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In a previous post, we talked about California shifting gears to the so-called “ABC test” for determining whether a worker is an employee or independent contractor in a law called “AB-5.” Compared to California’s previous standard, the ABC test classifies far more workers as employees. However, a provision in AB-5 says that where the ABC test can’t be applied in a particular context because a court says so California’s former “
Borello” standard kicks back in.
Perturbed by the Golden State’s maneuver, the California Trucking Association an industry group representing motor carriers that hire independent owner-operator truckers challenged AB-5, arguing the new test can’t be applied to its carriers because a federal deregulation statute the Federal Aviation Administration Authorization Act (FAAAA) expressly preempts state laws “related to a price, route, or service of any motor carrier . . . with re
May 7, 2021 It’s not a good vibe right now, said Raman Dhillon, CEO of the California-headquartered North American Punjabi Trucking Association. He was talking about his group s membership s response to the news last week that a three-judge panel of the Ninth Circuit Court of Appeals had struck down a lower court s injunction against application of California s A.B. 5 contractor law and its ABC test s application to trucking.
The original suit that was ruled on had been brought by the California Trucking Association, who told
Overdrive it is planning to request what s known as an en banc review, a reconsideration from the entire panel of judges in the Ninth Circuit. As previously reported, from the April 28 ruling on the injunction, CTA has 14 days to seek rehearing. If that request is denied or if the rehearing fails to change the view of the court, it will be a mere seven days from the denial or failure before the injunction lifts.
Labor Department Drops Independent Contractor Rule 1933bkk/Getty Images
The U.S. Department of Labor has announced the withdrawal of a federal regulation for classification of independent contractors that the agency earlier said would “promote certainty” for the trucking industry’s use of contractors, but which it now maintains would introduce “substantial confusion and uncertainty on the topic.”
“Upon further reflection, including consideration of relevant [public] comments, the department does not believe that the independent contractor rule would have achieved the added clarity it intended to provide to the regulated community,” the May 5 withdrawal announcement said. “Businesses operating nationwide would have had to familiarize themselves with multiple standards for determining who is an employee under the Fair Labor Standards Act across different jurisdictions.”
On 30 April 2018, the California Supreme Court issued the seminal decision in
Dynamex Operations West, Inc. v. Superior Court, adopting the “A-B-C Test” for determining independent contractor status in the state. The A-B-C Test, which superseded the prior, less stringent common law
Borello test,
1 was later codified by the state legislature in California Assembly Bill 5 (AB-5). Under AB-5, a worker is presumed to be an employee and not an independent contractor unless the entity can establish the following three elements:
(A) The person is free from the control and direction of the hiring entity in connection with the performance of the work, both under the contract for the performance of the work 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 that involved in the work performed.
The Ninth Circuit Court of Appeals, in
California Trucking Association v. Bonta, has reversed the preliminary injunction staying enforcement of AB 5 (now Labor Code § 2775). The Circuit Court determined that the California Trucking Association (“CTA”) is unlikely to succeed on the merits of its district court claim that AB 5 is preempted by the Federal Aviation Administration Authorization Act of 1994 (“F4A”). This decision may have far-reaching consequences for not only California motor carriers but also California businesses and consumers due to increased costs of employing truckers and potentially owning and maintaining fleets of trucks.
The Injunction Staying AB5
The California Legislature enacted AB 5 in response to the California Supreme Court’s decision in