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Legal victories secured in the Seventh and Third Circuit by Siegel & Dolan, Ltd. are helping employees pursue their wage claims in federal courts.

The Third Circuit Court of Appeals recently affirmed the lower court’s denial of defendant’s motion to dismiss by following the Seventh Circuit’s holding in Costello v. BeavEx, Inc that the Federal Aviation Administration Authorization Act of 1994 (“FAAAA”) does not preempt the Illinois Wage Payment and Collection Act (“IWPCA”) in regard to the compensation of truck drivers.

In Lupian v. Joseph Cory Holdings LLC, 2018 WL 4623718 (3d Cir. Sep. 27, 2018), a group of truck drivers brought suit against their employer, Joseph Cory Holdings LLC (“Joseph Cory”), a motor carrier business, for violating the IWPCA by deducting wages from their paychecks without obtaining contemporaneous consent. Pursuant to the contract between the drivers and Joseph Cory, Joseph Cory was allowed to take “‘[c]hargebacks’ for any expense or liability that the Drivers had agreed to bear. . . . including costs for ‘insurance, any related insurance claims, truck rentals, . . . uniforms,’ and ‘damaged goods’ from the drivers’ paychecks without obtaining contemporaneous consent.” Id. at *2. The drivers alleged that these deductions violated the IWPCA because the IWPCA prohibits an employer from taking deductions from an employee’s paycheck without obtaining contemporaneous consent.[1] The drivers were able to cite to the Illinois statute in New Jersey because they are residents of Illinois. Joseph Cory argued that the FAAAA preempted the IWPCA.[2] The District Court for the District of New Jersey denied Joseph Cory’s motion to dismiss, and Joseph Cory appealed.

In its reasoning, the Third Circuit cited as persuasive the Seventh Circuit’s holding in Costello v. BeavEx, Inc, 810 F.3d 1045 (7th Cir. 2016). There, in a similar case involving unauthorized deductions from truck drivers’ paychecks, the Seventh Circuit denied BeavEx summary judgment and held that the FAAAA did not preempt the IWPCA. The Seventh Circuit reasoned that the FAAAA was not preempted because of the IWPCA’s limited scope: “the IWPCA regulates the motor carrier as an employer, and any indirect effect on prices is too tenuous, remote, or peripheral.” Id. at 1055.

Additionally, the Third Circuit also relied on Dilts v. Penske Logistic LLC, 769 F.3d 637 (9th Cir. 2014), which held that a state meal and rest break statute was not preempted by the FAAAA because “generally applicable background regulations . . . such as prevailing wage laws or safety regulations [] are not preempted, even if the employers must factor those provisions into their decisions about the prices they set, the routes that they use, or the services that they provide.” Id. at 646.

Accordingly, the Third Circuit ruled in favor of the drivers and affirmed the District Court’s denial of Joseph Cory’s motion to dismiss, finding that “the IWPCA does not have a significant impact on carrier rates, routes, or services of a motor carrier and does not frustrate the FAAAA’s deregulatory objectives, as the impact of the IWPCA is too tenuous, remote, and peripheral to fall within the scope of the FAAAA preemption clause.” Lupian, 2018 WL 4623718, at *20.

[1] Under the IWPCA, “deductions by employers from wages or final compensation are prohibited unless such deductions are . . . made with the express written consent of the employee, given freely at the time the deduction is made.” Ill. Comp. Stat. 115/9. 

[2]  The FAAAA preemption clause states that “a State, political division of a State, or a political authority of 2 or more States may not enact or enforce a law, regulation, or other provision having the force and effect of law related to a price, route, or service of any motor carrier . . . or any motor private carrier, broker, or freight forwarder with respect to the transportation of property.” 49 U.S.C. § 14501(c)(1).