The trucking industry, specifically some 70,000 owner/operators in California, learned on June 30 that the U.S. Supreme court had denied the California Trucking Association’s petition for a hearing on CA AB 5.
The move by the nation’s highest court sends the case back to United States District Court Southern District of California.
In a comprehensive look at the issue published July 6 at |https://landline.media/ab5-case-denied-by-supreme-court-whats-next/, writer Mark Schremmer said, “The decision to decline the trucking group’s petition means that a previous ruling from the U.S. Court of Appeals for the Ninth Circuit stands and that a preliminary injunction preventing AB5 from being enforced on motor carriers will end. According to a court order, it was set to end seven days after the Supreme Court’s decision.”
He added that the “fight against California’s AB5 in the trucking industry is not necessarily over,” noting the case will be sent back to the district court, where the California Trucking Association’s arguments that AB5 violates the Commerce Clause will be considered.
However, Schremmer said, “For now, though, motor carriers and truck drivers in California should prepare for a climate that includes AB5. OOIDA members who are leased on to carriers in California are telling the Association that they are being encouraged to get their own authority.”
AB5, passed into law in 2019, codified the ABC Test, Schremmer wrote. That act “makes it more difficult for a worker to be considered an independent contractor,” and many in the trucking industry, “including the California Trucking Association and the Owner-Operator Independent Drivers Association, said the law would force the end of the owner-operator model in the state.”
The ABC Test itself has three parts, the first of which is that the “worker is free from the control and direction of the hirer in connection with the performance of the work, both under the contract for the performance of the work and in fact.” The second part is that “the worker performs work that is outside the usual course of the hiring entity’s business,” and the third is that “the worker is customarily engaged in an independently established trade, occupation or business of the same nature as that involved in the work performed.”
Schremmer said the second part of the test “appears to make it nearly impossible for a leased-on truck driver to be considered an independent contractor.”
Following the 2019 passage of AB5 into law by the California legislature, the California Trucking Association sought a preliminary injunction with the U.S. District Court for the Southern District of California, arguing that AB5 was “preempted by the Federal Aviation Administration Authorization Act, or F4A, which prevents states from enforcing a law or regulation related to a price, route or service of motor carriers.”
Moreover, the “law also violates the Commerce Clause of the U.S. Constitution, the California Trucking Association claimed.
The district court found that the law was likely to be preempted by the F4A and granted a preliminary injunction. In 2021, following a request from California’s attorney general, the Ninth Circuit Court of Appeals to review the injunction. In 2021 the Ninth Circuit ruled 2-1 that ABB5 “is a generally applicable labor law,” calling for the preliminary injunction to be removed.
The Trucking Association then filed a petition to the U.S. Supreme Court, and this June 30 the Supreme Court said that it denied the California Trucking Association’s petition.
The Owner-Operator Independent Drivers Association spoke out against the state of California “for not providing current independent contractors a road map for how to navigate an AB5 landscape,” Schremmer wrote. And the California Trucking Association was quoted as saying, “In addition to the direct impact on California’s 70,000 owner-operators who have seven days to cease long-standing independent businesses, the impact of taking tens of thousands of truck drivers off the road will have devastating repercussions on an already fragile supply chain, increasing costs and worsening runaway inflation.”
However, “… the International Brotherhood of Teamsters lauded the Supreme Court’s decision, pointing to misclassification among port drivers.”
Schremmer wrote that groups including the California Trucking Association and OOIDA “will continue to pursue all legal options.
First, the spotlight moves back to the district court to see if it will revive the California Trucking Association’s claim that AB5 violates the Commerce Clause of the U.S. Constitution.” The Commerce Clause “protects the right to engage in interstate commerce free of undue burdens and discrimination by state governments.”
