• DATVF.ATLPHL
    1.770
    0.010
    0.6%
  • DATVF.CHIATL
    2.016
    -0.133
    -6.2%
  • DATVF.DALLAX
    0.850
    -0.099
    -10.4%
  • DATVF.LAXDAL
    1.594
    0.002
    0.1%
  • DATVF.SEALAX
    1.015
    -0.022
    -2.1%
  • DATVF.PHLCHI
    1.129
    -0.026
    -2.3%
  • DATVF.LAXSEA
    2.150
    0.001
    0%
  • DATVF.VEU
    1.638
    -0.050
    -3%
  • DATVF.VNU
    1.481
    -0.036
    -2.4%
  • DATVF.VSU
    1.222
    -0.049
    -3.9%
  • DATVF.VWU
    1.582
    -0.011
    -0.7%
  • ITVI.USA
    9,697.950
    -63.310
    -0.6%
  • OTRI.USA
    7.710
    0.190
    2.5%
  • OTVI.USA
    9,690.610
    -70.020
    -0.7%
  • TLT.USA
    2.720
    0.030
    1.1%
  • WAIT.USA
    156.000
    -2.000
    -1.3%
  • DATVF.ATLPHL
    1.770
    0.010
    0.6%
  • DATVF.CHIATL
    2.016
    -0.133
    -6.2%
  • DATVF.DALLAX
    0.850
    -0.099
    -10.4%
  • DATVF.LAXDAL
    1.594
    0.002
    0.1%
  • DATVF.SEALAX
    1.015
    -0.022
    -2.1%
  • DATVF.PHLCHI
    1.129
    -0.026
    -2.3%
  • DATVF.LAXSEA
    2.150
    0.001
    0%
  • DATVF.VEU
    1.638
    -0.050
    -3%
  • DATVF.VNU
    1.481
    -0.036
    -2.4%
  • DATVF.VSU
    1.222
    -0.049
    -3.9%
  • DATVF.VWU
    1.582
    -0.011
    -0.7%
  • ITVI.USA
    9,697.950
    -63.310
    -0.6%
  • OTRI.USA
    7.710
    0.190
    2.5%
  • OTVI.USA
    9,690.610
    -70.020
    -0.7%
  • TLT.USA
    2.720
    0.030
    1.1%
  • WAIT.USA
    156.000
    -2.000
    -1.3%
Driver issuesLegal issuesNewsTrucking

Breaking: federal judge temporarily blocks AB5 enforcement against California trucking (with video)

A federal judge has handed down a temporary restraining order blocking the Jan. 1 implementation of California’s AB5 against motor carriers.

AB5 is the law restricting the ability of independent operators — including truck drivers — to operate in the state.

In a case brought by the California Trucking Association, Judge Roger T. Benitez of the U.S. Southern District Court ordered the state not to enforce AB5 against any motor carrier in California, pending a final resolution of the lawsuit brought by the CTA.

Weston LaBar, the executive director of the Harbor Trucking Association, which is closely aligned with CTA, described it as a “minor victory” but said he hoped it was one step toward “a more fruitful” victory in the CTA’s fight against AB5. While the CTA is the lead plaintiff, LeBar said the Harbor Trucking Association, which represents the drayage sector, supported CTA’s efforts and believed it was the preferred organization to lead the legal fight.

At issue in the judge’s order was the so-called “B Prong” of AB5. AB5 adopted almost verbatim wording from the Dynamex case handed down in California in 2018 which set several tests for when a worker should be considered an employee rather than an independent operator. The B part of the ABC test in Dynamex — the basis for the B prong in AB 5 — said an owner-operator should be considered an employee unless, as Benitez noted, “the person performs work that is outside the usual course of the hiring entity’s business.” A trucking company hiring a truck driver who is independent would not meet that test of independence. A trucking company hiring a cleaning company to tend to its headquarters would meet it.

Key legal arguments against AB5 have focused on the Federal Aviation Administration Authorization Act of 1994. That federal law has wording on the ability of states to regulate motor carriers. Attorneys for CTA have argued that FAAAA pre-empts AB5, and Benitez was persuaded.

In a footnote, the judge said “the Court is persuaded by the likelihood of Plaintiffs’ success on the FAAAA preemption ground.” Benitez chose not to address some other CTA arguments; in essence, he appears to be saying that the FAAAA challenge is enough and other legal points don’t need to be considered at this time.

In another part of his ruling, Benitez said the CTA and other plaintiffs “are likely to succeed on the merits.” He also ruled that a restraining order is called for because the plaintiffs are “likely to suffer irreparable harm in the absence of relief” and “relief is in the public interest.”

