The Rhode Island Supreme Court recently held that the Airline Deregulation Act (ADA), a federal law, preempts Rhode Island law requiring premium pay for Sunday and holidays.  This decision may allow employers in other industries in Rhode Island to argue preemption of the Sunday and holiday premium pay law as well.

The Decision

Under Rhode Island law, most non-exempt employees must be paid time-and-a-half for hours worked on Sundays or state holidays.  Several customer service agents of an airline filed a claim with the Rhode Island Department of Labor and Training (DLT), alleging they had not been paid overtime for Sundays and holidays.  The airline moved to dismiss the claim before the DLT, arguing that the Rhode Island law was preempted by the federal ADA.  At a hearing, the airline’s witnesses testified that having to pay overtime premiums on Sundays and holidays would have a negative impact on air carriers conducting business in Rhode Island; could alter flights into or out of the airport; and would cause the airline to reduce the staff it employs, leading to modifications in customer service.  Based on this testimony, the DLT found in favor of the airline and held that the Sunday and holiday pay law was preempted.

On appeal, the Rhode Island Supreme Court upheld the DLT’s decision.  The court noted that the ADA has a “broad pre-emptive purpose” and preempts any state law that has a “significant impact” on an airline’s “prices, routes or services.”  The court adopted the preemption test used by the federal First Circuit Court of Appeals: preemption can be found based on a “statute’s potential impact on carriers’ prices, routes, and services,” which can be shown by “look[ing] to the logical effects that the scheme has on the delivery of services or the setting of rates.” 

Applying these principles to the case, the court noted that a possible increase in fares based on increased labor costs would be insufficient to establish preemption, because “countless state laws” increase costs and therefore would have “some potential effect on the prices charged.”  The airline’s witnesses went further, however, and the court accepted the claim that the increased labor costs from paying Sunday and holiday premiums would lead to reductions in staff, and therefore fewer flights and diminished customer service.  Thus, the “logical effect” of the state law had a negative effect on airline services, and was preempted.

Wider Implications?

With this decision, the Rhode Island Supreme Court adopted a broad interpretation of the ADA – the “potential impact” test used by the First Circuit.  While the decision itself applies only to airlines, the ADA is interpreted identically to the Federal Administration Aviation Authorization Act of 1994 (FAAAA), which – despite it aeronautical name – applies to motor carriers and similarly preempts any state law that substantially impacts the prices, routes or services of a motor carrier.  Arguably, motor carriers in Rhode Island could plausibly assert that the Sunday and holiday pay law is preempted as to drivers in the state, if they can show that those laws negatively impact their services.