The Federal Aviation Administration Authorization Act and Preemption

Kevin Anderson Employment and Labor, Judgments, Regulations, Transportation

A much anticipated case from the U.S. District Court for the District of Massachusetts that may have an impact on how the FAAAA is interpreted in the future was recently released. In Massachusetts Delivery Association v. Coakley the district court faced the task of ruling whether Massachusetts’ state law involving independent contractors was preempted by the Federal Aviation Administration Authorization Act.

The Massachusetts law in question requires companies using couriers in Massachusetts to designate their couriers as employees, not independent contractors. The couriers would rather be treated as employees because that designation brings with it protections and benefits that independent contractors do not enjoy. But shipping and transport companies prefer to employ independent contractors because doing so reduces overhead, costs, and other liabilities.

Background of Case and FAAAA Provisions

An association representing delivery companies in Massachusetts challenged the application of the state law as applied to delivery and shipping companies. In 2013 a U.S. district court judge ruled against them, but after a 1st Circuit Court of Appeals reversed, the court now finds that the FAAAA does preempt application of the state law dealing with independent contractors.

The FAAAA explicitly states that state law is preempted where the law is “related to a price, route, or service of any motor carrier …. with respect to the transportation of property.” 49 U.S.C. § 14501(c)(1). Preemption of state law means that it will not apply to a motor carrier when it deals with price, routes, or services.

In its decision, the court took a broad view of what the state law did. The Massachusetts law that required these companies to designate their delivery contractors as employees did not, on its face, relate to price, route or service. But according to the court, the law did have a logical and indirect effect on price, routes, and services. Because if these delivery companies were required to hire their contractors as employees, the price the service they provide would go up, some routes would be affected, and service would surely be impacted on some level. As a result, the court held that the FAAAA did preempt application of the Massachusetts law.

Impact of Decision and Comparisons

This is an oft litigated area of the law when it comes to motor carriers and state regulations. For example, in 2014 the 9th Circuit Court of appeals ruled that California laws regarding mandatory breaks for truckers were not preempted by the FAAAA. What results is a split in reasoning among the several courts as to what is preempted by the FAAAA and what is not.

The impact this particular decision will have on future FAAAA rulings and state law is not yet clear. But it is a victory for trucking companies because it further establishes federal laws and regulations as the superseding rules when it comes to interstate commercial shipping. That is the purpose of the FAAAA, Carmack Amendment, and other regulations: to ensure that companies dealing in interstate commerce do not have to worry about compliance with 50 different set of laws and rules as they seek to transport America’s goods throughout the country.

When it comes to your company’s legal needs, we can help. At Anderson and Yamada, P.C. we are dedicated to your industry. Contact us so we can help you navigate the intricacies of the FAAAA, Carmack Amendment, and other rules affecting trucking companies. Our practice is dedicated to meeting the needs of your company as you seek to thrive and grow.