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    5.4%
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    1.5%
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    0.050
    1.9%
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    0.160
    6.8%
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    0.020
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  • ITVI.USA
    12,872.370
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  • OTRI.USA
    15.340
    0.780
    5.4%
  • OTVI.USA
    12,860.970
    187.460
    1.5%
  • TLT.USA
    2.650
    0.050
    1.9%
  • TSTOPVRPM.ATLPHL
    2.520
    0.160
    6.8%
  • TSTOPVRPM.CHIATL
    1.860
    0.020
    1.1%
  • TSTOPVRPM.DALLAX
    1.310
    0.140
    12%
  • TSTOPVRPM.LAXDAL
    2.260
    0.100
    4.6%
  • TSTOPVRPM.PHLCHI
    1.260
    0.040
    3.3%
  • TSTOPVRPM.LAXSEA
    2.730
    0.150
    5.8%
  • WAIT.USA
    120.000
    -19.000
    -13.7%
Driver issuesNewsTrucking

Handing down preliminary injunction, judge says AB5 ‘runs off the road’ 

The temporary injunction stopping AB5 from being enforced against the trucking sector in California has been “promoted” to a preliminary injunction.

The move was largely expected after the outcome of a hearing Monday before Federal District Court Judge Roger Benitez in the case brought by the California Trucking Association (CTA) against California over the implementation of AB5. The law severely constricts the ability of companies to hire independent contractors in their predominant line of business. Benitez on New Year’s Eve handed down a temporary injunction blocking implementation of AB5 in the trucking sector when it went into effect Jan. 1.  Benitez’s statements from the bench Monday were generally interpreted as signaling that a move from a temporary injunction to a preliminary injunction was likely.

His decision Thursday touched on many of the same themes that were in his New Year’s Eve decision, though in greater detail. The primary argument put forth by the CTA is that the Federal Aviation Administration Authorization Act of 1994 restricts how much a state can regulate transportation. “FAAAA preemption is broad but not so broad that the sky is the limit: states retain the ability to execute their police power with laws that do not significantly impact rates, routes, or services,” the judge wrote. “Here, however, there is little question that the State of California has encroached on Congress’ territory by eliminating motor carriers’ choice to use independent contractor drivers, a choice at the very heart of interstate trucking.”

The new law, the decision says, “produces the patchwork of state regulations Congress sought to prevent. With AB-5, California runs off the road and into the preemption ditch of the FAAAA.”

Five days before the Monday hearing on whether to grant a preliminary injunction, California lost a case on some of the same arguments in a lawsuit it had brought against Cal Cartage, a drayage provider that is part of NFI Industries. Benitez’s decision Thursday noted that the case in state court “ruled that because the ABC test effectively prohibits motor carriers from using independent contractors to provide transportation services, the test has a significant, impermissible effect on motor carriers’ ‘prices, routes and services’ and thus is preempted by the FAAAA.” That case is cited in a long list of other cases that Benitez said argue in favor of the CTA view on whether the FAAAA preempts AB5 in the trucking sector.

The decision is unique to trucking and does not impact AB5 implementation in other sectors.

The ABC test at the heart of AB5 and its civil case that spurred the legislation, the so-called Dynamex decision, holds among other provisions that if a company hires a person to perform a task that is at the core of what that company does, that person should be considered an employee. That’s the B prong of the ABC test. Putting aside the question of trucking, since it’s at the heart of the CTA case, a company that provides translation services that hires an accounting firm to do its books passes the B prong; a translation company hiring an independent translator might not. (Translators have been particularly vocal that the implementation of AB5 is hurting them hard.) .

One of the tests of whether to grant a preliminary injunction is whether allowing the legal situation in question to go on unimpeded would inflict “irreparable harm” on the party seeking the injunction. “Plaintiffs have shown that irreparable harm is likely because without significantly transforming their business operations to treat independent-contractor drivers as employees for all specified purposes under California laws and regulations, they face the risk of government enforcement actions, as well as criminal and civil penalties,” Benitez wrote.

The injunction is not the end of the case but will remain in place until final judgement is handed down. But lawyers who have followed the case have said Benitez’s arguments in the proceedings so far, and in his orders, show a strong leaning toward the arguments of the CTA.

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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.

4 Comments

  1. Quote:

    “The law severely constricts the ability of companies to hire independent contractors in their predominant line of business. ”

    NO ! The law severely constricts the ability of companies to misclassify EMPLOYEES , shortchanging employees out of fair wages and benefits , and the government out of taxes !

    Attempting to use the FAAAA to preempt such laws is HOCUS POCUS ! The FAAAA is not a “carte blanche” that allows the trucking(transportation) industry to misclassify nor screw drivers/employees out of wages & benefits , nor to screw the government out of income taxes .

    Stop resisting “positive” change . ADAPT ! The industry is in great need of restructuring .

    In my humble opinion ………….

    1. How is making it impossible to go into contract with owner operators, who are paying off their trucks, that they own, going to help anyone? They will go belly up on their loans because they cant find work, then what? the bank takes all of these owner operators trucks away (crushing their credit score), & or force a company to buy out the rest of their drivers loans if they want to keep doing business, even if its not a tractor that the company doesn’t necessarily want to own? Then their only choice is to go work for a larger trucking company that employs drivers and restricts them of their choice to be independent….Owner operators like it because its flexible, they can choose their schedule, take off for months at a time, you don’t have that luxury when you are an employee. How can changing an industry over night help anyone? When in all honesty no one in the industry was asking for more regulation!

  2. Have been an owner operator in the construction business for 20 years this a be 5 law has put me straight outta work even though the judge put an injunction in granite construction and those contractors are still demanding that we get 5 million dollars a coverage a Class S corporation and workman’s comp all this cost me an additional $20000 a year of which I don’t make an extra $20000 a year is total bullship I was nobody’s employee I make my own insurance payments I make my own truck payments I had to get up tax number from the state and operating permit from the state now how can they tell me I’m not an independent owner operator this is total bull shit .Do we live in Russia . The state of California and the Democratic Party are straight screwing me I’ll have to work 11 days to make what I make in 7 days owning my own truck working for somebody else why should I have to do that. Being in business for yourself used to be in American dream and a right now they’ve taken that from me The ability for me to provide for my family has been taken from me so now what should I do . Go to work for somebody else so I can work twice is many days to make the same amount of money I’m so goddam mad I can’t even think straight right now

    1. So, Ed, make sure to write your representatives and join a trucking organization that will voice your concerns and keep you informed. You can always take your trucking business to another state, which we did back in 2006. We saw the writing on the wall when CARB (non-elected people) decided our assets (commercial trucks) were going to become worthless prematurely in that rogue state unless one becomes COMPLIANT (their favorite word). So get used to endless COMPLYING if you want to stay in trucking. Be docile. Just obey. CA liberal government knows best for everyone in every situation. And besides Ed, your last name is so “white”, you won’t get much sympathy from the powers that be. Si, se puedes!

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