A Massachusetts Superior Court recently ruled against a group of truck drivers who claimed that a delivery company violated the Massachusetts Wage Act by misclassifying the drivers as independent contractors rather than as employees. The court held that the state wage law did not apply to the drivers’ claims because the state law was preempted by federal law.

The decision is an important one for Massachusetts employers in industries that (1) have been deregulated under federal laws such as the Federal Aviation Administration Authorization Act (FAAAA) and (2) use third-party contractors to transport goods.

Background 

In Chambers, et al. v. RDI Logistics, Inc., the plaintiff truck drivers sued RDI Logistics, Inc. (RDI), a delivery company that provided “last-mile” delivery services for furniture company customers. As part of its business model, RDI contracted with third-party truckers to deliver furniture for RDI’s clients. These contracts were between RDI and corporately operated driver businesses; none of the agreements were with individual truck drivers. RDI was registered with the Federal Motor Safety Administration as a motor carrier and regulated by the U.S. Department of Transportation.

In 2013, two drivers who formerly delivered furniture pursuant to contracts with RDI filed a class action lawsuit. The lawsuit alleged that RDI misclassified the drivers as independent contractors instead of as employees under Section 148B of the Massachusetts Wage Act, and that the misclassification deprived them of wages to which they were legally entitled.

After pre-trial discovery was complete, but before trial began, the plaintiff drivers asked the court to rule that, as a matter of law, they were employees of RDI for purposes of the Massachusetts Wage Act. In response, RDI asked the court to deny the plaintiffs’ request and instead rule that the plaintiffs’ state wage law claims were preempted by the FAAAA.

The court agreed that the FAAAA preempted the plaintiffs’ state wage law claims and granted summary judgment to RDI. The plaintiffs have appealed the decision to the Massachusetts Appeals Court.

Takeaways

Federal and state labor agencies have recently concentrated significant enforcement efforts on companies that misclassify workers as independent contractors, rather than as employees. Against this backdrop of increased agency scrutiny, the Chambers decision is a bright spot for companies that regularly use independent contractors as part of their business models.

“This decision is very good news for companies that work with independent contractors in Massachusetts,” said Andrew Fay, a shareholder at LeClairRyan who represented RDI in the case. “To our knowledge, this is the first time since the First Circuit Court of Appeals’ decision in the MDA v. Coakley case last fall that a Massachusetts state court has found in favor of the putative employer on federal preemption grounds.” Mr. Fay was assisted on the case by LeClairRyan associate Michael Grant.

This case also serves as a timely reminder for all companies, whether in Massachusetts or in other states, that using independent contractors can carry significant legal risks. Reviewing and monitoring worker classifications to ensure compliance with state and federal laws is a critical tool in helping companies mitigate these risks.