On New Year’s Eve, Federal District Court Judge Roger Benitez handed down an initial temporary restraining order that halted the implementation of CA AB5 in the California trucking market.
CA AB5, also known as the “gig worker law,” put California carrier relationships with owner-operators and contract drivers at risk due to the law’s definition of what constitutes an employee. The law intended to protect gig workers by ensuring they had access to employee protections. Trucking industry owner-operators and contractors faced uncertainty and potential lifestyle changes with the law’s implementation on January 1st.
The problem with the “B prong”
As implemented, CA AB5 codified a 3-prong approach, defining a “contractor” as workers who:
A) Are free from the control and direction of the hiring entity in connection with the performance of the work,
B) Perform work that is outside the usual course of the hiring entity’s business, and
C) Are customarily engaged in an independently established trade, occupation, or business.
Failing any of these qualifications means that employers must provide legally required employee benefits for the worker, including unemployment insurance.
The California Trucking Association (CTA), motor carrier companies, owner-operators, and independent truckers took issue specifically with “prong B” of the law. Truckers, by definition, perform work that is typical for the hiring entity’s business. Yet, the law failed to identify truck drivers as an established trade, per “prong C.”
The CTA pushback against CA AB5
On December 31st, 2019, the CTA asked for an order restraining CA AB5 in the trucking industry, stating that the Federal Aviation Administration Authorization Act of 1994 “had made California’s imposition of AB5 against the trucking sector an act that illegally substituted the state’s authority for federal authority” (Source: Freight Waves). Since trucking is a national profession and workers routinely cross state lines, state-specific laws undermine Congress’s attempts to deregulate the activities of motor carriers and commercial drivers. Additionally, the restraining order cites motor carriers’ requirement for flexible staffing due to seasonal and other fluctuations in demand.
As of January 13th, the CTA pushed to continue the restraining order. They continue to fight on behalf of California’s independent trucking trade, which could mean possible changes to the law. However, the fate of the law is still uncertain, and after the 14-day continuance expires, the gig worker law could still go into effect for truckers in the state of California.
What can we expect next?
As of now, nothing has changed regarding the hiring of owner-operators and independent drivers in the state of California. However, if CTA loses the fight, employers will have to find alternative hiring solutions in a hurry. We will follow this developing story closely and keep you updated on the latest word out of the California courts.
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