AB5 could be fatal to owner-ops, OOIDA tells Ninth Circuit
May 20, 2020
California Assembly Bill 5, the state’s new worker classification law, would cause “irreparable harm” and could be “fatal” to owner-operators and small-business motor carriers, OOIDA said in an amicus brief filed in support of the California Trucking Association’s lawsuit.
The California Trucking Association contends the law is unconstitutional and is preempted by the Federal Aviation Administration Authorization Act of 1994, which prevents states from enforcing a law or regulation related to a price, route, or service of motor carriers.
AB5, signed into law in September, codifies the California Supreme Court’s establishment of the ABC test, which makes it more difficult for a worker to be considered an independent contractor.
OOIDA filed its brief with the U.S. Court of Appeals for the Ninth Circuit in support of the California Trucking Association’s case on May 13.
“AB5 not only threatens the business models and balance sheets of large motor carriers, it will also result in irreparable harm to owner-operators and small-business motor carriers businesses, including OOIDA members, that are a critical component of interstate commerce.”
The ABC test considers all workers to be employees unless the hiring business demonstrates that three factors are established:
A. That the worker is free from the control and direction of the hirer in connection with the performance of the work, both under the contract for the performance of the work and in fact.
B. That the worker performs work that is outside the usual course of the hiring entity’s business.
C. That the worker is customarily engaged in an independently established trade, occupation or business of the same nature as that involved in the work performed.
The law, which went into effect on Jan. 1, was intended to apply to a variety of industries, including trucking.
The California Trucking Association filed a lawsuit against California Attorney General Xavier Becerra, saying that the B factor of the test would effectively end the owner-operator model in the state. Benitez granted a temporary restraining order on Dec. 31 to block enforcement until the motion for preliminary injunction was decided.
Judge Robert Benitez for the U.S. District Court Southern District of California ordered on Jan. 16 to block California from enforcing motor carriers to comply with Assembly Bill 5, which makes it more difficult for a worker to be considered an independent contractor. The decision to grant the preliminary injunction means California can’t apply the law to the trucking industry until the trucking group’s full case is decided.
In its brief, OOIDA established that owner-operators are a significant piece of the motor carrier industry and large motor carriers will not be the only ones affected by the law.
“This court should not adopt the blinders that defendants urge,” OOIDA wrote. “AB5’s impact is not limited to large motor carriers, simply a matter of increasing the cost of doing business, or confined to California.
“Instead, for tens of thousands of interstate owner-operators and small-business motor carriers that regularly cross the California border – small-business truckers critical to the interstate motor carrier industry – AB5 could be fatal.”
Western States Trucking Association
In a related case, a district court ruled on May 18 against the Western State Trucking Association’s lawsuit against California’s AB5.
Western States argued that trucking companies should be exempt because it is preempted by federal law.
Judge Christina Snyder of the U.S. District Court for the Central District of California, granted a motion filed by the International Brotherhood of Teamsters to dismiss the case.
Snyder said the F4A does not preempt the challenged provisions of AB5.