UPDATE: U.S. Supreme Court Appeal Filed on Ninth Circuit Reversal Allowing ABC Test Trucking Enforcement
Bryan Little, Farm Employers Labor Service
Updated August 26, 2021
UPDATE: The California Trucking Association (CTA) recently filed a petition with the U.S. Supreme Court seeking to reverse a U.S. Ninth Circuit decision overturning a lower court injunction against enforcement of the ABC test in truck transportation. The petition requests the Supreme Court weigh in on whether federal law preempts the application to motor carriers of a state worker-classification law that effectively precludes motor carriers from using independent owner-operators to provide trucking services. You can read more here.
On April 29, a panel of judges from the U.S. Ninth Circuit Court of Appeals has reversed a lower federal court ruling from January 2020 exempting trucking operations in California from state enforcement of AB 5 and the "ABC test" for determining independent contractor versus employee status. The lead plaintiff in the case, the California Trucking Association, has indicated it intends to file for a rehearing. The January 2020 premliminary injunction will remain in effect at least until May 19.
Should the courts take no further action, this clears the way for the Labor Commissioner to begin enforcement of AB 5 and the "ABC Test," which many fear will eliminate owner-operator truck operators in California.
On March 30. 2020, the Ninth Circuit denied the Teamster’s motion to stay the preliminary injunction issued by the District Court in January which prevents the State from applying AB 5 to motor carriers. In practical terms, this means the preliminary injunction will remain in effect for the duration of the proceedings on the appeal at the Ninth Circuit. You can read the Court's order here.
Two California-based Federal judges, in separate actions, enjoined actions of the California Legislature as over-reaches preempted by Federal law.
On New Year’s Eve, Judge Robert Benitez of the U.S. District Court for the Southern District of California issued a temporary restraining order (TRO) in a lawsuit brought by the California Trucking Association seeking to overturn AB 5 with respect to motor carrier operators. Judge Benitez’ order constrains California General Xavier Becerra and other agencies of the California state government from enforcement of Assembly Bill 5 (AB 5) with respect to determination of appropriate classification of providers of services as employees or independent contractors for purposes of enforcement of the Labor Code, the Unemployment Insurance Code and Industrial Welfare Commission Wage Orders within the motor carrier industry.
AB 5, passed by the California Legislature in 2019, becoming effective on Jan. 1, 2020, sets forth stringent criteria which the relationship between a service provider and a service receiver must meet for the service provider to be considered an independent contractor rather than an employee.
In his temporary restraining order, Judge Benitez found:
- Federal law (the Federal Aviation Administration Authorization Act, or FAAAA) likely preempts AB 5 because FAAAA “prohibits any state from enact[ing] or enforc[ing] a law, regulation or other provision having force and effect of law related to a price, route or service of any motor carrier… with respect to transportation of property.”
- Operation of AB 5’s “prong B” test (requiring an independent contractor perform work that is outside the usual course of the hiring entity’s business) effectively mandates that motor carriers treat owner-operators as employees rather than independent contractors.
- The Plaintiffs established that imminent, irreparable harm is likely, requiring motor carriers to restructure their operations to treat independent owner-operators as employees.
- That the Plaintiffs have “carried their burden for purposes of emergency relief to show (1) that they are likely to succeed on the merits, (2) likely to suffer irreparable harm in the absence of relief, (3) that the balance of equities tips in their favor, and (4) that their requested relief is in the public interest.”
Bear in mind that Judge Benitez’ order applies only to motor carriers, though other litigation seeking to overturn AB 5 is pending. Please see FAQ on AB 5 Worker/Contractor Standards at the California Farm Bureau’s website for more information about how AB 5 impacts agriculture.
(Editor's Note: On Jan. 16, 2020, Judge Benitez granted a permanent injunction barring the State of California from enforcing AB 5 against motor carriers.)
AB 51, California’s attempt to limit the use of workplace arbitration agreements won’t go into effect in January thanks to a federal judge’s Dec. 30 order. The U.S. Chamber of Commerce and other business groups raised serious questions about whether the Federal Arbitration Act preempts the state’s employment arbitration law, U.S. District Judge Kimberly Mueller said in her order granting a temporary restraining order against the law. California’s restriction on workplace arbitration would prohibit employers from requiring that job applicants or workers sign arbitration pacts as a condition of employment. That represents a departure from other states’ tactic of declaring that agreements to arbitrate certain types of claims are invalid.
Although just a temporary restraining order, the ruling deals a blow to a state statute on arbitration designed to pass legal muster where others failed. Mueller will hear the business groups’ motion for a preliminary injunction Jan. 10.