California Assembly Bill 5 in for a Bumpy Ride with Truckers

Sacramento, CACalifornia trucking fleets don’t agree with California Gov. Gavin Newsom, who says that AB5, a new California labor law, he signed into law on Sept 11 is a “landmark legislation for workers and our economy.” Rather, the California Trucking Association (CTA) argues in its federal lawsuit that the bill “runs afoul of federal law.”

This new labor law, which is slated to take effect January 1, will purportedly give wage and benefit protections—such as minimum wage, workers compensation, health insurance, paid leave and other benefits-- to workers in the so-called gig economy, including independent truckers.
 

The California Trucking Association Lawsuit

The CTA first filed a lawsuit in federal court to stop the AB5 law in October 2018. It amended the labor lawsuit on November 12, reported CBS Sacramento.The lawsuit filed against California Attorney General Xavier Becerra and other named defendants by plaintiffs Ravinder Singh of Fremont and Thomas Odom of Madera, contend that they are independent owner-operators with the CTA and not employees. 

The plaintiffs are seeking “declaratory and injunctive relief against the ABC employment test established by the California Supreme Court in 2018,” according to the amended complaint. Shawn Yadon, CEO of the trucking group, said that the AB5 threatens the livelihood of more than 70,000 independent truck drivers. “The bill wrongfully restricts their ability to provide services as owner-operators and, therefore, runs afoul of federal law,” he said in a CTA News Release.

The CTA argues that the ABC test denies truckers the ability to continue operating as independent owner-operators in California, and forces them to abandon $150,000 investments in clean trucks and the right to set their own schedule and become their own boss. Instead, this test will force independent truckers to work as employees.

An attorney for the CTA, Robert Roginson, said that “AB 5 has implications that go beyond employment classification in California…with more than 350,000 independent owner-operators registered in the United States, the new test imposes an impermissible burden on interstate commerce under the U.S. Constitution’s commerce clause and infringes upon decades-old congressional intent to prevent states from regulating the rates, routes and services of the trucking industry.”

The second amended complaint is Case No. 3:18-cv-02458-BEN-BLM.

ABC Test

To determine whether a worker is an employee or independent contractor, the California Assembly Bill 5 requires an “ABC” test to be used. To be classified as an independent contractor, a worker must meet all three parts:

A. The person is free from the control and direction of the hiring entity, both in contract and in fact.
B. The person performs work that is outside the usual course of the hiring entity’s business.
C. The person is customarily engaged in an independently established trade, occupation or business of the same nature as the work performed.

Motor carriers and the CTA are mainly concerned about B, arguing that this part makes it almost impossible to engage independent contractors to work.

Coincidentally, the lawsuit was filed the same day that the University of California, Berkeley, Labor Center published its estimation of AB5 Law coverage.

The law will apply to nearly two-thirds of independent contractors, including truck and taxi drivers, janitors and maids, hair stylists, accountants, retail workers, grounds maintenance workers and childcare workers. “Two of the most common occupations that the ABC test will apply to—janitors and truck drivers—are also known to have high rates of misclassification,” said the authors.

The Teamsters issued its news release in reaction to the CTA’s lawsuit, arguing that the complaint perpetuates misclassification and wage theft at America's largest port complex.  Fred Potter, Vice President-at-Large, International Brotherhood of Teamsters, and Director of the Teamsters' Port Division, said the following:

"For decades, companies like Lowe’s, Rio Tinto Mines, and Target have enjoyed unprecedented profitability and shareholder value off the backs of the hardworking truck drivers who haul their imported cargo from our nation’s seaports to their warehouses. It’s no surprise that their trucking contractors are going to court to perpetuate a scheme – deemed illegal by multiple regulatory agencies and courts long before Assembly Bill 5 was introduced in the California Legislature – that has robbed the typical driver of tens of thousands of dollars a year due to their misclassification as independent contractors. The gig is up and it’s time for the drayage industry to comply with local, state, and federal laws or risk being kicked out of the ports altogether, and it’s time for the cargo owners – America’s largest retailers – to stop doing business with recidivist lawbreakers."

Besides the trucking industry, rideshare companies such as Uber and Lyft also oppose AB5. It’s going to be an interesting ride…