Recent case continues exploration of the limits of Federal law preemption and its effect on truck drivers

In Rodriguez v. RWA Trucking Company, Inc. truck drivers, who transport goods arriving at the Port of Long Beach and the Port of Los Angeles, sued the company RWA. The drivers alleged RWA violated California’s Unfair Competition Law (UCL) by: (1) selling insurance without a license and charging a portion of the cost back to the drivers and (2) charging the costs of workers compensation insurance to the drivers who were classified as independent contractors. RWA defended claiming federal law preempted the UCL—meaning California law did not apply because the federal law applied instead.

Regarding California state law insurance, the Court of Appeal found that federal law specifically allows for the charge back of insurance costs to the drivers. Because it decided federal law already regulated this issue, the Court found California’s insurance regulations, that protected the drivers, were trumped by federal law. So the Company won this part of the case.

But the Court also decided the federal law does not let RWA charge the drivers for workers’ compensation insurance. The Court said California law controls. Although independent contractors are not required under state law to have workers’ compensation insurance, under the agreements in place between RWA and the drivers, the drivers needed to maintain coverage. Once the company and drivers chose to bring themselves under the law by entering into these agreements, the company could not charge drivers for workers’ comp insurance. Score one for the drivers.

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