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News Alert: AB5 free to be enforced in California’s trucking sector

Appeals court rules law regulating use of independent contractors is not preempted by federal law; injunction was in place since start of 2020

Photo: Jim Allen/FreightWaves

An injunction that stopped the California trucking industry from coming under AB5, the state’s  law governing the use of independent contractors, has been overturned.

A three-judge panel in the U.S. Court of Appeals for the 9th Circuit, in a 2-1 vote, handed down its decision Wednesday after hearing oral arguments back in early September.

In his dissent, Judge Mark Bennett summed up the impact of the appellate court’s decision in language that the California trucking sector has been dreading for many months in the case originally brought by the California Trucking Association. 

“California will now be free to enforce its preempted law,” Bennett said. “CTA’s members will now suffer irreparable injury. And the damage to the policies mandated by Congress will likely be profound.”

The primary issue in the case is whether a federal law, the Federal Aviation Administration Authorization Act, which dates back to the ’90s, preempted the implementation of AB5 in the state. On New Year’s Eve 2019, right before AB5 went into effect, the suit brought by the CTA was able to get an injunction handed down by a lower court on the grounds that F4A, as it’s known, preempted implementation of AB5. That has kept AB5 out of the state since the law’s  full state implementation on the first day of 2020.

The key issue for the trucking sector in AB5 is the so-called B prong of the ABC test, which allows the hiring of independent contractors if the contractor “performs work that is outside the usual course of the hiring entity’s business.” Given that a trucking company hires independent truck drivers to move freight, it has always been assumed that activity would not be permitted under AB5.

FreightWaves will continue to report on this story as the day progresses.

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  1. Stephen Webster

    Too many lease ops end up hurt and sick with no coverage. The same thing for U B E R drivers. I see in the homeless shelters that volunteer for and live at when my health is not good enough to drive truck. We need a system that all owner ops that has a minimum of $22.00 U S per hour on payroll or $28.00 cd per hour on payroll with payroll deduction like C P P in both Canada and the U S for both company drivers and lease ops that have more than 5000 hours experience and go O T R. In Ontario Canada the taxpayers are paying more money in services like health care and housing than lower wage workers at places like Amazon and Walmart. Also Uber drivers and lease ops truck drivers get more gov assistance than taxes they pay. Also lower wage T F Ws including cross border truck drivers are costing the homeless shelters a lot of money.

  2. Mark Greydanus

    As President Biden is preaching…
    Embrace the Unions. They are taking Trucking back. Especially in the Ports.
    Thousands of good men and women will be financially ruined.

Comments are closed.

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.