AB-5 Legislation Update

The state of California has asked a federal court to begin lifting the preliminary junction against imposing AB-5 on the state’s trucking industry. The requests to the Court of Appeals for the state’s 9th Circuit is part of the appeal of the attempt by the California Trucking Association (CTA) to be granted an injunction against the position that AB-5 has put the trucking industry in.

The state’s AB-5 Legislation has been a topic of controversy for over a year now. What it does is move 2018’s Dynamex California Supreme Court decision into law, which established an ABC test to determine the status of an independent contractor that could essentially eliminate the owner-operator model in California, and disrupting everything from investing in commercial truck insurance, such as general liability insurance, and the sharing economy.

According to the appeal by the attorney general’s office, the law set in place by the FAA in the early 90s “preempts state and local regulation that has a significant effect on the prices, routes or services of motor carriers.” This has been the position of the CTA as well and a case they have been trying to make since AB-5 began picking up steam last year.

The state’s appeal is mostly looking at the prices, routes, and services, as mentioned above, in the preliminary injunction. The state cited legal precedents that it said should be looked at as meaning that state labor regulations are not preempted by the Federal Aviation’s act.

Independent Contractors and Trucking Companies

If the argument that AB-5 doesn’t entirely ban the hiring of independent contractors as truck drivers by a company, the state’s argument stays focused on prices, routes, and services. The test brought on by AB-5, the ABC test, and the earlier standard used to decide if someone is a full-time employee or a contractor do not define the rights or benefits that a trucking carrier has to provide its drivers.

The state went on to argue that the decision to grant the injunction then offers no “substantive analysis on what impact labeling motor carriers’ drivers to be ‘employees’ will have on prices, routes, and services”. The state argues that what might be seen as a hurried nature of the CTA action is reason enough to overturn the injunction.

The state’s filing says the ABC test became a reality for trucking companies and their drivers with the Dynamex decision, which was put into place in April of 2018. However, the injunction wasn’t put into motion until December of 2019, plenty of time for the plaintiffs to seek injunctive relief during that time period.

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