AB 5 Worker Reclassification Ends Independent Trucking in California
Enforcing California’s rigid worker classification law—AB 5, Cal. Labor Code § 2775—against interstate truckers violates the Constitution. That’s what attorneys from The Cullen Law Firm, PLLC, told a federal appeals court on behalf of the Owner-Operators Independent Drivers Association, Inc. (“OOIDA”) earlier this month in its opening brief of its appeal of a recent district court decision. OOIDA’s brief is focused on the impact of AB 5 on individuals who own and operate trucks as small businesses under an independent contractor agreement with motor carriers. Because the classification law’s ABC test prohibits owner-operators from working as independent contractors in California, AB 5 forces these truckers to give up their hard-earned small businesses or stop hauling freight to or from the country’s most important commercial market.
How Worker Reclassification Will Disrupt Trucking
OOIDA’s appeal asks the Ninth Circuit to reverse a decision of the Southern District of California that approved AB 5’s eliminating leased independent owner-operators in the state. OOIDA explained to the appellate court that independent leased owner-operators are critical to interstate trucking. Removing that business model will have an oversize impact on the trucking industry. It hurts not only those truckers who must upend their professional lives, but also the motor carriers who hire them, and the industry loses their experience and entrepreneurial efforts. According to OOIDA, these harms constitute an unreasonable burden on interstate commerce, violating the U.S. Constitution’s dormant Commerce Clause by restricting states’ ability to burden or discriminate against interstate commerce.
OOIDA also argued that AB 5 discriminates against interstate truckers because the law contains a “Business-to-Business” exemption that can only ever be used by truckers who drive within California. Workers who can satisfy each of these“B2B” exemption requirements are classified according to the previous Borello standard, which permits independent leased owner-operators, unlike AB 5’s ABC test. However, the federal regulations that apply to interstate leased operations conflict with the B2B exemption requirements. Thus, only local, California truck drivers who need not comply with the federal leasing rules could ever be classified under Borello—and lawfully drive as independent contractors. Finally, OOIDA argued that the B2B exemption’s differential treatment violates the U.S. Constitution’s guarantee of equal protection under the law.
OOIDA’s full brief can be found here. The appellees (California officials and the International Brotherhood of Teamsters) must submit their response brief by September 4, 2024.
For more in-depth coverage of AB 5 and this lawsuit, check out CullenLaw’s analysis here. The caption of the case is Owner-Operator Independent Drivers Association, Inc. v. Bonta, Case No. 24-2341, in the United States Circuit Court of Appeals for the Ninth Circuit. For further information, please contact Paul D. Cullen, Jr. (paul@cullenlaw.com) or Charles S. Stinson (charles@cullenlaw.com).