Truck Law

A Transportation Law Blog from TransportationAttorneys.NET

Month: July, 2019

California Meal and Rest Break Suit Dismissed on Basis of FMCSA Preemption Stance.

by gspencermynko

On Friday, May 3, 2019, the Central District of California dismissed the meal and rest break claims in a class action based on the December 28, 2018 decision from the FMCSA preempting the California meal and rest break rules as they apply to interstate drivers.

See Ayala v. U.S. Xpress Enterprises, Inc. et al., Case No. EDCV 16-137-GW(KKx). A federal court dismissed a lawsuit brought by a group of drivers against U.S. Xpress concerning the state’s meal and rest break laws, signaling a potential tide change in the lingering legal issue in the state. The court determined that it lacks jurisdiction to rule on a class-action suit brought against U.S. Xpress that alleges the motor carrier violated State of California rules governing meal and rest breaks for commercial vehicle drivers. The court also stated it was required to follow and enforce the FMCSA decision: specifically, California meal and rest break rules cannot be enforced against motor carriers and their drivers who are operating in the state. This decision because it reflects how the courts are respecting the FMCSA’s position and following its declaration that motor carriers subject to USDOT rules do not have to follow California Meal and Rest Break rules.

A quick refresher on the Law:

California requires an employer to provide employees who works more than five hours with a 30-minute uninterrupted, off-duty meal break (and another meal break if they work more than 10 hours). State law also requires an employer to provide employees with a 10-minute uninterrupted, off-duty break every four hours.Cal. Lab. Code §§ 226.7, 512. Regulations issued by the U.S. Department of Transportation (DOT), on the other hand, require only that a commercial driver not drive more than eight hours without first taking a 30-minute, off-duty meal break. See 49 C.F.R. § 395.3(a)(3).

California’s labor code provides for a 30-minute meal break for shifts of five hours or more for all workers in the state. California laws also establish a right for workers in the transportation industry to a 10-minute break for every four working hours. In contrast, Federal hours-of-service rules impose daily limits on driving time, and require long-haul truck drivers to take at least 30 minutes off no less than eight hours after starting a shift if they plan to drive for more than eight hours in a day.

On December 21, 2018 The FMCSA ruled that All Truck Drivers Subject to USDOT Rules Do Not Have To Follow California Law Regarding MRB.

The U.S. Transportation Department ruled last December that California laws requiring truck drivers be allowed certain break periods can be pre-empted by federal laws, which provide for less downtime. The ruling comes in response to a September petition of the DOT by the American Trucking Association (ATA), which claimed that a when rules vary from state to state, it can cause confusion for drivers and challenges for business across the supply chain.

The DOT’s Federal Motor Carrier Safety Administration wrote California’s meal-and-rest break laws, “are more stringent than the agency’s hours of service regulations, that they have no safety benefits that extend beyond those already provided by the Federal Motor Carrier Safety Regulations, that they are incompatible with the Federal hours of service regulations, and that they cause an unreasonable burden on interstate commerce.” The FMCSA has determined that the MRB Rules are laws on CMV safety, that they are more stringent than the Agency’s hours of service regulations, that they have no safety benefits that extend beyond those already provided by the Federal Motor Carrier Safety Regulations, that they are incompatible with the Federal hours of service regulations, and that they cause an unreasonable burden on interstate commerce. The California MRB Rules, therefore, are preempted under 49 U.S.C. 31141(c).

The FMCSA Opinion has now been tested in the courts, and the Trucking Companies are the victors.

The U.S. Central District of California (9th Cir.) entered an order dismissing the meal and rest break claims of the plaintiff and absent class in Ayala v. U.S. Xpress Enterprises, Inc. et al., based on the decision by the FMCSA to preempt the state’s meal and rest break rules as they apply to drivers operating in interstate commerce. The case is the first since the FMCSA decision to test the new legal environment surrounding California’s meal and rest breaks as they pertain to trucking.There have been four different appeals filed with the 9th Circuit challenging the FMCSA’s decision. The district court explicitly conditioned the dismissal on the plaintiff’s right to seek reconsideration should the 9th Circuit reverse or possible stay the FMCSA’s decision on the appeal. The lawyers representing US Xpress stated “This is an important precedent for transportation companies facing meal and rest break claims in California. It provides a means to stop the litigation, including discovery on those claims, while the appeal is pending.

However, take heart that the court’s reasoning is on solid ground.
The Ayala court acknowledged the authority of the Secretary of Transportation to make a determination that state laws meeting certain criteria are preempted and, unless the Ninth Circuit rules otherwise, California may not enforce its meal and rest period rules with respect to drivers of property-carrying commercial motor vehicles subject to FMCSA’s hours of service rules.

Take this good news with caution.

Based on the appeals to the decision in Ayala v. U.S. Xpress Enterprises, Inc. The Ninth Circuit (or U.S. Supreme Court) will have to decide whether the FMCSA’s preemption Order stands. Until the Ninth Circuit rules, motor carriers operating in California have to choose between compliance with California’s meal and rest break rules or hope the Ninth Circuit upholds the FMCSA’s decision. If a carrier changes its policies and practices in reliance on the FMCSA decision, but the Ninth Circuit later overturns the FMCSA decision, the carrier could be liable for violating California meal and rest break law. Trucking companies may want to wait for the Ninth Circuit’s decision before disposing of their California-compliant meal and rest break policies and practices for drivers working in California.

