California’s attorney general asks Ninth Circuit to review AB5 case

Contending that the California Trucking Association’s preemption claim falls short, California Attorney General Xavier Becerra and the Teamsters asked the U.S. Court of Appeals for the Ninth Circuit to review an injunction that gives motor carriers a reprieve from the state’s new worker classification law.

The requests for appeal were filed Jan. 29 in the U.S. District Court for the Southern District of California.

On Jan. 16, Judge Robert Benitez ordered an injunction to block California from enforcing motor carriers to comply with Assembly Bill 5, a law that makes it more difficult for a worker to be considered an independent contractor. The decision to grant the California Trucking Association’s request for a preliminary injunction means California can’t apply the law to the trucking industry until the trucking group’s full case is decided.

ABC test

California’s AB5, which was signed into law in September, codifies the California Supreme Court’s establishment of the ABC test, which considers all workers to be employees unless the hiring business demonstrates that all of the 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.

F4A arguments

The California Trucking Association contends that the law is unconstitutional and is preempted by the Federal Aviation Administration Authorization Act of 1994 (F4A), which prevents states from enforcing a law or regulation related to a price, route, or service of motor carriers.

Becerra contends that the F4A is not preempted.

“Plaintiffs’ preemption claim under the (F4A) fails under Ninth Circuit case law, which holds that generally applicable state labor regulations are not preempted because they do not have the requisite forbidden effect on the price, routes and services of motor carriers,” Becerra wrote in a motion. “Plaintiffs’ opposition relies on its contention that the ABC test under AB5 ‘effectively prohibits’ the use of independent contractors. As the case law and the statutory language demonstrate, this assertion is incorrect.”

CTA lacks standing, Teamsters say

In addition, the Teamsters, which is serving as an intervenor in the case for the defendants, said that the California Trucking Association hasn’t adequately alleged associational standing.

“An organization asserting associational standing must ‘identify members who have suffered the requisite harm,’” the Teamsters wrote in its reply memorandum. “Plaintiffs’ operative complaint does not identify a single California Trucking Association member (let alone plead facts about harm to that member), and so fails to establish CTA’s standing.”

Opponents of AB5 contend that the B factor of the test would kill trucking’s leased-on owner-operator model in the state.

Drivers asked to relocate?

As the days approached the enactment of AB5, there were reports that numerous trucking companies that operate in California notified its leased-on owner-operators that its business model would have to change. In some cases, trucking companies reportedly told its owner-operators in the state that they would need to either become employees or relocate to another state.

Steve Crawford, general counsel for Springfield, Mo.-based New Prime, Inc., said California’s AB5, which went into effect on Jan. 1, made it impossible for motor carriers to use independent contractors in the state.

“Obviously, like most in the industry, when AB5 was passed we had to take measures to protect our company and our fleet,” Crawford wrote in an email to Land Line. “Like any other company, it became impossible to meet the second prong of the test for an independent contractor to be recognized as such where the state of California had jurisdiction.

“Accordingly, we had already stopped associating with new independent contractors from California and were in the process of offering other opportunities to existing independent contractors. One option we offered was relocation.”

OOIDA says AB5 goes too far

The Owner-Operator Independent Drivers Association agrees that there has been a problem with misclassified truckers in the state but said AB5 went too far.

“We’ve always maintained that misclassification in trucking is a very real issue, but California’s legislative approach was overly broad and unnecessarily chaotic. Simply outlawing independent contractors in trucking is unacceptable,” OOIDA wrote to its members on Jan. 10.