Seyfarth Synopsis: Following the Federal Motor Carrier Safety Administration's determination in December 2018 that federal law preempts California's meal and rest break rules, observers questioned whether California courts would find that the preemption was valid. Shortly after the determination was issued, the State of California and several other groups appealed directly to the Ninth Circuit, arguing the federal agency overstepped had its authority. On January 15, 2021, a panel of the Ninth Circuit Court of Appeals published its decision, ruling that the FMCSA's preemption determination, as applied to drivers of property-carrying commercial motor vehicles, was valid. Employers should still proceed with caution, however, as this decision is still subject to further review and appeal, and regardless of what happens in the courts, the Biden Administration may seek to unravel the preemption determination.

The FMCSA's Preemption Determination:

On December 21, 2018, the FMCSA concluded that the federal Motor Carrier Safety Act (the "Act") preempts California's meal and rest break rules when a driver is subject to federal hours-of-service requirements. The FMCSA found that California's rules "are incompatible with the federal hours of service regulations and that they cause an unreasonable burden on interstate commerce." Consequently, "California may no longer enforce the [state meal and rest break rules] with respect to drivers of property-carrying [commercial motor vehicles] subject to FMCSA's [hours of service] rules." Given the ramifications of this preemption determination, observers question whether, and to what extent, California courts would defer to the federal agency's determination in future meal and rest break cases brought by drivers. Indeed, the determination is at some odds with the Ninth Circuit 2014 decision in Dilts v. Penske, which held that the Federal Aviation and Administration Authorization Act does not preempt California state law mandating meal and rest breaks for drivers.

Shortly after the FMCSA's determination was issued, the State of California and several other groups filed petitions to challenge its authority to invalidate California's rules. While the appeal was pending before the Ninth Circuit, in 2019, California courts began applying the FMCSA's preemption determination to dismiss drivers' meal and rest period claims. As these rulings came down, observers still waited for the Ninth Circuit to weigh in on the validity of the FMCSA's preemption determination.

The Ninth Circuit Finds the FMCSA's Preemption Determination Deserves Deference and is Reasonable and Neither Arbitrary nor Capricious.

The issues presented on appeal were whether federal law preempts California's state meal and rest break claims, or whether the FMCSA exceeded its authority in issuing the preemption determination.

First, the Ninth Circuit's decision finds the FMCSA has the authority, under the Act, to review for preemption any state laws and regulations "on commercial motor vehicle safety." Finding this phrase ambiguous, the Ninth Court ruled that the FMCSA's interpretation of the Act was entitled to deference. Still, because the same agency in 2008 had interpreted the same phrase differently (such that the meal and rest break rules were not preempted), the FMCSA had to explain why it changed its mind on the same preemption subject ten years later.

Addressing the charge of inconsistency, the FMCSA reasoned in 2018 that the phrase was one that "imposes requirements in an area of regulations that is already addressed by a regulation" under the Act, such as the federal hours-of-service regulations.

The fact that California regulated meal and rest breaks, regardless of industry, did not negate the FMCSA's finding that the meal and rest break rules still were "on commercial motor vehicle safety." Indeed, many observers had suspected the Ninth Circuit may find difficulty in upholding the new preemption determination because of its recent case law holding that federal law did not preempt meal and rest break rules in light of the general application of those rules. Here, the Ninth Circuit found the FMCSA permissibly determined that the meal and rest break rules were state regulations "on commercial motor vehicle safety," and therefore within the agency's authority to find preempted under the Act. The Ninth Circuit distinguished its 2014 decision in Dilts v. Penske Logistics, LLC, which found no preemption arising from the FAAAA, an entirely different statute than the Motor Carrier Safety Act, and which prohibits state laws that are "related to" prices, routes, or services of commercial motor vehicles. Dilts also involved short-haul drivers who were not covered by the federal hours-of-service regulations.

Finally, the Ninth Circuit's decision held that the Act permits the FMCSA to find preemption where the state rules were "additional to or more stringent than" the federal regulations. On this point, because California law requires more breaks, more often, and provides less timing flexibility than one sees under federal law, the FMCSA's determination was reasonable and supported. As a result, the Ninth Circuit dismissed the State of California's arguments that the FMCSA acted arbitrarily or capriciously in finding that enforcement of the meal and rest break rules "would cause an unreasonable burden on interstate commerce."

Employers Still Should Proceed With Caution Before Changing Their Current Meal and Rest Break Practices In California

While the Ninth Circuit's decision is welcome news to employers of drivers subject to federal rules, employers still should, as always, proceed with caution in California. The decision itself could be subject to a rehearing en banc by the full Ninth Circuit, where its fate would be uncertain. Even if this decision stands at the Ninth Circuit, the Supreme Court could be asked to weigh in on the issues raised by the appeal, including whether the FMCSA's determination is subject to Chevron deference. (Justice Gorsuch is an avowed opponent of Chevron deference and may be influential in the next Supreme Court decision addressing it.) Additionally, the Biden Administration, decidedly more favorable to the interests of employees and unions than the prior administration, may work to undo the preemption determination that was rolled out in December 2018.

As a result, the issue of whether drivers are subject to California's meal and rest break rules remains in flux. There also is the ever-present question of whether this preemption determination would have retroactive application, such that pre-December 2018 claims would be barred. In any event, employers should continue to keep their eye on this developing area of law, especially given the ramifications that preemption (or no preemption) of California's meal and rest break rules would have on many employers' policies and practices, and given the consequences of not complying with these rules, when required.

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