For at least the time being, California’s AB 5 independent contractor classification law is in effect for the trucking industry after Judge Roger Benitez of the U.S. District Court for the Southern District of California lifted on Monday the trucking industry’s injunction that had been in place since January 2020.
According to a law alert from transportation legal firm Scopelitis, Gavin, Light, Hanson and Feary, Benitez lifted the injunction, which had been reversed by the Ninth Circuit Court of Appeals in April 2021. The case was eventually elevated to the U.S. Supreme Court, with the injunction remaining in place until the conclusion of the legal battle, and SCOTUS officially declined to hear the case earlier this summer.
For now, AB 5 and its ABC test for determining independent contractor status is effective for the trucking industry. Any motor carrier now using leased owner-operators in the state risks being in violation of the law, unless the law's business-to-business exemption is appropriately satisfied.
However, according to the Scopelitis brief, the California Trucking Association has “indicated that it intends to file a new motion for preliminary injunction under the [Federal Aviation Administration Authorization Act of 1994] preemption standard set forth by the Ninth Circuit and on Dormant Commerce Clause grounds.”
Greg Feary, president of Scopelitis, said CTA will now have to argue to the district court based on the 9th Circuit's own standard rather than the U.S. Supreme Court's standard for FAAAA preemption.
"The 9th Circuit said that AB 5 is a generally applicable law and that because it affects the carrier’s relationship with its workforce and not with its customers, it does not freeze into place a particular price, route or service that a carrier would otherwise not provide," Feary said. "Therefore, it is not significantly related to rates, routes or services," thus not being preempted by FAAAA.
"Now, CTA has to say, 'No, while dealing with [carriers'] workforce, it also impacts services and prices and, potentially, routes that would have to be provided to customers,'" Feary added.
