Hatfield Enterprizes, Inc., et al. v. Washington State Employment Security Department

The Federal Aviation Administration Authorization Act, 49 U.S.C. § 14501(c)(1), (“FAAAA”) broadly preempts any state action that relates even indirectly to a carrier’s prices, routes, or services. Washington State’s statute defining independent contractors for unemployment compensation taxes, Wash. Rev. Code § 50.04.140, makes it impossible for such federally-authorized independent contractors in the trucking industry (owner/operators) to ever be anything but trucking carriers’ employees. Such a reclassification eliminates an established business model in that industry. Is such a reclassification scheme preempted by the FAAAA, given its direct and indirect effects on prices, routes, and services of trucking carriers?

49 C.F.R. § 376.12 regulates the relationship between tr ucking car r iers and ow ner/operators, specifically providing in C.F.R. § 376.12(c)(4) that compliance with the federal requirement of exclusive carrier possession, control, and use of owner/operator equipment during the duration of the parties’ equipment lease may not affect whether an owner/operator is an employee or independent contractor under state law. Are courts barred from considering federally-mandated lease contract provisions in determining carrier control over an owner/operator for purposes of unemployment compensation taxation?