The Massachusetts Attorney General in Massachusetts Delivery Association v. Healey claimed that the couriers hired by same-day delivery companies were not performing services outside the usual course of the companies’ business and therefore should be classified as employees and not independent contractors. The delivery companies allowed the couriers to decide what route to follow in making delivers, compensated them based on the number of packages delivered, did not provide them with delivery trucks, made them bear the expenses of delivering packages, and awarded routes to couriers who submitted the lowest bids.
The First Circuit Court of Appeals rejected the Attorney General’s argument on the grounds that the FAAAA preempted the application of Prong 2, because it prohibits any state law, regulation or other provision from having an effect on the “price, route, or service of any motor carrier…with respect to the transportation of property.” Relying on the reasoning from its earlier February 2016 decision in Schwann v. FedEx Ground Package System, Inc., the Court held that the application of Prong 2 “would both expressly reference and have a significant impact” on a delivery company’s prices, routes or services.
First, the court held that application of Prong 2 would “expressly reference” services in violation of the preemption provision of FAAAA, because it would require a judicial determination of whether a particular service offered by a delivery company was within its usual course of business. Thus, a court, and not the market, would determine what services a company provides and how it chooses to provide them.
Second, application of the Prong 2 would “logically” have a “significant impact” on the routes chosen by a delivery company, as it would affect its current business model, which allows couriers to select the routes they want to take in order to make efficient deliveries.
Source: Same-Day Delivery Companies: 2; MA Independent Contractor Statute: 0. First Circuit Once Again Upholds Classification of Couriers as Independent Contractors | Mintz Levin – Employment Matters – JDSupra