This week the Ninth Circuit weighed in on the enforceability of AB-5 – and confirmed that the State can enforce AB-5 against California truckers.
As a refresher, the California legislature enacted AB-5, codifying the ABC test, effective January 1, 2020. The “ABC” Test sets the framework for California employers to classify workers as either employees or independent contractors (you can access our prior e-Blast on AB-5 here). Among several legal challenges to AB-5, the California Trucking Association, a trade association representing motor carriers that hire independent contractors who own their own trucks, and two independent owner-operators filed suit, seeking to stop the State from enforcement of AB-5.
While the Ninth Circuit found that the California Trucking Association had the legal right to bring a lawsuit against the State, the Ninth Circuit didn’t buy the argument that federal laws for trucking control here. In short, the Ninth Circuit concluded that while AB-5 impacts how trucking companies classify workers, AB-5 does not impact how trucking companies set prices, decide on routes or the services they provide. The Ninth Circuit reasoned that the impact of AB-5 was comparable to the meal and rest break laws in California- both laws impact the cost of business but do not impact prices, routes or services to justify exempting trucking from State law.
COUNSEL TO MANAGEMENT:
While the preliminary injunction preventing enforcement of AB 5 will not be lifted immediately, enforcement in the trucking industry could start as early as May. Meanwhile, the California Trucking Association has already signaled its intention to continue fighting this issue in the courts and may well appeal to the U.S. Supreme Court. However, as it stands today, California motor carriers must now determine how to proceed in California under AB-5. If your company has questions about the impact of AB-5, contact the experts at The Saqui Law Group, P.C.