(This article has been revised to more accurately reflect litigation regarding AB5 that was cited by the CTA and OOIDA. In an earlier version, references were made to litigation regarding California’s Prop 22. Outside of both dealing with the issue of AB5, there is no link between that Prop 22 specific litigation and the CTA vs. Bonta case that is the subject of this article. FreightWaves regrets the error.)
Both the California Trucking Association and the Owner-Operator Independent Drivers Association have filed amended complaints in the ongoing lawsuit regarding California’s AB5 independent contractor law, and as expected, the changes have a common target: Lorena Gonzalez.
Gonzalez, a former state assemblywoman, is the author of AB5, which tightly restricts whether a worker can be defined as an independent contractor. Its tenets favor classifying workers as employees.
AB5 includes the ABC test, whose B prong says a worker is independent if he or she “performs work that is outside the usual course of the hiring entity’s business,” an obvious problem for trucking companies hiring independent owner-operators to move freight.
But AB5 has a slew of exemptions. It’s those exemptions that led to the amended complaints. They follow on the initial filings from both the OOIDA and CTA in December and January, respectively.
In March, a Ninth Circuit Court of Appeals decision in the case known as Olson vs. California kicked back an earlier dismissal of an anti-AB5 case brought in late 2019 by Uber, Postmates and several individuals, including Uber driver Lydia Olson, the lead named plaintiff.
In doing so, the court concluded that the exemptions, in combination with Gonzalez’ own statements, could be seen as denying Uber and Postmates the equal protection of the laws in putting together AB5 and then layering on a wide variety of exemptions. That anti-AB5 victory led the CTA and OOIDA to amend their initial complaints, bringing Gonzalez’s views on trucking into the mix.
Gonzalez was in office in 2019 when AB5 was signed by Gov. Gavin Newsom. She has since resigned and is now executive secretary-treasurer of the California Labor Federation.
The original AB5 legislation and a subsequent law, AB2257, carved out a bevy of exceptions to the ABC test. And the argument in the Prop 22 case, and now in the arguments of the CTA and OOIDA, is that AB5 amounts to denial of equal protection of the laws to the trucking industry because of what appears to be targeting by Gonzalez.
“The fact that AB-5 was intended to target motor carriers is clear from floor debate on the bill,” the CTA says in its brief. The organization quotes a statement by Gonzalez that a goal of AB5 was “to get rid of an outdated broker model that allows companies to basically make money and set rates for people that they called independent contractors.”
For the industries exempted from AB5, the legal test of whether a worker is independent or an employee remains the Borello test, the standard in California before AB5. Borello is generally also seen as leaning toward classifying a worker as an employee but is considered far less restrictive than AB5.
That AB5 was aimed at trucking “is also clear from the dozens of exemptions and exceptions inserted into AB-5 and AB-2257,” the CTA argues. “These exclusions establish that the traditional Borello test continues to apply to numerous industries and professions.”
The CTA argument in its amended brief also focuses on an exemption for truck drivers in the construction industry. “The proliferation of exceptions and exemptions under AB5 for workers in businesses other than interstate trucking, including an exception for an industry that involves intrastate trucking, underscores the animus towards non-construction-related motor carriers,” the association said.
Gonzalez tweeted about that exemption in November 2019, according to the CTA, saying AB5 would allow a truck driver to “work as an independent contractor for a construction firm” but that an owner-operator must “work as an employee for a trucking company.” In doing so, the CTA said, she was “specifically acknowledging the disparate treatment of these similarly-situated drivers.”
OOIDA’s brief also cited the construction trucker’s exemption. “No rational basis exists for using one classification test for construction industry truckers — the Borello test — and another — AB 5 — for other truckers, including OOIDA’s members,” the organization’s brief argues.
Echoing CTA, OOIDA said “the true basis in fact for this treatment of the trucking industry is political animus. [Gonzalez] repeatedly stated AB5’s purpose of ending the independent owner-operator model. Yet the law carves out an exception for owner-operators in construction.”
Both CTA and OOIDA argue that what they see as the singling out of the trucking industry has denied their clients equal protection of the law, the same standard that ultimately allowed Prop 22 to prevail on appeal.
The rest of the amended briefs are largely unchanged from. Both the CTA and OOIDA argue that AB5 should not apply to the trucking industry because it would violate the principles of the Federal Aviation Administration Authorization Act, granting federal preemption of state laws that impact “prices, routes and services” of transportation providers.
That is the argument that was successfully made to Judge Roger Benitez of the U.S. District Court for the Southern District of California at the end of 2019, leading him to hand down a preliminary injunction barring implementation of AB5 in California trucking. That injunction was later overturned on appeal, and when the U.S. Supreme Court chose not to review the CTA’s appeal, AB5 took effect in trucking.
The two groups also argue that AB5 violates the Constitution’s commerce clause that regulates interstate commerce.
The ongoing litigation is essentially a revival of the legal action that initially led to the injunction that blocked AB5 in California trucking. Since that case was never fully litigated once the injunction was handed down, the Supreme Court action denying review did not kill the case; it just sent it back to the original court and put it before Benitez.
OOIDA joined as a plaintiff after the case was sent back to the district court. The defendants are state Attorney General Rob Bonta and the Teamsters union.
CTA and OOIDA have asked for summary judgment. The deadlines for filings and hearings have shifted several times in the past few months and the state’s response is now due May 10. An initial hearing on the case that was to be on May 22 would be moved to June 12 under a request from both plaintiffs and defendants.
More articles by John Kingston
TIA’s stark message: Double brokering, fraud out of control
Shippers in control: How they approach a market strongly in their favor
3PL industry rattled by C.H. Robinson liability decision looks to other cases
