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CTA’s last hope to protect California trucking from AB5: US Supreme Court

Organization, after earlier losses, asks high court for a review on independent contractor law

Photo: Jim Allen/FreightWaves

The California Trucking Association has asked the U.S. Supreme Court to review its case against imposing AB5 on the state’s trucking sector. 

It’s a last-ditch effort to keep in place a stay that is blocking imposition on the law governing the definition of independent contractors in the state.

The last two rounds in the courts did not go well for the CTA. In April, the injunction that kept AB5 from being implemented was overturned by a three-judge panel of the 9th U.S. Circuit Court of Appeals. In June, a petition to appeal the panel’s ruling to an en banc sitting of the court — a larger number of judges from the 9th Circuit — was denied. 

After that petition was denied, the earlier injunction that prevents the state from implementing AB5 — which dates back to a New Year’s Eve decision at the close of 2019 — was allowed to remain in place temporarily. But the wording of the order that allowed the injunction to remain in place said that if the Supreme Court denied certiorari, the stay against AB5 in California’s trucking sector would end immediately.

The Supreme Court generally grants certiorari to less than 2% of all the petitions it receives.  

In a brief statement announcing its filing, the CTA cited its view that the Federal Aviation Administration Authorization Act, the so-called F4A, should prevent AB5 from applying to trucking in the state.

AB5 governs the definition of independent contractors. The issue that the trucking industry faces is the so-called “B prong,” which defines an employee as a worker engaged in a primary activity of the hiring entity. A trucking company hiring an outside accountant would not face a problem with the B prong, since accounting is not its primary business. But a trucking company hiring an independent owner-operator would have an issue with that part of the ABC test that is at the heart of AB5.

The CTA’s lawsuit against AB5’s implementation argued that F4A blocks any state law that might impact rates or services — wording that can be found in federal legislation passed in the early ’90s. A lower court agreed with that argument and imposed a temporary injunction and then preliminary injunction to block the state from enforcing AB5. 

But an appeals court ruled in April that F4A’s wording should not be seen as blocking what it said was a “law of general applicability” like AB5. 

In its statement announcing the certiorari filing, CTA President Shawn Yadon said: “We believe the Federal Aviation Administration Authorization Act prohibits a state statute such as California’s AB 5 that clearly abolishes the historic role within the trucking industry of independent owner-operators. It is our hope the United States Supreme Court will take up this urgent matter of national significance and we are asking the country’s highest court to fully consider the question of FAAAA preemption of the ‘all or nothing’ ABC test and resolve the circuit conflicts that exist on this issue.”

There is no known F4A Circuit Court decision regarding its relationship to AB5. However, the body of law on F4A in general is far from unanimous in what constitutes legislation that might impact rates and services, which is what Yadon presumably was referring to when he mentioned “circuit conflicts.” (The so-called Cal Cartage case, which ruled that AB5 is not preempted by F4A, was a state case.)

“In California, more than 70,000 owner-operators choose to work independently because of the freedom, flexibility and business growth potential that business model provides,” Yadon said in his statement. “These small-business entrepreneurs face irreparable damage should AB 5 be allowed to exist as it relates to the trucking industry.”

How the state’s trucking industry would cope with AB5 has been a source of much speculation. Using the B2B exception, having trucking companies become more of a brokerage operation…all have been discussed. But one option that does not appear to have much support is the idea that trucking companies will just turn to adding a lot more company drivers. 

Trucking was long seen as a primary target of AB5, along with gig worker delivery services like Uber and Lyft. However, those two companies and others worked together to get Prop 22 on the ballot in November in California. It won by a large margin, exempting those workers from AB5. 

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  1. Stephen Webster

    California is right to demand truck drivers including owner ops get paid by payroll. In Ontario Canada I live and volunteer in homeless shelters and group homes for injured and sick workers and homeless. The trucking companies and the private insurance companies are leaving the cost of care for gig workers to nonprofit groups that do not have the resources to handle the gig workers in my opinion.

    1. Gerald T Niedert

      My response is to the trucking industry trying to overturn AB5 while being unable to solve the driver shortage, which will get worse. There is no prohibition from having a company employee own and operate his/her own truck, while being an employee. The truth is that Independent Contractors have been used to depress the wages that could be paid to company (employee) drivers. If all trucking companies used company drivers, and if the Fair Labor Standards exemption for interstate trucking companies was removed I am confident the driver shortage would quickly abate; and I am also confident that the trucking industry would quickly put the technology in-place to manage drivers hours and routes. End result is a safer, saner, and more productive industry, and an industry that again becomes attractive as a career choice.

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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.