MASS. DISTRICT COURT JUDGE INVOKES FEDERAL PREEMPTION OVER STATE LAW

On July 8, 2015, Massachusetts District Court Judge Denise Casper held that the FAAAA (Federal Aviation and Administration Authorization Act of 1994) pre-empts a Massachusetts state law limiting classification of independent contractors to those whose work differs from the company’s usual line of business.  The Court granted summary judgement to the Massachusetts Delivery Association in a case challenging Massachusetts’ “ABC” law. The “ABC” law provides conditions for the classification of workers as independent contractors.  By granting summary judgment, Judge Casper found that the “ABC” law was preempted because it relates to rates, routes, or services of motor carriers.  Interestingly, Judge Casper had previously ruled in the opposite direction, but upon appeal to the First Circuit Court of Appeals, that decision was overruled and sent back to the District Court.  Judge Casper’s new opinion focused mostly on Prong B of the “ABC” law, which states that a worker is properly classified as an independent contractor if “the service is performed outside the usual course of the business of the employer.” In an opinion that examined several outcomes of a carrier’s adherence to Prong B, Judge Casper’s opinion can essentially be boiled down to this: The “ABC” law as it stands would force many trucking companies operating in Massachusetts to reclassify independent contractors as employees. That reclassification would alter those companies’ prices, routes, and services.  Thus, the FAAAA preempts the state law, effectively nullifying it when pertaining to trucking operations in the state of Massachusetts.

THE CALIFORNIA LABOR COMMISSIONER FINDS UBER DRIVERS TO BE EMPLOYEES

On June 3, 2016, the Labor Commissioner of the State of California issued a Decision finding that Uber Technologies is the employer of the “Transportation Providers” with whom it contracts to use its software system and who provide transportation to Uber’s customers.  The Commissioner analyzed the factors set forth by the California Supreme Court in S.G. Borella & Sons, Inc. v. Dept. of Industrial Relations (1989) 48 Cal.3d 341 with a focus on the finding that the drivers provide services integral to the business of Uber.  While the Commissioner found control of the overall operation was exercised by Uber, she acknowledged that there was a minimal degree of control over the details of the work.  Nevertheless, given the statutes establishing a presumption of employment and the “modern tendency” to find employment when the individual is providing work that is integral to the regular business of the alleged employer, it was determined that the drivers are employees of Uber.  Uber filed a Notice of Appeal on June 16, 2015 in the California Superior Court.

HILLARY BOOTH SPEAKS AT THE TRANSPORTATION LAWYERS ASSOCIATION ANNUAL CONFERENCE

Hillary Booth participated in a panel discussion titled: “How Effective Implementation and Management of Internal Corporate Policies Can Eliminate Claims and Make Lawsuits Defensible” at the TLA 2015 Annual Conference.  The panel evaluated common policies that are beneficial for some reasons, but may have negative ramifications in other areas of a business, and common policies that violate the law or create unintended negative inferences for a business.

HILLARY BOOTH ELECTED SECOND VICE PRESIDENT OF THE TRANSPORTATION LAWYERS ASSOCIATION

In May 2015, Hillary was elected to serve as the Second Vice President of the Transportation Lawyers Association, an association of over 1000 lawyers from accross North America specializing in providing services to the transportation industry.

HILLARY BOOTH SPEAKS AT THE TRANSPORTATION & LOGISTICS COUNCIL CONFERENCE

Hillary Booth participated in the “Law of the Land, Law of the Jungle” panel presentation at the 2015 Transportation & Logistics Council conference.   The panel discussed various topics of interest to transportation professionals, including the proper measure of damages for lost or delayed cargo, the requirements for enforcement of limitations on liability, and the rights of the parties in connection with concealed damages.  The conference was attended by industry members and attorneys from all over the Country, and provided education and networking opportunities.

HOUSE BILL WOULD PROVIDE UNIFORM STANDARD FOR THE SELECTION OF MOTOR CARRIERS

On February 26, 2015, Rep. John J. Duncan, Jr. (R-TN) reintroduced a Bill (H.R. 1120) that prohibits any state from enforcing a law or imposing liability on an entity that hires a motor carrier for the transportation of property or household goods under a negligent selection claim or cause of action.  This prohibition would apply to any type of damages, including personal injury, death, cargo damage, or other property damage.  The bill specifies the protected entities as those acting as a shipper, a broker, a consignee, a freight forwarder, a household goods freight forwarder, a Non-Vessel Operating Common Carrier, an ocean freight forwarder, an ocean transportation intermediary, an indirect air carrier, a licensed customs broker, an interchange motor carrier, or a warehouse.

The entities may obtain the provided protections from liability only if, before tendering a shipment but not more than 35 days before the hired motor carrier picks up a shipment, the entity verifies that the motor carrier, at the time of verification:

1. Is registered with and authorized by the Federal Motor Carrier Safety Administration (“FMCSA”) to operate as a motor carrier or household goods motor carrier;

2. Has the minimum insurance coverage required by federal regulation; and

3. Does not have an unsatisfactory safety rating from the FMCSA at the time of verification.

If passed, the Bill would provide some needed stability and predictability in the industry, and would nullify what the Transportation Intermediaries Association (“TIA”) has termed “the confusing and conflicting vagaries of the CSA BASIC data as it relates to the negligent selection of a carrier.”  This Bill would confirm that a satisfactory rating from the Federal Motor Carrier Safety Administration is the applicable standard, and that the FMCSA is the only entity authorized to determine whether a motor carrier is safe to operate and to hire.

H.R. 1120 is currently being considered by the House Transportation and Infrastructure Committee.

HAS THE CALIFORNIA SUPREME COURT GONE TOO FAR?