The ruling suggests that a truck driver would almost never be found to be an independent owner-operator under the tenets of AB5. “Because contrary to Prong B, drivers perform work within (court italics) the usual course of the motor carrier hiring entity’s business, drivers will never be considered independent contractors under California law,” Benitez wrote.

And the costs of ignoring the law are significant, he added. “If their interpretation of the statute is correct, Plaintiffs will have to risk criminal prosecution or take significant and costly compliance measures,” he wrote.

LaBar called the temporary restraining order a “really good sign.” “It is extremely difficult to get a restraining order and preliminary injunction,” he said. “This bodes well for the case.”

“We felt like this was an overreach from day one,” LaBar added. “We felt like this was done with a complete disregard on how this impacted interstate commerce.”

He added that he hopes the decision and a possible success in further proceedings can “attract cargo back to the West Coast, giving us boxes to move and livelihoods to make.”

LaBar said the next hearing on the case will be Jan. 13.

Show More

John Kingston

John has an almost 40-year career covering commodities, most of the time at S&P Global Platts. He created the Dated Brent benchmark, now the world’s most important crude oil marker. He was Director of Oil, Director of News, the editor in chief of Platts Oilgram News and the “talking head” for Platts on numerous media outlets, including CNBC, Fox Business and Canada’s BNN. He covered metals before joining Platts and then spent a year running Platts’ metals business as well. He was awarded the International Association of Energy Economics Award for Excellence in Written Journalism in 2015. In 2010, he won two Corporate Achievement Awards from McGraw-Hill, an extremely rare accomplishment, one for steering coverage of the BP Deepwater Horizon disaster and the other for the launch of a public affairs television show, Platts Energy Week.

13 Comments

  1. Quote: :

    March 2017

    WAGE VIOLATIONS AND PERSONAL LIABILITY

    When an employer does not pay an employee for work, the employer is liable for the unpaid wages.  But a company’s owners, directors, officers, and managing agents may be personally liable for wage and hour violations as well.  Lower-level managers and supervisors may also incur personal liability in some circumstances. 

    Labor Code Section 558.1

    Labor Code section 558.1 permits employees to bring certain actions against “persons acting on behalf of [their] employer.”  Employees may assert against these “persons” a variety of wage-hour claims. These include Wage Order or Labor Code sections governing timely payment of discharged employees, meal, rest, and recovery periods, itemized wage statements, unpaid minimum wage and overtime, and the reimbursement of employment related expenses.

    “Employer” is defined in the Labor Code  to include “an owner, director, officer, or managing agent of the employer.”  So,  employees may bring wage and hour claims against the owners, directors, officers, or managing agents of the business. 
    A managing agent is an employee who exercises substantial discretionary authority over decisions that ultimately determine a company’s policies.  A manager who merely has authority to hire or fire employees is not a managing agent.  However, a manager who exercises substantial independent authority and judgment, and whose decisions affect company policies may be. The key issue in making that determination is how much discretion the manager possesses, and whether their decisions ultimately determine corporate policy. 

    Other Employees Who May Be “Employers”

    Labor Code section 558.1 does not apply to lower-level managers and supervisors.  However, those individuals may be liable for certain wage and hour violations under case law and the Wage Orders.  In Martinez v. Combs, the California Supreme Court adopted a broad definition of employer contained in the Wage Orders.  Specifically, the court held that “[to employ] means:  (a) to exercise control over the wages, hours or working conditions, or (b) to suffer or permit work, or (c) to engage, thereby creating a common law employment relationship.”   As a result, “employer” can include a broader set of defendants than the “corporation” or other business entity, such as a subsidiary.  

    Misdemeanor Liability

    The Labor Commissioner can seek to impose criminal liability on an employer, including an owner, director, or managing agent, for failing to comply with a “stop order.”  A “stop order” is an administrative order to cease work due to serious wage and hour violations.  Individuals can be charged with a misdemeanor punishable by imprisonment in county jail for up to 60 days and/or by a fine of up to $10,000.   

    Personal Liability under Federal Law

    The federal Fair Labor Standards Act (FLSA) also allows for corporate agents and certain employees to be held personally liable for minimum wage, overtime pay, and child labor violations.  Federal courts will apply an “economic realities” test, which requires the individual to exercise significant control over the company’s operations. 

