Trucking Industry Dealt A Blow: What You Should Know
Published date | 15 August 2022 |
Subject Matter | Litigation, Mediation & Arbitration, Transport, Rail, Road & Cycling, Trials & Appeals & Compensation |
Law Firm | Gentry Locke |
Author | Mr John M. Scheib and Ashley W. Winsky |
The question regarding whether a worker is properly classified as an independent contractor or employee is fraught with controversy, legal risk and uncertainty. A recent case illustrates the issue in the trucking world.
On June 30, 2022, the U.S. Supreme Court declined a petition for writ of certiorari filed by a group representing California's trucking industry, California Trucking Association ('CTA'). CTA's petition sought to challenge a California worker classification law that will have a devastating impact on the trucking and transportation industries. These industries are already in the midst of multiple, overlapping crises.
The high court denied CTA's petition challenging the Ninth Circuit's decision in California Trucking Association v. Bonta, 996 F.3d 644 (9th Cir. 2021). That case focused on a 2019 California law known as California's Assembly Bill 5, or 'AB5,' which makes it more difficult for businesses to classify workers as independent contractors, as opposed to employees.
AB5 codified a test created by the California Supreme Court in Dynamex Operations West Inc. v. Superior Court, 416 P.3d 1 (2018), to determine whether workers are truly independent contractors. The three-pronged 'ABC test' presumptively considers all workers to be employees, and it allows workers to be classified as independent contractors only if the hiring business demonstrates that the worker satisfies each of the following conditions: '(a) 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; and (b) that the worker performs work that is outside the usual course of the hiring entity's business; and (c) 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.' Id. at 34.
The trucking industry has long relied on an 'owner-operator' model, which is dependent on independent contractors who own their trucks. Under this industry model, it is difficult to satisfy the 'B' prong of the ABC test because independent contractor drivers and the motor carrier are involved in the same business of transporting freight.
The Ninth Circuit held in Bonta that AB5 is a generally applicable labor law and is therefore not preempted by the Federal Aviation Administration Authorization Act ('F4A'). F4A1, which also applies to the trucking industry, prohibits...
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