AB5 needlessly reclassifies genuine independent contractors, OOIDA says

California’s Assembly Bill 5 violates the Commerce Clause and the equal protection clauses, the Owner-Operator Independent Drivers Association said in its latest brief filed to the U.S. District Court of the Southern District of California.

OOIDA, which is serving as an intervenor in a case against the state’s worker classification law, told the court in its Oct. 27 reply brief that AB5 needlessly causes genuine independent contractors to be reclassified as employees.

“AB5 discriminates against and imposes undue burdens on interstate commerce in violation of the dormant Commerce Clause, and the disparate treatment of AB5’s business-to-business and construction exemptions violates the U.S. and California constitutions’ equal protection clauses,” OOIDA wrote.

Background on AB5

In 2019, California passed AB5 into law with the purported goal of eliminating instances of workers who were really employees being classified as independent contractors. AB5 is based on the ABC Test, which requires a business to demonstrate three factors are established before a worker can be deemed an independent contractor.

Many in the trucking industry argue that the test is too stringent, as the “B prong” prevents the business from using an independent contractor that performs typical functions for the company. For instance, the B prong stops a trucking company from classifying a truck driver as an independent contractor regardless of the level of control or any other factors.

The California Trucking Association filed a lawsuit in 2019 and received a preliminary injunction based on arguments that AB5 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.

OOIDA, which is representing the rights of small-business truckers who travel in and out of California, joined the fight after the case was sent back to the lower courts.

California is defending the law, and the International Brotherhood of Teamsters is serving as an intervenor on the state’s behalf.

A hearing in the case is scheduled for Nov. 13.

OOIDA’s arguments

AB5 destroys the independent contractor model in the trucking industry instead of only eliminating the instances of misclassification.

“OOIDA readily concedes that there are bad actors in the trucking industry, as in many industries, who misclassify and exploit workers,” the Association wrote. “But defendants can’t justify eliminating the independent contractor driver business model, needlessly reclassifying genuine independent contractors as employees.”

California offers a business-to-business exemption, but it is available only to intrastate California motor carriers and drivers. OOIDA said that distinction causes the law to violate the U.S. Constitution’s Commerce Clause, which protects the right to engage in interstate commerce free of undue burdens and discrimination by state governments. OOIDA also told the court that the law violates equal protection clauses, because there is no “rational basis” for granting exemptions to intrastate carriers and the construction industry but not to all motor carriers. LL