AB5 harms small-business truckers, OOIDA says

Instead of fixing the problem of misclassified truck drivers in the state, California’s Assembly Bill 5 created a burden for legitimate independent contractors, the Owner-Operator Independent Drivers Association said.

OOIDA, which is serving as an intervenor for the California Trucking Association in a lawsuit against the state, filed a brief in U.S. District Court for the Southern District of California on Friday, Sept. 30. Oral arguments in the case are scheduled for Nov. 13.

“Defendants state that the purpose of AB5 is to address the misclassification of workers in California,” OOIDA wrote in its brief. “Instead of routing out truck driver misclassification, the law’s ABC Test automatically classifies all independent contractor truck drivers as employees and eliminates their small businesses from the trucking industry.”

OOIDA told the court that California’s law violates the U.S. Constitution.

“These consequences of the ABC Test to the trucking industry are a major disruption to interstate commerce,” OOIDA wrote. “Thousands of properly classified independent contractor businesses are terminated. The universe of drivers and motor carriers willing to haul freight in California and expose themselves to liability under AB5 is greatly narrowed. And those carriers and drivers who change their fundamental business models to comply with AB5 face significant burdens to do so.”

How we got here

California passed AB5 into law in 2019. The AB5 worker classification law is based on the ABC Test, which considers all workers to be employees unless the hiring business demonstrates that all of these factors are established:

1. 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
2. The worker performs work that is outside the usual course of the hiring entity’s business
3. The worker is customarily engaged in an independently established trade, occupation or business of the same nature as that involved in the work performed

Pointing to the difficulties of meeting the B prong of the test, opponents argued that AB5 would force the end of the owner-operator model in the state.

The California Trucking Association received a preliminary injunction in 2019 based on arguments that the law violated the Federal Aviation Administration Authorization Act. The injunction remained in place until late June 2022, when the U.S. Supreme Court denied the state trucking group’s petition for a hearing.

The case was sent back to the lower courts, and in 2022, OOIDA joined the California Trucking Association’s fight as an intervenor.

OOIDA is representing the rights of small-business truckers who travel in and out of California.

The California Trucking Association and OOIDA have claimed that AB5 violates the Commerce Clause, which protects the right to engage in interstate commerce free of undue burdens and discrimination by state governments.

OOIDA’s brief

OOIDA argued that AB5 violates the dormant Commerce Clause of the U.S. Constitution, as well as the equal protection clause.

While leased-on independent contractors operating in interstate commerce will be classified as employees under AB5, in-state drivers were granted a business-to-business exemption.

OOIDA wrote that the burdens AB5 imposes on interstate commerce far outweigh the local benefits of AB5 to California.

“OOIDA asks the court to declare that the ABC Test violates the dormant Commerce Clause of the U.S. Constitution and to enjoin California’s enforcement of the ABC Test against motor carriers and drivers operating in interstate commerce, or in the alternative, at least against the motor carriers and drivers based outside of California performing less than 50% of their work in California,” it said.

The Association also argued that “there is no rational basis” for an exemption to be provided to an independent contractor operating for the construction industry but not for all motor carriers.

“OOIDA asks the court to declare that the ABC Test violates the equal protection clause of the U.S. and California constitutions and enjoin its enforcement as to all motor carriers and drivers so that all such classes of independent contractor drivers can be classified as independent contractors and, therefore, are treated equally under the law,” it wrote.

In addition, OOIDA is seeking preliminary relief in its pending motion for a preliminary injunction from AB5 being enforced on truckers. LL