California companies have been required to reconsider their use of independent contractors since the state’s Supreme Court outlined the new ABC test in Dynamex Operations West, Inc. v. Superior Court. Unlike the prior Borello test, which involved the balancing of numerous factors, the ABC test requires that a company establish all of the following: (A) the worker is free from the control and direction of the company; (B) the work is outside the company’s usual course of business; and (C) the worker is customarily engaged in an independent established business in the same line of work.
In the transportation industry, however, the ABC test may be preempted by the Federal Aviation Administration Authorization Act (the FAAAA). The FAAAA preempts all state laws that “relate to a price, route, or service of any motor carrier . . . with respect to the transportation of property.” The United States Supreme Court has held that preemption may occur “even if a state law’s effect on rates, routes, or services is only indirect” and applies “at least where state laws have a significant impact related to Congress’ deregulatory and pre-emption-related objectives.”
Because the ABC test is new, there is no binding authority in California on the question of whether it is preempted by the FAAAA. Given this fact, Western States Trucking Association filed a lawsuit against the Acting Director of the California Department of Industrial Relations (Andre Schoorl) and the California Attorney General (Xavier Becerra) seeking a finding that the FAAAA preempts the ABC test.