California State Court of Appeals Rules AB5 Can Apply to the Trucking Industry
On November 19, 2020, the California State Court of Appeals ruled in The People of the State of California vs. Superior Court of Los Angeles that the prevailing federal law known as FAAAA does not preempt AB5 and its ABC Test from being implemented against the California trucking industry.
In its ruling, the Court concluded that the ABC Test “does not prohibit motor carriers from using independent contractors or otherwise directly affect motor carriers’ prices, routes, and services.” The Court reasoned that AB5 is a “law of general application,” and does not target the trucking industry.
Despite the harsh ruling, the Court held that a motor carrier can qualify as an independent contractor under AB5’s business-to-business exemption if certain criteria are met. If the business-to-business exemption is satisfied, courts would apply the less strict Borello standard to determine whether a worker has been misclassified as an independent contractor.
Although the state’s ruling is a step back for the trucking industry’s fight against AB5, it is distinct from last year’s ruling by a federal district court in California Trucking Association v. Becerra, which held that FAAAA preempts AB5 from applying to motor carriers. The CTA v. Becerra federal ruling is pending before the U.S. Ninth Circuit Court of Appeals and a decision is expected soon.
For more information about how these court rulings may impact your trucking business, contact the experienced transportation attorneys at Chauvel & Glatt.
The material in this article, provided by Chauvel & Glatt, is designed to provide informative and current information as of the date of the post. It should not be considered, nor is it intended to constitute, legal advice or promise similar outcomes. For information on your particular circumstances, please contact Chauvel & Glatt at 650-573-9500. (photo credit: 123rf.com)