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.