    To make this determination, courts consider whether the individuals have the power to hire and fire employees, determine salaries, are responsible for maintaining employment records, and control other significant aspects of the company’s day-to-day functions.   In Boucher v. Shaw the Ninth Circuit ruled that a CEO, CFO, and other managers could be held liable for the corporation’s failure to pay wages under the FLSA because the officers had “control and custody of the plaintiff class, their employment, and their place of employment.”  However, in Alvarez Perez v. Danford-Orlando Kennel Club, Inc., the Eleventh Circuit found a corporate officer who was only at the actual workplace once a year was not an “employer” under the FLSA. 

    Employer Required to Indemnify

    Although laws allow for an individual employee’s personal liability under federal and state law, California managers rarely will pay out of pocket for wage and hour violations. California law requires employers to indemnify employees for necessarily incurred expenses, which can include legal expenses generated by claims against the individual. Indemnification is required when an employee is working within the course and scope of employment, carrying out the employer’s directions.  So, when a manager carries out company policy, the employer is responsible for reimbursing that manager for legal costs and even a judgment.
    That said, management risks liability when they take actions that are outside the course of employment. And indemnification may not be possible if the employer is insolvent or otherwise unable to pay.

    Bankruptcy/Insolvency of Employer

    Laws expanding liability allow plaintiffs to recover awards from those who may be able to pay when the business entity-employer is insolvent or undercapitalized.  For example, if an employer files for bankruptcy, an employee may try to recover their unpaid wages from alternative sources, such as managing agents. Although employers are required to indemnify employees, managers and supervisors may have to seek indemnification in the bankruptcy proceedings. 

    Conclusion

    So-called “sue your boss” laws provide tangible incentives for managers to ensure the employing entity complies with all the relevant minimum wage, overtime, and other salary and benefit laws.  Those who implement wage and hour policies should seek training regarding the complex web of wage and hour obligations. These would-be “employers” also should review their employing entities’ by-laws and insurance policies to determine if owners, directors, officers, and managing agents are appropriately protected and if additional coverage is needed.  Employing entities also must foster a workplace environment that prioritizes compliance with employment law, which includes policy development and management training.”

    End quote !

  2. What are the main points we can learn from my 3 quoted comments ?

    First we need to be unbiased , neutral , honest , and fair . Step back and put your emotions aside for a few minutes .

    5 paragraphs re-quoted from my second quoted comment :

    “Treating all workers whose services are provided within the usual course of the hiring entity’s business as employees is important to ensure that those workers who need and want the fundamental protections afforded by the wage order do not lose those protections.

    If the wage order’s obligations could be avoided for workers who provide services in a role comparable to employees but who are willing to forgo the wage order’s protections, other workers who provide similar services and are intended to be protected under the suffer or permit to work standard would frequently find themselves displaced by those willing to decline such coverage. ”

    This is considered to be “fair” . It removes unfair competition among ourselves as “employee” drivers in the industry . This is very important to understand . It gives us an advantage to fair treatment in regards to the “Wage Order or Labor Code ”

    2 more ,

    “When a worker has not independently decided to engage in an independently established business but instead is simply designated an independent contractor by the unilateral action of a hiring entity, there is a substantial risk that the hiring business is attempting to evade the demands of an applicable wage order through misclassification.

    A company that labels as independent contractors a class of workers who are not engaged in an independently established business in order to enable the company to obtain the economic advantages that flow from avoiding the financial obligations that a wage order imposes on employers unquestionably violates the fundamental purposes of the wage order. ”

    Last one ,

    If you’re “employ”ed under the Wage Order, and not “exempt” from the Wage Order, you’re entitled to all the goodness the Wage Order confers on employees, even if you might be an independent contractor in other contexts (such as for workers’ compensation purposes).  ”

    End quotes

    I repeat : This is considered to be “fair” . It removes unfair competition among ourselves as “employee” drivers in the industry . This is very important to understand . It gives us an advantage to fair treatment in regards to the “Wage Order or Labor Code ”

    We are generally complaining about unfair competition in regards to those who misclassify “employees” by rendering them independent contractors which gives “employers” a financial advantage and allows “employers” to cut rates at our expense .

    Right ?

    That’s what I have been reading on this site in regards to ie; Americans vs foreigners . Most of you have been complaining about foreigners using “loopholes” in the system to bypass “laws” which in doing so gives them an unfair “competitive” advantage leading to cutting and or lower rates at your expense .

    Let’s take this a step further .

    Due to AB-5 , CARRIERS are asking YOU lease ops to migrate to another state and or register in another state in an attempt to bypass AB-5 . Some of you are deciding to do this on your own . Therefore some of you yourselves are attempting to take advantage of a “loophole” and continue unfair competition among yourselves by migrating and registering in another state . Some of you are even advocating to boycott California . WOW !

