The California proposition that was approved at the polls last week and took ride-share drivers out from under the state’s AB5 law should be a factor in whether the trucking industry remains exempt from it as well, according to a lawyer involved in key litigation.
The Court of Appeals for the 9th Circuit is considering whether to lift an injunction first handed down New Year’s Eve 2019 that blocked AB5 from being applied to the trucking industry in California. AB5 is the law that under certain circumstances will make it difficult for companies to hire independent contractors to perform certain tasks.
A trucking company hiring an independent owner-operator is near the top of that list. The alternative? Make him or her an employee.
In a letter to the court, the attorney for the California Trucking Association, which brought the original lawsuit, says the victory of Proposition 22 takes a further whack at the idea that AB5 is a law of “general applicability.” Andrew Tauber, an attorney with Mayer Brown, says AB5 was never a law of general applicability, which would cover a broad swath of economic activity. The CTA’s argument is that it was always targeted at trucking and ride-sharing and is even more so with the success of Proposition 22.
Tauber notes in the letter that the original AB5 had several exemptions to various industries from the provisions of AB5. That list of employee classifications grew with additional exemptions passed in September.
“Now AB5 has been amended yet again and once again rendered even less generally applicable than before,” Tauber writes in the letter to the court. “This, after passage of Proposition 22, AB5 is not a generally applicable law — not even in the transportation industry, much less more broadly.”
In the earlier injunctions blocking AB5 from being applied to the trucking industry, lower courts held that its provisions conflicted with a 1990s-era law called the Federal Aviation Administration Authorization Act, known colloquially as F4A.
In his arguments before the appeals court on Sept. 1, Tauber said the state of California — which is the CTA’s opponent in the case — had argued that AB5 can’t be preempted by F4A because it is a law of general applicability.
Tauber had described that in his arguments before the court as a “false characterization.”
“AB5 is not a law of general applicability,” he argued. “It contains numerous exceptions for numerous industries and professions.” Further, he said, “it specifically targets the trucking industry.”
This was the second letter sent to the court by Tauber since the Sept. 1 hearing about the question of general applicability. After the California Legislature significantly widened the number of jobs that were performed by independent contractors that could be exempted from AB5, Tauber wrote the court to say that “truck drivers are notably absent from the long list of professions exempt from the ABC test under California law.” That omission, he said, helped make the argument that AB5 is a targeted piece of legislation and is not a law of general applicability.
One of the arguments that attorneys representing CTA have made throughout the process has been that F4A prohibits state action that could affect routes or prices. Tauber made that point in his arguments before the appeals court.
But in the Sept. 1 hearing, Judge Douglas Woodlock cited an earlier precedent in a similar case involving regulations that affected employer-employee relations. The law there “didn’t set prices, it didn’t mandate or prohibit certain routes,” Woodlock said, similar to the language in F4A that specifically prohibited laws that would do just that. What that earlier decision might mean, Woodlock said, is “that in certain circumstances … the decisions about prices that are set, services that are set and routes that are used is really immaterial.”
It was that sort of questioning that led the law firm of Scopelitis Garvin Light Hanson & Feary to publish a commentary soon after the hearing that said the questions posed by two of the three judges “raises some concern the court is leaning toward reversing the District Court’s order.”