AB5 lawsuit continues as OOIDA, CTA file appeals

A long battle between California’s AB5 worker classification law and trucking continues.

The state contends that Assembly Bill 5 is a general labor law that aims to stop workers, who should receive the benefits of an employee, from being misclassified as an independent contractor. The California Trucking Association and the Owner-Operator Independent Drivers Association argue that the law goes too far by taking away a preferred business option from legitimate owner-operators while also creating impediments for interstate truckers.

On April 12, the two trucking groups filed a notice to take the case to the U.S. Court of Appeals for the Ninth Circuit. OOIDA and the California Trucking Association maintain that AB5 violates the U.S. Constitution.

“OOIDA respectfully disagrees with the legal basis for the decision issued by the district court,” the Association wrote in a statement. “OOIDA appeals this decision with the hope that the Ninth Circuit will agree with OOIDA and reverse it.”

What is AB5 and how did it start?

California signed AB5 into law in 2019. The worker classification law 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.

The “B prong” of the ABC Test appears to prevent 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 soon after the law was passed in 2019, and a preliminary injunction preventing AB5 from being applied to the trucking industry was granted.  In 2022, the case was kicked back to the district courts after the U.S. Supreme Court declined to hear arguments related to the law violating the Federal Aviation Administration Authorization Act, or F4A.

OOIDA then joined the California Trucking Association’s case as an intervenor to support out-of-state truckers who could be harmed by the state law.

The California Trucking Association and OOIDA contend that AB5 imposes undue burdens on interstate commerce in violation of the dormant Commerce Clause. In addition, OOIDA and the state trucking group have said that the law’s decisions on who it exempts violate the U.S. and California constitutions’ equal protection clauses.

Lower court ruling

At oral arguments in November, Paul Cullen Jr., the attorney representing OOIDA, told the U.S. District Court for the Southern District Court of California that AB5 was causing out-of-state owner-operators to give up California loads. Cullen added that AB5 violated the Commerce Clause, which says that states can’t impose undue burdens on interstate commerce.

However, Judge Roger Benitez ruled in favor of the state on March 15.

“Remedying complexities and perceived deficiencies in AB5 are the kind of work better left to the soap box and the ballot box than to the jury box,” Benitez wrote in his ruling. “If sufficient political or economic pressure can be brought to bear by plaintiffs and their supporters, the more onerous provisions of the statute can be amended. The courts, on the other hand, are not the proper bodies for imposing legislative amendments.”

Benitez cited a previous U.S. Supreme Court case as justification for his decision.

“The state benefit of potentially overclassifying all independent contractor worker-drivers as employees may be debatable, maybe even illusory, but ‘the dormant Commerce Clause does not protect a particular structure or method of operation,’” Benitez wrote.

What’s next?

Opening briefs from OOIDA and the California Trucking Association are due on July 5.

We must wait until then to know exactly where the two trucking groups will focus their arguments. However, FreightWaves reported in April that Greg Feary, president of the Scopelitis Law Firm, suggested that the equal protection clause was one avenue to a successful appeal. LL