here are answers to some of the more commonly asked questions surrounding driver qualification (DQ) file management:

1. Who needs a DQ file?
The answer is based on the definition of “commercial motor vehicle” from 49 CFR section 390.5 and may come as a surprise. According to this definition, it’s not just CDL drivers who need a file. Drivers operating the following vehicles are also included:

  • Vehicles weighing 10,0001 pounds or more (this includes gross vehicle weight, gross vehicle weight rating, gross combination weight, or gross combination weight rating)
  • Vehicles designed to transport 9+ passengers (including the driver) for compensation, or 16+ passengers not for compensation
  • Vehicles placarded for hazmat transportation

2. What is required in a DQ file, and how long do you keep it?
The driver’s application, motor vehicle records (MVRs), safety performance history, and certificate of road test or copy of CDL are created at time of hire and kept for the duration of employment plus three years. The Annual MVR and review notes, medical card and national registry verification, and annual list of driver convictions are generated biennially, annually, or more frequently, and may be discarded after three years. A terminated driver’s file should be kept for three years after the driver leaves.

3. What if something is missing?
Once you identify a potential violation with your files, the best thing you can do is put forth a good faith effort to comply. Attempting to hide the violation is considered falsification and carries a hefty price tag, so it’s in your best interest to document your acknowledgement of the violation, show you have taken steps to correct it, and put the proper controls in place to prevent future violations.

4. What about rehires?
If a driver is let go, or leaves and is then rehired, the driver must be treated like a new hire. In addition to keeping the old file intact, a new driver file must be created. Items that may still be valid, for example the road test or medical card, can be recycled and used for the new file. The driver application and MVR, however, must be recreated.

5. How must DQ files be stored?
Organized and accessible! It is legal and more efficient to scan your driver qualification file documents, store them electronically, and purge the originals. However, you may be called upon to print electronic images during an audit based on the discretion of the auditor. You need to ensure the scanned images are as clear as the original before you destroy any document.

The Risk of Non-Compliance
Choosing not to comply with DQ file regulations could result in poor CSA scores and being put on ‘Alert,’ which can lead to an on-site investigation, FMCSA audit, or being issued an out-of-service order. Additionally, your operation will be at risk of a downgraded safety rating and may be liable for fines and penalties ranging from $1,214 per day to $12,135 for certain recordkeeping violations.

Proper DQ file maintenance helps ensure your drivers are not only licensed to drive, but also experienced and trained according to your company’s standards. In the event of a crash, driver qualification files provide legal proof that you’ve done everything in your power to ensure only qualified drivers are operating your vehicles.

Do ELDs Improve Safety?

The research says that the ELD mandate does not currently improve safety – this is according to Alex Scott of Northeastern University, Andre Balthop of the University of Arkansas, and Jason Miller of Michigan State University.

Alex Scott led a team that evaluated inspection and crash data from the FMCSA. The research shows that the widespread adoption of ELDs had no measurable impact on the number of accidents. In that same 2 year timeframe, Hours of Service violations decreased by 51.7%.

Unsafe driving infractions have increased for small carriers and owner operators.

“Our research also provides another example of how policy interventions are fraught with uncertainty in complex systems with many interconnections and possible feedbacks,” the report states.

These offsetting results, the researchers say, could have been predicted. The authors found that even before the ELD mandate, drivers were heavily incentivized to avoid accidents, and this didn’t change after the ELD mandate. The ELD mandate was designed to reduce driver fatigue, a cause of some accidents, but it failed to encourage other safe driving behaviors, and may have actually increased unsafe driving behaviors.

“Given the legal liabilities involved with being in a crash when outside hours-of-service limits, drivers are incentivized to be extra cautious when driving beyond limits. The ELD mandate has not done much to change the driver calculus in this respect, and so it is perhaps not surprising that we fail to uncover significant accident reductions,” the paper concludes.

Read the research paper in its entirety here; https://jbatelematics.com/didtheelectronicloggingdevicemandatereduceaccidents/