AB5 injunction arguments go before Ninth Circuit on Sept. 1

July 17, 2020

Mark Schremmer

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It has been more than 10 months since California lawmakers passed Assembly Bill 5, which changed how workers are classified in the state.

However, the fight is far from over regarding the law’s relationship to the trucking industry. Shortly after the law went into effect in January, the U.S. Southern District Court granted a preliminary injunction that blocked California from enforcing AB5 against motor carriers. In March, the U.S. Court of Appeals for the Ninth Circuit denied a motion to halt the preliminary injunction.

On Sept. 1, the Ninth Circuit will listen to oral arguments about whether or not the injunction should remain in effect.

How we got here

In 2018, the California Supreme Court’s Dynamex decision established the ABC test, which 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.

On Sept. 11, 2019, California’s senate passed AB5, which codifies the California Supreme Court’s decision. California Gov. Gavin Newsom signed the bill into law on Sept. 18. The law, which was intended to apply to a variety of industries, went into effect Jan. 1.

In response to a request from the California Trucking Association, A U.S. district judge granted a temporary restraining order on Dec. 31. A couple of weeks later, the district court granted the preliminary injunction to halt enforcement of AB5 against motor carriers.

The California Trucking Association argued in its lawsuit that AB5 should not be enforced against motor carriers, because it is preempted by federal law.

On March 30, the Ninth Circuit denied the Teamster’s motion to stay the district court’s injunction, saying they didn’t make “an adequate showing that it will be irreparably injured absent a stay.”

AB5 could be fatal to owner-ops, OOIDA says

In May, OOIDA filed an amicus brief with the Ninth Circuit in support of the California Trucking Association’s lawsuit.

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.”

What’s next?

The Ninth Circuit will hear oral arguments on whether or not to uphold the AB5 injunction on Sept. 1. After that is decided, the full case will be kicked back to the district court.

Mark Schremmer

Mark Schremmer, senior editor, joined Land Line in 2015. An award-winning journalist and former assistant news editor at The Topeka Capital-Journal, he brings fresh ideas, solid reporting skills, and more than two decades of journalism experience to our staff.