California Trucking Association Takes AB 5 Case to Supreme Court

The U.S. Supreme Court building in Washington, D.C. (Andrew Harrer/Bloomberg News)

[Stay on top of transportation news: Get TTNews in your inbox.]



The California Trucking Association on Aug. 9 filed a petition asking the U.S. Supreme Court to review a state independent contractor law — known as AB 5 — that it argued should be exempt from enforcement for motor carriers based on federal pre-emption.

The request for the high court’s review comes after the 9th U.S. Circuit Court of Appeals in June declined to reconsider its earlier rejection of CTA’s legal challenge to AB 5, which the association has said includes an “ABC test” that would in effect make it impossible for motor carriers to continue to use independent owner-operators.

“The 9th Circuit’s holding should not stand,” CTA said. “It creates a conflict in the circuits. It rests on a construction of the Federal Aviation Administration Authorization Act of 1994 that departs both from the statutory language and from this court’s approach. It will cause dis-uniformity in national commerce while disrupting the operations both of motor carriers and of owner-operators. And it interferes with the routes, services and prices of motor carriers — just what Congress meant the FAAAA to prevent.”

What is Assembly Bill 5?

"California Assembly Bill 5 or AB 5 is a state statute that expands a landmark Supreme Court of California case from 2018, Dynamex Operations West, Inc. v. Superior Court ("Dynamex"). In that case, the court held that most wage-earning workers are employees and ought to be classified as such, and that the burden of proof for classifying individuals as independent contractors belongs to the hiring entity. AB 5 extends that decision to all workers."

Source: Wikipedia

Trade organizations representing motor carriers and independent owner-operators strongly have opposed the new law, which aims to reclassify large numbers of independent contractors as company employees. CTA has maintained that it believes it is “reasonably likely” that four members of the Supreme Court will support a grant of certiorari in the case and ultimately reverse the 9th Circuit three-judge panel’s 2-1 decision that was made in April.

“For decades, motor carriers across the United States have provided freight-transportation services through owner-operators — individuals who drive their own trucks and operate as independent contractors,” CTA said in its petition for a writ of certiorari. “Owner-operators play a critical role in interstate commerce — one that Congress has recognized and protected.”

CTA said its petition for review concerns an “express conflict in the federal circuit courts on an exceptionally important question of federal law: Does the Federal Aviation Administration Authorization Act of 1994 preclude states from adopting worker-classification rules that prohibit or substantially restrict motor carriers’ use of owner-operators?”

CTA said that question warrants review for several reasons:

• The courts of appeals and state courts of last resort disagree about the answer.

CTA FILES PETITION FOR WRIT OF CERTIORARI WITH THE

UNITED STATES SUPREME COURT

— CA Trucking Assoc. (@Caltrux) August 9, 2021

• The decision upholding California’s statute is wrong. “Congress used notably broad pre-emptive language in the FAAAA to avoid development of a patchwork of state service-determining laws, acting to ensure that trucking rates, routes and services would reflect competitive market forces,” CTA said.
• The issue is one of tremendous practical significance. “If applied to owner-operators, California’s worker-classification statute will upend the trucking industry’s long-standing business model,” CTA said. “It also will destroy the uniformity necessary for the free flow of interstate commerce and the operation of nationwide businesses.”

CTA said that for decades, classification of California workers as independent contractors or employees had been governed by the “multifactor test” described in the case S.G. Borello & Sons Inc. v. Department of Industrial Relations.

“Motor carriers lawfully treat owner-operators as independent contractors under that test,” CTA told the Supreme Court. “In 2018, however, the California Supreme Court held that a new test for independent-contractor status, the so-called ‘ABC’ test, would apply to claims under state wage orders. … The California Legislature subsequently adopted a statute, known as Assembly Bill 5, that codified the ABC test, expanded its applicability beyond wage orders to reach the entire Labor Code and the Unemployment Insurance Code, and created specified exceptions to the test.”

 Benitez

CTA filed its lawsuit in federal district court against the California attorney general Oct. 25, 2018, citing the law as violating federal pre-emption, and on Jan. 16 was granted a preliminary injunction against enforcing the law.

In his order, Judge Roger Benitez of the Southern District Court of California said, “There is little question that the state of California has encroached on Congress’ territory by eliminating motor carriers’ choice to use independent contractor drivers, a choice at the very heart of interstate trucking.”

The 9th Circuit is permitting the district court’s injunction to still stand until CTA has exhausted its legal appeals.

California lawmakers passed AB 5 in September 2019 to codify a 2018 state Supreme Court decision that made it easier for independent contractors to become reclassified as employees of motor carriers. The bill was signed into law Sept. 18 by Democratic Gov. Gavin Newsom, who had publicly voiced his support for the legislation. The law was slated to go into effect in January 2020.