Now we need to convince the FMCSA that the Dynamex “ABC Test” is preempted by Federal Law. Let’s hope that is a future article.

Legal Developments On Sleeper Berth Claims, Dynamex Legislative Developments, and Non-Compete Agreements.

by gspencermynko

 

Judge says drivers should be paid for sleeper berth time

Trucking companies who utilize sleeper berth equipment for their drivers, will be interested in two recent legal cases. The Fair Labor Standards Act requires employers to pay a minimum wage to employees for all “hours worked.” Two federal district courts recently determined sleeper berth time logged in excess of eight hours per day is compensable and counts as hours worked. (Julian v. Swift Transport. Co. Inc. and Browne v. P.A.M. Transp., Inc). The basis for their reasoning was that over-the-road drivers are “on-duty” 24 hours per day. The judge said that drivers should be paid at least minimum wage for time spent off-duty and in their sleeper berths. The ruling doesn’t institute any new requirements for carriers, but it could open the door to lawsuits brought by drivers

The Ninth Circuit Court of Appeals and the U.S. District Court in Nebraska previously reached a different result. Those courts held sleeper berth time was not compensable hours of work unless the driver actually performed work in the sleeper berth, according to a U.S. Department of Labor regulation that specifically addresses the issue. Having to account for sleeper berth time obviously is a big deal because that’s a lot of time every day that would be considered compensable.

Given the different court holdings, carriers should review their policies to ensure that drivers-while logged as “off duty” or “sleeper berth”-are relieved of all duties related to the equipment and the load. For example, drivers should not be required to respond to communications or to guard a load during this time. Carriers should train drivers and then periodically remind them that they must log all work time as on duty.

Dynamex Legislation Passes California Assembly

On Wednesday, May 29, 2019, California’s legislative Assembly passed AB 5, which seeks to codify the ABC Test set forth in the Dynamex decision. This proposed new law expands the Dynamex ruling to apply to all of California’s Labor and Unemployment Insurance Codes. While the legislation codifies the test set forth in Dynamex as applied to Industrial Welfare Commission wage orders, it also makes life even more challenging for average Owner-Operators and the companies using them. The best hope now is that the legislature will take trucking business considerations into account during necessary compromise negotiations with the state Senate, and the bill will be modified from its present form to address some key issues and perhaps exempt trucking companies. Currently, the bill would exempt doctors, dentists, lawyers, architects, accountants, engineers, insurance agents, investment advisers, direct sellers, real estate agents, hairstylists and barbers who rent booths at salons, and marketers and human-resources professionals with advanced degrees.

Under the ABC test, a worker will be deemed to have been “suffered or permitted to work,” and thus an employee for wage order purposes, unless the employer proves:

(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.

But AB 5 actually goes beyond Dynamex: it would expand the ruling to apply to unemployment insurance taxes – which was not covered within the Dynamex decision – thereby exposing trucking companies to additional employment costs for which they would be liable.

As currently drafted, the legislation specifically identifies several industries that are exempt from application of the Dynamex standard and would, instead, be subject to the pre-Dynamex test that was set forth in S.G. Borello & Sons, Inc. v. Department of Industrial Relations. Although the trucking industry is not included in the list of exempted industries, stakeholders continue to work with the legislation’s sponsor to establish a workable exemption for the trucking industry. The legislation will next be heard in the California Senate Labor Committee.

However, there is still a chance that if Trucking does not get an exemption, the argument that Federal law preempts California law on the question of whether Owner-Operators are actually independent contractors is still in play. Unfortunately, there’s still uncertainty as to where things stand in California with regard to independent contractors in the trucking industry due to ongoing legal battles on the federal preemption question. Ultimately, the US Supreme Court may have to decide the question once and for all. Stay posted for developments.

Is Your Non-Compete Agreement Enforceable

I regularly get asked if Non-Compete agreements are enforceable. Many motor carriers have experienced both the offensive and defensive side of non-compete agreements. On one hand, trucking companies have drafted agreements to protect their legitimate business interests (e.g., customer relationships and confidential information). On the other hand, trucking companies have tried to hire workers who are subject to their own non-compete agreements. This is an uncertain area of law and I’m frequently asked “Is this thing enforceable?”

Contributing to the uncertainty, California is particularly hostile to non-competes. With a few exceptions, California courts will not enforce non-compete agreements against departing workers, and post-employment restrictive covenants – therefore this is a difficult jurisdiction for the enforcement of non-compete agreements. The question usually comes down to whether an exception applies.

Therefore, motor carriers should pay close attention to the rules in California and draft agreements that meet only their specific needs. Enforceability depends on a motor carrier’s success in convincing a court that it carefully crafted a narrowly-tailored agreement designed to protect a legitimate, protectible interest. Enforcement problems often result from over-reaching: Asking all employees to sign non-compete agreements rather than just those with customer relationships or access to confidential information. Geographic restrictions that are too broad and far exceed the worker’s geographic area of responsibility. Insisting on a broad geographic non-compete when a more limited (and more enforceable) client-specific non-solicitation provision would suffice. Prohibiting a worker from working in any capacity for a competitor is generally always invalid.

From a defensive standpoint, motor carriers should consider the consequences of hiring an employee who is subject to an ongoing non-competition obligation to a former employer. This consideration should include an analysis of whether the prospective employee can be effectively utilized despite the non-compete and the cost and time of defending against a noncompete lawsuit.