The Complex Nature of Transportation Relationships

Kevin Anderson Employment and Labor, Regulations, Transportation

The trucking and transportation industry continues to work its way through numerous litigations regarding the impact various state laws have on wage and contracting relationships. One of the epicenters of this new trend is in Massachusetts where several lawsuits are being contested against large trucking companies from smaller trucking owners or workers.

In one of the most recent chapters of this unfolding saga, a federal court in Massachusetts was tasked with deciding whether that state’s laws regarding leases are preempted by the Truth-in-Leasing regulations. In typical preemption cases involving trucking companies, the FAAAA is used to preempt challenges against trucking companies based on state law.

The FAAAA preempts any state law that has a significant impact on routes, prices, or services of a motor carrier. 49 U.S.C. § 14501(c)(1). Many trucking companies have used this law as a defense against former employees seeking more money or benefits under state laws established to protect employees and labor rights. This defense is being interpreted differently in different states, and will not be fully resolved until it reaches the Supreme Court.

In this case, Remington v. JB Hunt Transport, Inc., the FAAAA is implicated, but the court also ruled on how federal Truth-in-Leasing regulation relates with state laws. It is a different type of law used in a preemption case, but it is also shows that litigation in federal court with transportation issues requires a creative approach to be successful.

The Main Issue in This Case

This case is so much like others where a former independant contractor is suing a large trucking company based on Massachusetts’ state law regarding the leasing of equipment. In their suit, the former contractor argued that they should have been classified as employees, and that the company took improper deduction from wages for equipment repairs, cargo loss, and damage, and insurance for equipment. Under their theory the company violated state law provisions regulating the leasing of equipment from owner-operators.

The company had a different, if not creative theory to combat this suit. They argued that the federal Truth-in-Leasing regulations found in 49 C.F.R. § 376.1 occupy the field of legislation regarding leased transportation equipment, and therefore preempt state law. The court, in this case, agreed with this point of view. Now the owner-operator plaintiff’s claim on state law and leasing of equipment is thrown out, and the case will proceed on different grounds.

The Law of Preemption

The Supremacy Clause of the U.S. Constitution is an important one to U.S. truckers everywhere. Because it declares federal law the supreme law of the land, any state or local law that interferes with already established federal rules, regulations, and laws will preempt local laws so that they do not apply. You can see why this is important to the transportation industry because of the sheer number of states that one small company could potentially travel through in only a week’s worth of work. Of course, knowing how these laws mesh and apply with federal laws is key for the survival of any trucking company.

As your company continues to grow and do business, it is important to have the right legal partner giving you the right counsel on how to proceed under different circumstances. At Anderson and Yamada, our team of legal professionals has decades of experience helping transportation companies of all sizes work through these issues. Contact us today so we can become part of your team.