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Independent Contractor Truckers Win in California – Federal Law Does Not Preempt State Law for Applying AB-5 to Motor Carriers

| Apr 30, 2021 | EDD, Supreme Court |

In 2018, the California Supreme Court adopted the “ABC” test in Dynamex Operations W. v. Superior Ct., 4 Cal. 5th 903 (2018).  The California legislature enacted AB-5, codifying the judge-made ABC test for classifying workers as either employees or independent contractors, in 2019.  California Trucking Association, a trade association representing motor carriers that hire independent contractors who own their own trucks, along with two independent owner-operators filed a lawsuit, seeking to enjoin enforcement of AB-5.  Id.  The district court granted the preliminary injunction against enforcement of AB-5 against any motor carrier doing business in California, holding that the Federal Aviation Administration Authorization Act of 1994 preempted state law.  Id.

The district court’s holding regarding the federal law preempting the state law was true, but only to the extent that AB-5 is related to the price, route, or service of a motor carrier in its operations involving the transportation of property.  In its analysis on appeal, the Ninth Circuit Court of Appeal issued its Opinion reversing the district court’s preliminary injunction finding that AB-5 does not have a binding or freezing effect, and that it has only a tenuous, remote, or peripheral connection to rates, routes, or services, and therefore is not preempted.  As a result, the ABC test may be used to determine the correct status of a worker as either an employee or independent contractor.

To read the Ninth Circuit’s opinion, click here.