Remaining legal challenges to AB 5 'an uphill climb,' enforcement light thus far

Regulations out of California are shaping the face of modern trucking through two elements most critical to freight movement: trucks and the people that drive them. 

The Golden State is ground zero for some of the most aggressive anti-emissions rules in the country, and California’s AB 5 independent contractor classification law instituted strict criteria for determining a worker’s classification status – employee or contractor – known as the ABC test.

Pictured are Glenn Fehribach, CFO of transportation and logistics network World Group; Prasad Sharma Partner, Scopelitis, Garvin, Light, Hanson & Feary; Shannon McClellan Cohen Partner, Scopelitis, Garvin, Light, Hanson & Feary; and Gregory M. Feary, legal partner at Scopelitis, Garvin, Light, Hanson & Feary.In the case of trucking, the "B" prong of the ABC test effectively bars motor carriers from contracting with owner-operators, including by some estimates both those who lease their equipment to a carrier and run under their authority and independent operators/fleets with their own authority who contract to haul freight for a larger carrier. 

The "B" prong of the test is particularly problematic for traditional leasing arrangements with owner-operators classified as independent contractors, given it requires a contractor to be outside the normal course of business of the entity contracted to. 

Speaking at the American Trucking Associations Management Conference and Exhibition Sunday in San Diego, legal partners at transportation legal firm Scopelitis, Garvin, Light, Hanson & Feary highlighted the law's looming effects on the industry – a law that Glenn Fehribach, CFO of transportation and logistics network World Group, who led the panel Sunday, called "fundamentally flawed" because it assumes owner-operators don't want to be their own boss and will "magically" convert themselves to employees.

In effect for the trucking industry since late-August, when the U.S. District Court for the Southern District of California lifted an injunction that had been in place since January 2020 and the U.S. Supreme Court declined to hear the case earlier this summer, Greg Feary, managing partner and president of Scopelitis, Garvin, Light, Hanson & Feary, said there's no indication that enforcement of AB 5 has been heavy to-date, but he has seen class action cases percolating.

"If you're a really large, very high profile carrier, look out," he said. "That's a way of enforcing the law; to prosecute the big motor carriers. It gets everybody else in line."