For at least two weeks, trucking companies are exempt from California’s contractor law

A California-based federal judge on New Year’s Eve issued a temporary stay of enforcement on the new California law that mostly bars motor carriers from contracting with owner-operator drivers. The decision came just a day before the law was set to take effect.

Granting a request filed by the California Trucking Association the week prior, U.S. District Judge Roger Benitez issued a restraining order Dec. 31 blocking the state from enforcing its A.B. 5 law for motor carriers until at least Jan. 13, when the court will consider a longer stay of enforcement for motor carriers.

The law, which cuts across nearly all industries in California, took effect Wednesday, Jan. 1, after being passed by the state legislature and signed by California Gov. Gavin Newsom in September. A.B. 5 institutes new, strict criteria for determining a worker’s classification status — employee or contractor. In the case of trucking, the law effectively bars motor carriers from contracting with independent contractor drivers (like owner-operators who lease their equipment to a carrier and run under their authority or independent fleets with their own authority that contract to haul freight for a larger carrier).

The stipulations within A.B. 5 have caused carriers to shy away from contracting with owner-operators in the state, prompting many to forgo working with owner-operators entirely or, in some cases, giving owner-operators the choice to move out of state or transition to company driver.

The California Trucking Association, alongside two independent owner-operators, filed a lawsuit against the law in November, arguing the 1994 Federal Aviation Administration Authorization Act blocks states from enacting such laws and, thus, allows interstate trucking companies an exemption from A.B. 5’s statutes.

Benitez agreed, for now, with CTA’s assertions, also noting in his opinion that the law would cause “imminent, irreparable harm” to carriers and owner-operators. “Without significantly transforming their operations to treat independent contractor drivers as employees…they face the risk of governmental enforcement actions, as well as criminal and civil penalties,” Benitez writes in his opinion.

He will hear CTA’s case for a longer injunction Monday, Jan. 13. CTA’s suit was filed in federal court in the Southern District of California against California Attorney General Xavier Becerra. The International Brotherhood of Teamsters has intervened in the case on behalf of the state, too, and are named as a defendant in the lawsuit.

See more of CCJ‘s recent coverage of A.B. 5 at the links below.