News Alert: State court says applying AB5 to California trucking not preempted by significant federal law

The prospect of California’s AB5 impacting the state’s trucking sector moved a step closer to reality Thursday when a California Court of Appeals ruled that the law governing the hiring of independent contractors was not preempted by a federal law. 

In a case that was first filed before AB5 passed the California legislature in 2019, the drayage company Cal Cartage had won an earlier ruling that AB5 was preempted by the Federal Aviation Administration Authorization Act, legislation passed in the 1990s. It was that law, known as F4A, that also was cited by a federal court earlier this year as preempting the application of AB5 in the trucking sector. That earlier federal decision is being appealed. 

But in the ruling Thursday, a three-judge panel unanimously ruled that AB5 is not preempted by F4A. 

At issue with AB5 and the role of independent owner-operators has always been the B prong of the so-called ABC test inherent in AB5 used to determine whether a worker for a company can be an independent contractor or should be ruled an employee. The B test states a worker is an employee if his or her responsibilities are the same as the company’s fundamental business, such as a trucking company hiring a truck driver to move freight. A worker hired by that same company to do landscaping around the company’s headquarters is not performing the company’s essential function and therefore would not be considered an employee.