Federal Judge Rejects Challenge to California Supreme Court's ABC Test For Employee v. Independent Contractor Analysis

Readers might recall that last year, the California Supreme Court created the "ABC test" in its Dynamex Operations West, Inc. v. Superior Court opinion.  The Dynamex case was pivotal in so much that it established a new test to determine whether a worker was an independent contractor or an employee.  The ABC test stipulated that a worker must be considered an employee unless:  a) the worker is "free from control and direction over performance of the work"; b) the work is "outside the usual course of business for which the work is performed"; and c) the worker is "customarily engaged in an independently established trade, occupation or business."  As a result of this new standard, many workers would be entitled to minimum wage and reimbursement for expenses.  Needless to say, this labor friendly ruling riled a lot of feathers among California employers.

However, a challenge to the ABC test was made by a trucking organization (that represents truck operators, including those that regularly hired truckers as independent contractors) when a case was filed in the Eastern District of California.  The case, Western States Trucking Association v. Schoorl, addressed whether the ABC test was preempted by either the Federal Aviation Administration Authorization Act ("FAAAA") or federal motor carrier safety regulations.

In the opinion from the Eastern District of California Court, the FAAAA preemption argument was rejected on the grounds that the California wage regulations interpreted in Dynamex (and challenged in Western States Trucking Association), had only a tenuous connection to and no significant impact on motor carriers' rates, routes, or services governed by the FAAAA.

Further, the Court held that the ABC test created in Dynamex did not preempt applicable federal motor carrier safety regulations.  The federal motor carrier safety regulations were safety rules that regulated motor carriage industry safety, vehicle inspections, and driver's license standards.  The interpretation of the California wage regulations in Dynamex were found to only have a tangential connection to safety issues.  The decision from Dynamex did not conflict with the federal motor carrier safety regulations because these federal regulations did not speak to when an employee relationship exists or under what terms.

While this is another victory for workers in the state, it does not appear that this particular legal challenge is resolved.  The trucking organization has indicated it is planning to appeal the decision to the Ninth Circuit Court of Appeals and "to the U.S. Supreme Court if necessary."  While there is no guarantee that the Supreme Court would entertain an appeal, it is worth noting that there appears to be a split among circuits on the matter:  A federal court in Boston reached an opposite conclusion on a similar case in 2016.  Earlier this year, a court in Philadelphia upheld a New Jersey ruling that was similar to Dynamex.  The Supreme Court often takes up cases to resolve a dispute among circuits.  This case appears to be a candidate for the Supreme Court to resolve such an issue.  Stay tuned.

For a copy of the Eastern District of California's opinion:  http://hr.cch.com/eld/WesternSchoorl032819.pdf