    My point is , while you’re complaining about others unfairly taking advantage of loopholes which gives them an unfair competitive edge , some of you yourselves are doing exactly the same thing !

    This is why ” I ” have been advocating that the problem in this industry is YOU the drivers ! You’re cutting each others throat . This is one major reason why your self attempted “shutdowns have failed ! You’re not all on the same page for a “common cause” . You discriminate among yourselves and you screw each other , in general terms .

    Simply put , you’re no more ethical than the unethical one’s you’re complaining about ! Whether that be an employer/broker/Carrier , a lease op , or a misclassified “independent contractor” , and even a so called “OO” . You’re all “generally” the same !

    The “mentality” that is killing this industry is what needs to CHANGE ! That’s why I keeping saying that if you want to get a glimpse of the actual problem in the industry , look in the mirror !

    We can’t have our cake and eat it too . We need to be reasonable . I’m not preaching here . I’m simply observing . Through my observations I notice the major “problem(s)” .

    What some of you are doing by attempting to contest AB-5 is to strip away your rights to fair treatment and improving your circumstance .

    You want higher wages . You want to be compensated for all HOS . You want benefits , you want ect ect ect .

    AB-5 is giving you that opportunity !

    Some / most of you are fed up and yelling out loud for change . Some are desperate and would like to unite and shutdown in an attempt to improve their circumstance in the trade through the belief that it would be the only cure .

    AB-5 is giving you that opportunity . It’s giving you the opportunity to join an “ORGANIZED” labour “UNION” .

    I truly believe that most “drivers” who feel betrayed by AB-5 don’t truly understand AB-5 . I strongly recommend that you obtain “competent” legal counseling . You owe it to yourselves to fully understand what it truly implies . It’s truly one of the best legislated laws that has been created in your favor . Some of you are in a panic due to your lack of comprehending it , or because you’re listening to those who are attempting to influence you in their favor .

    Believe me ,if I saw the slightest unfairness in it in regards to drivers , I would be ranting about it non stop .

    Unfortunately for those who are against it , the recent temporary injunction restraining it is bittersweet . FAAAA does not preempt it . There’s jurisprudence on the matter which is extremely clear . Enjoy you’re 15 minutes of fame . That temporary retraining injunction victory is bittersweet .

    In my humble opinion ……………

  3. OOIDA challenges AB5, New Jersey bills
    November 22, 2019

    You can google it , I don’t feel like copy and pasting the article . I’m upset with this Spencer fellow for changing sides .

    Why ?

    Because what “some” so called Owner Operators do is get a few trucks , then they put an ad looking to hire a truck driver to drive for them . They explicitly state that the driver MUST be incorporated . They “misclassify” the driver as an independent contractor to save on expenses ! Those are the “clowns” that cut rates and cheat !

    In laymen terms , by doing such they SCREW the driver out of fair wages and benefits . Their excuse is that you don’t have to accept the job and go drive somewhere else . Really ? Now that’s a major problem . If we drivers don’t accept to be misclassified then we’re not eligible for the job because we don’t satisfy the OO’s illegal misclassification requirements !

    Which means , to get the job we have to agree to be exploited ! What kind of unethical ignoramus mentality is that ???

    An OO can’t afford to hire an employee . The OO’ aka broker leases on to a carrier , the misclassified EMPLOYEE then drives the OO’s truck while hauling for the carrier the OO is leased with . Sometimes the misclassified driver will haul for the OO through a load board . The rates aren’t high enough for the OO on either end to be in a position to satisfy employee wages and benefits according to the labour code . So the OO violates the labour code and now competes unfairly with other OO’s that really own and operate their own truck , and the so called OO clown also competes against carriers unfairly who hire employees on payroll .

    Now that is a HUGE problem trickling down to unfair competition due to violating labour codes and FORCING drivers to accept this sort of violation in order to get a job . Who in the heck do these people think they are ???

    The main reason we’re getting bombarded with regulations is do to abusive “employers”(clowns) in the industry who keep on abusing “employee” drivers , and violate laws themselves . If the CLOWNS were reasonable , we wouldn’t need HOS regulations , nor labour codes and laws like AB5 etc . These laws have been legislated to prevent employees from being EXPLOITED by unethical employers !

    It’s YOU the CLOWNS in the industry and due to your abuse that we’re being strangled into a lack of freedom ! Some of you are so stupid that you don’t even realize that you’re shooting yourselves in the foot !

