Motor carriers receive temporary relief from California’s AB5
January 2, 2020
A federal court recently granted the California Trucking Association’s motion for a temporary restraining order to block California from enforcing motor carriers to comply with a worker classification law that was set to take effect on Jan. 1.
The temporary restraining order was granted on Dec. 31 in U.S. District Court for the Southern District of California and will remain in effect pending the court’s resolution of the trucking group’s motion for a preliminary injunction, which is set for hearing on Jan. 13.
The trucking group’s lawsuit seeks relief from California’s Assembly Bill 5, which was signed into law in September. AB5 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.
A question of preemption
In the California Trucking Association’s amended lawsuit filed on Nov. 12, the trucking group said the B prong of the test prevents motor carriers from contracting with owner-operators and that the law is preempted by the Federal Aviation Administration Authorization Act of 1994.
As part of granting the temporary restraining order, U.S. District Judge Roger Benitez said that the California Trucking Association established that the law could cause imminent, irreparable harm to motor carriers.
“Plaintiffs have shown that AB5’s Prong B is likely preempted by the FAAAA because AB5 effectively mandates that motor carriers treat owner-operators as employees, rather than as the independent contractors that they are,” Benitez wrote.
The lawsuit contends that the FAAAA preempts state regulation of the trucking industry.
“A state … may not enact or enforce a law, regulation, or other provision having the force and effect of law related to a price, route, or service of any motor carrier or any motor private carrier, broker or freight forwarder with respect to the transportation of property.”
The California Trucking Association said that deregulation requires states to not interfere with the enforcement of private contracts.
“In enacting the FAAAA, Congress’ overarching goal was helping ensure transportation rates, routes, and services that reflect maximum reliance on competitive market forces, thereby stimulating efficiency, innovation, and low prices, as well as variety and quality,” the trucking group wrote in its lawsuit.
The Owner-Operator Independent Drivers Association has spoken out against AB5, calling the law “overly broad and unnecessarily rushed.”
“AB5 has created tremendous uncertainty and economic hardships for small-business truckers in California,” OOIDA President Todd Spencer said. “We’ve acknowledged from the beginning that misclassification in trucking is a real issue, but AB5 was overly broad and unnecessarily rushed. It’s a shame that lawmakers squandered an opportunity to meaningfully and responsibly address this issue. Instead, they’ve created chaos and deprived independent truckers of their ability to earn a living transporting freight.
“We appreciate the temporary relief granted by the courts, but we also realize a more comprehensive and long-term solution is needed. Hopefully, state lawmakers can swallow their pride, go back to the drawing board and fix this mess.”
While the temporary restraining order is exclusive to trucking, AB5 affects many industries and has also received challenges from such companies as Uber and DoorDash, as well as from the American Society of Journalists and Authors.