California, Trucking Groups Combat over Independent Contractor Definition in Court

The California attorney general’s office has fired back at two trucking groups’ legal challenges to a state Supreme Court ruling that may make it impossible for trucking companies to use independent contractor drivers in the state. As we reported last May, in Dynamex Operations West Inc. v. The Superior Court of Los Angeles County, the California Supreme Court ruled that transportation drivers should be presumed employees instead of independent contractors when evaluating wage and hour classification in class action cases. The court found that Dynamex, a courier and delivery service, had misclassified its couriers as independent contractors in order to cut costs. The court ruled that going forward, in order to be classified as an independent contractor for wage claims, the burden of proof is on the company doing the classifying, using newly adopted ABC test:

A: that the worker is free from the control and direction of the hiring entity in connection with the performance of the work, both under the contract for the performance of the work and in fact;

B: that the worker performs work that is outside the usual course of the hiring entity’s business; and

C: that the worker is customarily engaged in an independently established trade, occupation, or business of the same nature as the work performed.

It’s the second provision that is the problem, as drivers are not outside the course of a motor carrier’s business.

“Most legal analysis of the ruling agrees the ABC test sets an impossible standard for most of our members to meet,” said the Western States Trucking Association, which filed suit last summer in the U.S. Court for the Eastern District of California challenging the ruling. The state of California filed a motion to dismiss. The judge, after hearing arguments on that motion and a similar one from the Teamsters in November, has not yet issued a decision. But the WSTA’s suit was not the only one challenging the Dynamex decision. In October, the California Trucking Association and two California independent owner-operator drivers filed a lawsuit in U.S. Southern District Court, seeking declaratory and injunctive relief against what it called the unconstitutional interpretation of the state’s wage order test by the California Supreme Court.

CTA argued that the Dynamex ruling should not be enforced because it is pre-empted under the supremacy clause of the U.S. Constitution, which sets the decision in direct conflict with a federal law Congress passed in 1994, part of the Federal Aviation Administration Authorization Act, to prevent states from enacting laws that affected a motor carrier’s prices, routes and services. The Dynamex decision also imposes an impermissible burden on interstate commerce under the U.S. Constitution’s commerce clause, CTA contends. Earlier this month, the California attorney general’s office filed a motion asking the court to dismiss the CTA suit. It says that since the Dynamex decision has not actually been enforced against the plaintiffs, the plaintiffs lack standing and the court doesn’t have any jurisdiction in the case. Judge Roger Benitez is scheduled to hear the motion to dismiss on March 11. Meanwhile, Rajkovacz points to another recent case, Alvarez v. XPO Logistics Cartage. In November, a different federal judge in California issued an opinion that the ABC test is pre-empted by the FAAAA federal law, denying the defendant’s request for a stay.