California Trucking Association asks Supreme Court to hear AB5 case

The California Trucking Association has officially petitioned the U.S. Supreme Court regarding the state’s worker classification law, Assembly Bill 5.

The trucking group, which filed its petition on Monday, Aug. 9, argues that AB5 would force the end of the industry’s owner-operator model and would be in violation of the Federal Aviation Administration Authorization Act (F4A), which prevents states from enforcing a law or regulation related to a price, route, or service of motor carriers.

“We believe the (F4A) prohibits a state statute, such as California’s AB5, that clearly abolishes the historic role within the trucking industry of independent owner-operators,” said California Trucking Association CEO Shawn Yadon. “It is our hope the U.S. Supreme Court will take up this urgent matter of national significance, and we are asking the country’s highest court to fully consider the question of F4A preemption of the ‘all or nothing’ ABC Test and resolve the circuit conflicts that exist on this issue.”

On April 28, the U.S. Court of Appeals for the Ninth Circuit ruled 2-1 that California’s AB5 “is a generally applicable labor law” and called for the removal of a preliminary injunction against enforcing the state law on motor carriers. In June, the Ninth Circuit denied the California Trucking Association’s petition for a rehearing en banc. Following the decision, the trucking group confirmed that it planned to take the case to the U.S. Supreme Court.

How this all started

In 2018, the California Supreme Court’s Dynamex ruling 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.

In September 2019, California’s Senate passed AB5, which codifies the California Supreme Court’s decision. The law, which was intended to apply to a variety of industries, went into effect Jan. 1, 2020.

The California Trucking Association sued and the U.S. Southern District Court of California granted the preliminary injunction to stop the state from enforcing it on motor carriers. The Owner-Operator Independent Drivers Association also filed an amicus brief in support of the lawsuit, saying “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.”

What’s next?

Although the Ninth Circuit ruled to lift the injunction, it will remain in place until the U.S. Supreme Court determines the case.

The U.S. Supreme Court receives about 7,000 to 8,000 petitions for review each year and typically elects to hear about only 80 of those cases. However, there could be some momentum behind the court deciding to hear the California Trucking Association’s petition.

One of the three judges, Mark J. Bennett, on the Ninth Circuit panel offered a fiery dissent, saying the California Trucking Association’s members “will now suffer irreparable injury.”

“I do not agree … that a law like AB5 – which affects motor carriers’ relationships with their workers and significantly impacts the services motor carriers are able to provide to their customers – is not related to motor carriers’ services and thus is not preempted,” Bennet wrote.

In OOIDA’s amicus brief in support of the California Trucking Association’s en banc petition, said the effects of AB5 would be felt well outside of California.

“Independent owner-operator drivers must either become employee drivers and forfeit businesses they have built or give up all business opportunities that might take them to California,” OOIDA’s amicus brief stated. “AB5’s effects will be felt in every sector of the economy and throughout the region and the country. AB5’s intrusion into motor carriers’ operations represents the type of pervasive state regulation that Congress sought to abandon through federal deregulation and to preempt through the F4A.” LL