independent contractor

When hit with a wage hour suit, class action or single, employers are well advised to look for a preemption argument, whether from a union contract (e.g. National Labor Relations Act) or a statutory construct.  If the preemption argument is successful, the entire suit goes away.  Therefore, such an argument can become the proverbial “magic bullet” that defense practitioners (i.e. myself) yearn for.  The Third Circuit has just ruled that a federal law that confines state regulation of the trucking industry does not preempt the Illinois Wage Payment and Collection Act.  Thus, the claims of a class of drivers asserting that illegal deductions were made stays alive.  The case is entitled Lupian et al. v. Joseph Cory Holdings LLC, and issued from the Third Circuit Court of Appeals.

Trucking and the motor carrier exemption
Copyright: vitpho / 123RF Stock Photo

The appellate court affirmed the lower court ruling, where Judge Martini found that the state law was not preempted by the Federal Aviation Administration Authorization Act, a law that preempts any state law “relating to a price, route or service of any motor carrier.”  The Court stated that “the IWPCA claims here are too far removed from the [FAAAA’s] purpose to warrant preemption.  With no record to demonstrate otherwise, we hold that the impact of the IWPCA is too tenuous, remote and peripheral to fall within the scope of the FAAAA preemption clause.”

The plaintiffs sued in August 2016 on a theory that they were not independent contractors and had suffered illegal wage deductions.  They charged that the Company violated the section of the Wage Payment Act that required a written authorization in order to deduct from their compensation.  The lower federal court rejected the preemption defense, asserting that the state law’s “effect on motor carriers does not warrant preemption.”

The Third Circuit agreed and was guided by similar cases from the Seventh and Ninth Circuits.  The Court stated that these kinds of laws (e.g. Wage Payment laws) are “a prime example of an area of traditional state regulation.”  The Court observed that “while the fact that the IWPCA does not regulate affairs between employers and customers is not dispositive, it does demonstrate that the operation of the IWPCA is steps away from the type of regulation the FAAAA’s preemption clause sought to prohibit.  We cannot say, particularly at this procedural juncture, that the IWPCA has a significant impact on carrier rates, routes or services of a motor carrier or that it frustrates the FAAAA’s deregulatory objectives.”

The Takeaway

Well, sometimes the magic works and sometimes it doesn’t…