Truckers Fight Against Bill AB5, No Backup from Teamsters or State of California

Santa Clara, CAUber and other gig-based companies aren’t the only ones battling California labor law Assembly Bill 5.  Late last year, the Western States Trucking Association and the California Trucking Association also filed lawsuits challenging AB5 and its “ABC test”, which has now been challenged by the state and the Teamsters.

In early May, the California Attorney General and the International Brotherhood of Teamsters urged the court to shut down the Western States Trucking Association’s lawsuit claiming that AB5 unfairly burdens motor carrier operations and is preempted. On May 4, both the state and the Teamsters told a California federal judge that the WSTA has misinterpreted AB5, and that the trucking group’s claims of imminent harm are “speculative and completely overblown”.

The WSTA, which represents 6,000 trucking operators, argues that AB5’s mandate to classify workers as employees rather than independent contractors, prevents “a construction trucking subcontractor of any size from contracting with other independent trucking companies, and mandate[s] that subcontractors must negotiate with, contract with, and get compensated directly by the licensed contractor,” according to Law360 and court documents.

According to the WSTA, an “onerous and unduly restrictive exemption” in AB5 as it relates to the construction industry spells legal liability for construction trucking operators because of its confusing interpretation of licensed and other contractors.

The WSTA argues that how the state of California intends to apply that exemption is problematic. For instance, “a licensed contractor's liability as an employer may depend on factors completely out of their control, such as whether their subcontractor treated their sub-subcontractor drivers as employees or not,” the WSTA said, and reported by Law360, adding that it is "irrational to hinge such consequential liability on a contractor when he can do little or nothing to prevent or mitigate that liability.”

Truckers Oppose the ABC Test

The WSTA has been opposed to classifying workers as employees rather than independent contractors since July 2018, when it filed a lawsuit against the state over Dynamex where the California Supreme Court ruled against Dynamex, holding that employers must presume workers are employees (and pay them accordingly),  and it adopted the ABC test.

Employers--including trucking industry employers-- under AB5 are now required to provide employee benefits to new employees, including healthcare coverage. And they must track for contract workers their hours of services, wages and other employee level details. If truckers don’t comply, penalties could be costly.

The “ABC test” is at issue, particularly the “B” requirements that prohibits companies from using independent contractors unless the worker was performing work “outside the usual course of the hiring entity’s business.” The trucking associations argue that the bill wrongfully restricts the ability of trucking companies to provide services as owner-operators.

At issue is the following:

“A person providing labor or services for remuneration shall be considered an employee rather than an independent contractor unless the hiring entity demonstrates that the person is free from the control and direction of the hiring entity in connection with the performance of the work, the person performs work that is outside the usual course of the hiring entity’s business, and the person is customarily engaged in an independently established trade, occupation, or business.”

The case is Western States Trucking Association v. Xavier Becerra et al., case number 5:19-cv-02447, in the U.S. District Court for the Central District of California.