FAAAA, Preemption, and the 9th Circuit Court of Appeals

Kevin Anderson Employment and Labor, Transportation

There is a split of opinions among the various federal circuit courts as to when and how the Federal Aviation Administration Authorization Act preempts state wage and other employment rights laws. The 9th Circuit Court of Appeals decided this issue one way in 2014, and recently reaffirmed that decision in a case named Ortega v. JB Hunt Transport, Inc.

The split of opinions is over whether a state can pass certain wage and other employment benefits laws that have a significant impact on how interstate cargo carriers do business. The FAAAA was passed by the U.S. Congress in an effort to preempt state trucking regulations that varied across the entire fifty states. In its wake, the Federal Motor Carrier Safety Administration was created to regulate the entire industry.

Now the trucking industry is highly regulated, but with what should be a uniform set of regulations coming from one capital, Washington D.C. Were it not this way, there would be fifty different sets of regulations from fifty different capitals across the country. But the FAAAA and other laws like the Carmack Amendment work to give trucking and transportation companies clarity and uniformity as they work from state to state.

State Wage and Labor Laws

Over the last five years or so, many different class action and other lawsuits have surfaced against trucking companies for failure to comply with state wage and labor laws. These suits have made an appearance across the country, including in the 9th Circuit Court of Appeals.

The suits have only surfaced because for years the trucking industry has treated its employees differently because it is a federally regulated industry. Because of the heavy federal regulation, many trucking companies have ignored things like rest requirements and other wage-related labor laws. This is particularly true in California.

Once sued, the trucking industry’s response has been instinctive. That response is basically, “we cannot be held liable under state laws because of federal regulation.” The FAAAA specifically preempts state laws that significantly impact an interstate carrier’s “prices, routes, and services.” As the argument goes, if a state is allowed to regulate trucking company employee’s wages, breaks, and other parts of their employment, it will have a significant impact on how a company establishes its rates, routes, and prices in shipping goods interstate.

The First Circuit Court of Appeals accepted this line of thinking and argument, but other circuits (including ours in the 9th) have rejected this argument. As a result, this issue is primed for a review and ruling by the U.S. Supreme Court. But as this issue continues its way through the court system, it is important that your company is compliant with all the relevant law, so as to avoid any expensive suits going forward.

Your Trucking and Transportation Law Firm

At Anderson and Yamada, we are one of the few firms in Oregon dedicated to trucking and transportation legal issues. We have decades of experience representing, counseling, and guiding trucking companies as they navigate the endless number of legal issues. Contact us today.