The Supreme Court has denied the California Trucking Association’s petition for certiorari in the case regarding California’s AB 5 independent contractor law, putting an end to a years-long legal battle and, likely, the traditional leased owner-operator model in the state.
The law, which went into effect Jan. 1, 2020, has not applied to trucking due to an injunction issued just before the law took effect. With SCOTUS denying CTA’s request to review the case, the injunction will be lifted, and the law will apply to the trucking industry.
Greg Feary, president of transportation legal firm Scopelitis, Garvin, Light, Hanson & Feary, said the injunction will have to be lifted by a trial court, and he expects that to happen in “the next day or two.”
AB 5 instituted strict criteria for determining a worker’s classification status -- employee or contractor -- known as the ABC test. In the case of trucking, the ‘B’ prong of the ABC test effectively bars motor carriers from contracting with owner-operators -- such as those who lease their equipment to a carrier and run under their authority or independent operators/fleets with their own authority that contract to haul freight for a larger carrier.
CTA filed a lawsuit against the law in late 2019, arguing the 1994 Federal Aviation Administration Authorization Act (FAAAA), which preempts any state-level laws that would “interfere with prices, routes and services” of motor carriers. 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.
When the injunction is lifted, Feary said the law will take effect retroactive to Jan. 1, 2020, meaning it will legally be viewed as having been in effect since that date. Effectively, any lawsuits regarding contractor status during a time period since Jan. 1, 2020, will use the ABC test to determine the worker’s status, Feary said, even though the law did not technically apply to trucking during that time.
In April 2021, California’s Ninth Circuit Court of Appeals reversed the injunction that had been in place since the law took effect, but the injunction was allowed to remain in place through CTA’s appeal to the Supreme Court.
In addition to CTA, the American Trucking Associations, Owner-Operator Independent Drivers Association, Western States Trucking Association and a number of other groups were all part of the lawsuit fighting AB 5.
This is a developing story. Please check back for updates as they come available.
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