Federal Judge Holds FAAAA Preempts a Critical Portion of the Massachusetts Independent Contractor Law

delivery truck

From JDSupra, Shannon Berube, David Casey, Christopher Kaczmarek and Stephen Melnick discuss a recent Massachusetts decision in which the court said that the Federal Aviation Administration Authorization Act of 1994 (FAAAA) preempted the Massachusetts independent contractor law.  The case arose when the Massachusetts Delivery Association (MDA) challenged the applicability of the FAAAA, which prohibits states from enforcing laws related to the delivery or transportation of property, to the independent contractor law which covers workers who are engaged in the usual course of the employer’s business.  They write:

The MDA argued that having to use employee-drivers instead of independent contractors would necessarily affect the prices, routes and services the delivery companies offer, and therefore was preempted by the FAAAA.  Judge Denise Casper of the U.S. District Court in Massachusetts agreed.  With respect to prices, Judge Casper found that using employees would impose “myriad additional costs” on a delivery company that are not incurred with independent contractors, including higher wages and overtime payments, payroll taxes, and mileage reimbursement.  Together, these cost increases would be “more than negligible, and logically would translate into higher prices charged” to customers.

With respect to routes, Judge Casper found that in the same-day delivery industry, employees drive company-owned cars, whereas independent contractors use their own vehicles.  Independent contractors therefore start their route at the first stop and end it at the last stop, while employees need to pick up the car from the company’s facility, drive their route, then return to the facility – adding 28% to the miles driven.  Furthermore, employees must be given a 30-minute meal break after driving six hours, which means drivers cannot have routes that require more than six hours of consecutive driving.

With regard to services, the court held that a company could not provide rush or “on-demand” delivery services with employees.  While independent contractors can offer their services to multiple courier companies and are paid only when they actually make a delivery, employees normally work for one company, and would need to be paid for their time waiting for a call.  If forced to pay for on-call time, a company would either need to raise its prices for on-demand deliveries, or else abandon them altogether.

Based on these facts, the court held that “the logical, if indirect, effect of the application of Section 148B to delivery companies results in modification of prices (due to higher costs), routes and services.”  Accordingly, the court declared that the B Prong, as applied to same-day delivery companies, is preempted by the FAAAA….”

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