Preliminary injunction blocks AB5 enforcement on trucking

January 17, 2020

Mark Schremmer

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A federal judge’s decision to grant a preliminary injunction to the California Trucking Association gives motor carriers an extended reprieve from the state’s new worker classification law.

Judge Robert Benitez for the U.S. District Court Southern District of California ordered on Thursday, Jan. 16, to block California from enforcing motor carriers to comply with Assembly Bill 5, which makes it more difficult for a worker to be considered an independent contractor. The decision to grant the preliminary injunction means California can’t apply the law to the trucking industry until the trucking group’s full case is decided.

The lawsuit

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.

“To prevail on their motion for a preliminary injunction, plaintiffs must establish, at a minimum, that there are ‘serious questions’ on the merits of at least one of their challenges to AB5’s ABC test,” Benitez wrote. “Plaintiffs have done so with their (F4A) preemption challenge.

“The Court finds AB5’s ABC test has more than a ‘tenuous, remote, or peripheral’ impact on motor carriers’ prices, routes, or services, particularly in light of our Ninth Circuit jurisprudence casting serious doubt on the type of ‘all or nothing rule’ that AB5 implements.”

Shawn Yadon, CEO of the California Trucking Association, touted the court decision as a win for the state’s owner-operators.

“This ruling is a significant win for California’s more than 70,000 independent owner-operators and California Trucking Association members who have worked as independent truckers for decades, and who have invested hundreds of thousands of dollars to own their own vehicle and comply with California’s strict environmental guidelines and regulations over the years,” Yadon said in a news release.”

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.

However, the California Trucking Association filed a lawsuit against California Attorney General Xavier Becerra, saying that the B factor of the test would effectively end the owner-operator model in the state. Benitez granted a temporary restraining order on Dec. 31 to block enforcement until the motion for preliminary injunction was decided.

Teamster’s take

The International Brotherhood of Teamsters, which is serving as an intervenor in the case for the defendants, said the preliminary injunction means that for the time being the state will revert to the Borello standard to determine whether a worker is an employee or independent contractor. The Teamsters support AB5 because the union contends port truck drivers in California have been the victims of wage theft for years.

“We are not surprised by the court’s decision to issue a preliminary injunction blocking application of AB5’s ABC test to California truck drivers,” Julie Gutman Dickinson, local counsel to the Teamsters Port Division, said in a news release. “However, the decision does not impact port and rail drivers’ fight for their employee rights and an end to systemic wage theft. The bottom line is that in every port trucker misclassification/wage theft case to date, misclassified California port truck drivers have been found to be employees not independent contractors under the California Borello test.

“It simply does not matter whether you apply the ABC test under Dynamex, AB5, or the Borello test – they are employees under all tests. The court’s preliminary injunction has no practical effect on the employee status of these drivers. They are clearly employees.”

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.

State ruling

In a separate but related case, a state court judge determined that AB5 doesn’t apply to trucking. Los Angeles Superior Court Judge William Highberger ruled on Jan. 8 that AB5 is preempted by the F4A.

“Here the requirements of the ABC test … clearly run afoul of Congress’ 1994 determination that a uniform rule endorsing use of non-employee independent contractors should apply in all 50 states to increase competition and reduce the cost of trucking services,” Highberger wrote.

Developments in both cases are positives for opponents of AB5, but the legal battles are likely far from over.

Mark Schremmer, senior editor, joined Land Line in 2015. An award-winning journalist and former assistant news editor at The Topeka Capital-Journal, he brings fresh ideas, solid reporting skills, and more than two decades of journalism experience to our staff.