    Some of you genuine OO’s that in turn were unreasonable , violated laws , screwed up , killed someone in an accident , and due to your lack of ethics and sense , contributed to REGULATIONS depriving us of our liberties because YOU abused yours !

    But then you say , oh but , but , I had to because the industry is very competitive and if I didn’t then I’d be unprofitable . NO YOU CHOSE TO BE STUPID ! That’s the problem ! Their are an infinite amount of ETHICAL INNOVATIVE LEGAL & REASONABLE ways to be competitive . YOU CHOSE TO ACT UNETHICALLY and this is the price we pay TODAY due to your lack of ethics !

    This whole industry has become a can of worms ! People screwing each other , exploiting one another , even threatening and shooting at one another over a freaking parking space ! WOW MAN !

    Then we see your true colors when laws are created to PREVENT YOUR ABUSE ! You get mad , you lobby , , you hire lawyers , you try your hardest to fight so that you can keep on abusing for a freaking few bucks . Some of you carriers even collude to lobby for laws which favor you so that you can remain competitive among your cut throat selves .

    The only chance drivers have from my perspective is to agree to regulations like the ABC test and even laws like AB5 that go a step further , then unionize by joining an organized labour union and have your union leaders pursue your desired reasonable changes .

    That’s the way the system works , for now , until you wake up and improve it to a point where regulations are unnecessary . LOL , good luck with that .

    I know this comment is getting long so I’ll end it with a true story .

    I had an uncle in this business .He began trucking in the 60’s . When I was a child he was my favorite uncle . A real nice guy , a joker . He was an owner operator and always had extremely beautiful rigs . He was a proud guy . The older generation , the real truckers . A freaking cowboy behind the wheel . We’re going back in the 80’s now . These guys had a whole different mentality . Anyways , anywhere he went he would put a smile on people’s faces . If he saw a trucker stopped on the side of the road , he would stop to offer a hand .

    At truck stops , he’d make the waitresses laugh . He was well known on the CB and drivers liked him .

    This guy , my uncle, would cheat his log book like you wouldn’t believe . He used to run reefer long haul . He would drive for two people because he wouldn’t take 2 weeks to make a trip if he could do it 1 . Insane . But he was in love with my aunt and didn’t want to away from her for more than a week . Anyways, he cheated his log because he was mentally and physically capable . Never had an accident . At that time speed limiters were not even among our imaginations . He would stop and nap when he felt it was necessary . After awhile all that abuse of long hours and very little sleep began to take a toll on his body . It began with diabetes and eventually got real bad to the point that the kidney’s gave in .

    This guy never smoked a cigarette in his life nor had ever had a drop of alcohol , not even at his own wedding . He passed away at 62 . The body let go .

    So I’ve seen it first hand what a toll trucking can take on someone . Especially those old generation cowboys that inspired the younger generations to get into the industry .

    But it’s also these guys that pushed themselves to the max , violated laws because they felt they could and nobody was going to tell them what they could and couldn’t do . That sort of reasoning lead him to his death at a young age . He pushed too much . That sort of a lack of reasoning is what lead the industry to being regulated as it is today .

    As a child I would go on trips with him sometimes . You know as children we’re impressed by the big rig . I would ask him about every button,switch etc in the cab . I wanted to do that sort of job . He kept telling me no , and how it sucked and how competitive it was becoming and that the money just wasn’t as good as it used to be etc etc etc . So I didn’t do it until much later in life long after he passed away .

    Boy was he right . And he stopped and passed away in the 90’s. That’s when times were still somewhat ok in the industry . I would never have thought that trucking was as bad as it is today .

    Before I conclude this comment . That uncle of mine has a brother . LOL , yes another uncle of mine who chose to follow in his brother’s footsteps and became a trucker as well . Not quite the same character though . Shy , reserved and disciplined , but a cool guy .

    That uncle is still alive to this day . He would sleep his eight hours a day every day while on the road, ate regularly and well . Never cheated his log book , only rounded the corners if it was absolutely necessary on his way back home . He had 15 guys working for him as drivers at one time . Never did he cheat them , abuse , them in any way . They all liked him and only had good things to say about him . To them he wasn’t their boss , he was a friend .

    That’s the idea that I was introduced to in regards to “truckers” . Not the cr@p that I’ve experienced since I began trucking . What a disgrace this industry has become . The mentalities , the everything . In-freaking-believable !

    In my humble opinion ……….

Leave a Reply

Your email address will not be published. Required fields are marked *

Close