On February 18, 2015, the California Supreme Court held in Horne v. District Council 16 International Union of Painters and Allied Trades that a convicted felon, who was ineligible for the job he sought because of the conviction, may nevertheless sue the employer for discriminatory failure to hire him under California’s Fair Employment and Housing Act (FEHA), Government Code §12900 et seq., and may recover damages, including wages for the period of time when the applicant was not eligible for the job.  The Supreme Court relied on its prior decision in Salas v. Sierra Chem. Co., 59 Cal.4th 407 (2014), where it ruled that an undocumented worker who obtained employment using someone else’s social security number was able to sue for wrongful termination and discrimination under the FEHA.

The Supreme Court held in Salas that federal immigration law does not preempt this result, except to the extent that the employee seeks to recover lost wages for any time after the employer discovers the employee’s undocumented status.  In what appears to be a result oriented analysis, the Supreme Court relied upon California Government Code §7285, which declares: “All protections, rights and remedies available under state law, except any reinstatement remedy prohibited by federal law, are available to all individuals regardless of immigration status who have applied for employment, or who are or who have been employed, in this state.”  The Supreme Court reasoned that this code section does not frustrate the purpose of the federal Immigration Reform and Control Act of 1986, 8 U.S.C. §1101 et seq., which prohibits the employment of illegal aliens, and is thus not preempted.

The Supreme Court gave lip service to the rights of employers, stating that the equities between the parties should be balanced.  Under such a balancing of the equities, the Court concluded that remedies such as reinstatement, promotion, and back pay for periods after the employer learned of the disqualification would, generally speaking, be inappropriate. Rather, the damages available to the employee or potential employee should be limited to what is required to compensate the employee for loss of employment from the date of wrongful discharge or refusal to hire to the date on which the employer acquired the information of the employee’s wrongdoing or ineligibility.  The Salas Court recognized that under federal law, the State cannot require an employer to pay lost wages to the employee for the time period after it learns of the employee’s undocumented status.  In both the Horne and Salas cases, the employers did not find out about the ineligibility until long after the employee was either not hired or the employment was terminated.  Thus, the employees were compensated for time that they neither worked nor were legally eligible to work.

Though not expressed, the Salas and the Horne decisions undercut the Supreme Court’s prior decision in Guz v. Bechtel National, Inc. (2000) 24 Cal.4th 317, which has long been regarded as setting the standard for an employee’s burden in discrimination cases.  In Guz, the Supreme Court ruled that in addition to establishing a discriminatory motive behind an adverse employment action, the employee was required to establish that he or she “was qualified for the position he sought or was performing competently in the position he held.”  However, in both Horne and Salas, the Supreme Court skipped over that requirement as neither employee in those cases was “qualified” for the position held or sought.

While the Supreme Court declares that prohibiting lawsuits by ineligible employees would allow employers to engage in discriminatory conduct without ramifications, it failed to consider the ramifications of allowing undocumented and otherwise ineligible individuals the right to receive the benefits of employment, often without even having to work.  Preventing discrimination in all forms and in all situations is certainly a laudable goal.  But, it should be done without encouraging unintended consequences.  These decisions promote conduct inconsistent with the Immigration Reform and Control Act of 1986, and other laws setting forth eligibility requirements for certain positions.  Instead of promoting a consistent and evenhanded application of the law, they reward those who successfully hide their ineligibility by falsifying government documents or other deceitful measures, and those who hide it the longest get the most reward.

THE SAN DIEGO SUPERIOR COURT FINDS DRIVERS TO BE EMPLOYEES AND NOT INDEPENDENT CONTRACTORS

In late January, a Superior Court Judge ruled that drivers providing services to Pacer Cartage in the ports of Los Angeles and Long Beach are employees, not independent contractors.  The seven drivers were collectively awarded more than $2 million in damages.  Judge Bloom noted that the key indicator in any employment relationship is whether the worker has control over their own activities, profits, and losses, and he found that in this case, it was Pacer Cartage that had the control.

The vehicle lease agreement between Pacer Cartage and the drivers was criticized by the Judge, who commented that the “complex” leasing agreement was only available in English, even though the seven Latino drivers “spoke virtually no English,” and only two had graduated from high school.  Pacer Cartage had set up a separate company which leased the vehicles through a bank, and then subleased the vehicles to the drivers, who never saw the terms of the original lease.  The Judge found that the leases were more akin to traditional employer-employee contracts because the drivers had limited control over the vehicles, and were required to purchase insurance through Pacer Cartage.  Further, the Judge noted that the drivers were told where to park the vehicles, they could not transport freight for other companies, and they were punished if they received moving violations.  Separate from the vehicle leases, the Judge found other factors to support his ruling, including the facts that the drivers had to complete job applications, were issued identification cards with the Pacer logo, could not bill their customers, or set prices or rates, were required to complete log books and other forms of bookkeeping, and were required to follow rules laid down by Pacer.  The Judge’s reference to the log books is particularly troubling as they are required by law so all drivers complete them.

The attorney for the Plaintiffs stated that he will be filing similar cases against other drayage companies.  XPO Logistics Inc., the parent company of Pacer Cartage, said they would appeal the ruling.

HAPPY HOLIDAYS!

CONGRESS PASSES SUSPENSION OF THE HOURS OF SERVICE RESTART RULES

On December 13, 2014, Congress passed the 1,700 page 2015 Omnibus Appropriations bill, providing funding for the federal government.  President Obama is expected to sign the bill.  Within this bill is a provision suspending the 34 hour restart requirement for drivers of commercial vehicles.  Specifically, the bill reverts the restart rule back to the simple 34 hour restart that was in effect from 2003 to June 2013, and suspends the requirement that qualifying restarts contain two consecutive periods of time between 1:00 a.m. and 5:00 a.m.  For more information, see the attached announcement issued by the California Trucking Association:  HOS Restart Relief Passes