The California Supreme Court Provides New Guidance on How AB 5 Could Impact Independent Owner-Operator Truck Drivers Based Throughout the Nation
The California Supreme Court recently issued two decisions that shed light on the question of whether AB 5 would be imposed on owner-operator truck drivers who spend a majority of their time outside of California.[1] These decisions may influence the pending legal challenge to the application of AB 5 to the trucking industry.
The Ninth Circuit asks the California Supreme Court to clarify the scope of California’s wage and labor laws for interstate transportation industry workers.
In 2015, two companion class action lawsuits were filed by pilots and flight attendants against United Airlines[2] and Delta Airlines[3] alleging that the out-of-state companies had violated California’s wage statement and minimum wage laws. In the lawsuit against United Airlines, the representative pilots and flight attendants were based in California but worked throughout the nation.[4] In the lawsuit against Delta, the representative flight attendants were based within and outside of California, but all had performed work for Delta within California during the relevant time period.[5] In both cases, the pilots and flight attendants argued that because they either resided or performed work in California, United Airlines and Delta were required to comply with California’s wage and labor laws. The district courts disagreed and granted summary judgment for the airlines.[6]
On appeal the Ninth Circuit certified several questions to the California Supreme Court requesting its interpretation of California law.[7] Those questions asked the California Supreme Court to clarify the extent to which California wage and labor laws apply to employees who do not primarily work in the state.[8]
California Supreme Court adopts a “principal place of work” standard for determining the reach of California’s wage statement laws.
In Ward v. United Airlines and Oman v. Delta Air Lines[9] the California Supreme Court expressly rejected the proposition that California law applies to every minute or hour worked in the state or that other states’ labor laws do not follow workers into California.[10] Instead, the Court adopted a “principal place of work” standard for determining when California labor laws apply to interstate transportation workers.[11] For interstate transportation workers that do not conduct a majority of their work in any one state, the “principal place of work” standard is satisfied when “California serves as their base of work operations.”[12] For the purpose of California’s wage statement law, interstate transportation workers must perform some of their work in-state and California must serve ”as the physical location where the worker presents himself or herself to begin work.”[13]
The Court declined to adopt several other tests proposed by the parties. Most significantly, the Court declined to adopt the “job situs” test urged by the airlines.[14] Under that test, California’s labor laws would apply to workers who perform all or most of their work in the state. While the Court agreed with the general premise that the laws of California should apply to those who perform a majority of their work in the state, the “job situs” test is inapplicable for transportation workers that do not perform a majority of their work in any one state.[15] The Court reasoned that “if every state were to adopt the same rule, then many [transportation workers, including truck drivers] would not be entitled to the protections of any state’s laws.”[16]
The California Supreme Court’s Ward and Oman decisions may have serious implications for interstate truck drivers under AB 5.
Although the Ward and Oman decisions concern workers in the airline industry, the Court’s approach to determining the scope of California wage and labor laws may have significant implications for how the courts may apply AB5 to the trucking industry, particularly truckers operating in and out of California:
First, the Court expressly rejected the suggestion that its analysis should turn on the residency of the worker.[17] Accordingly, motor carriers would not be able to avoid AB 5 by hiring owner-operators based outside of California.
Second, the Court refused to adopt a singular test for determining the scope of California’s wage and labor laws, and it did not reach the question of whether California’s minimum wage laws apply to individuals that only sparingly work in the state.[18] That means the Court could ultimately adopt one of the alternative tests it considered for assessing the reach of AB 5.
Third, if California courts were to apply the same test used in Ward and Oman, owner-operators that “present himself or herself for work” in California by, for example, picking up a load or several loads in California may be subject to California’s labor laws, including AB 5, even if the trucker spends most of his or her time driving out of state.
These considerations could potentially shape the impact of AB 5 and may influence the outcome of the Ninth Circuit’s deliberations on whether to uphold the current preliminary injunction preventing the State from enforcing AB 5 against the trucking industry. A three-judge panel of the Ninth Circuit recently heard oral argument on that issue. You can read more of this blog’s discussion of AB 5 at the links below:
The ABC’s of AB 5: California’s New Employment Classification Law
OOIDA Files Amicus Brief in Support of Current Injunction of AB 5 Enforcement
For more information about AB 5 and the ongoing legal challenge to the worker misclassification test it enacted, please contact:
Paul D. Cullen, Jr.
(202) 944-8600
pxc@cullenlaw.com
[1] OOIDA’s amicus brief provides an extensive discussion of AB 5’s potential impact on owner-operators based throughout the nation and can be viewed in full here.
[2] Ward v. United Airlines, Inc., 889 F.3d 1068, 1070-71 (9th Cir. 2018).
[3] Oman v. Delta Air Lines, Inc., 889 F.3d 1075, 1077-78 (9th Cir. 2018).
[4] Ward, 889 F.3d at 1070-71.
[5] Oman, 889 F.3d at 1077.
[6] Ward, 889 F.3d at 1071-72; Oman, 889 F.3d at 1078.
[7] Ward, 889 F.3d at 1070, 1072-74; Oman, 889 F.3d at 1076-77, 1079-81.
[8] Id.
[9] Ward v. United Airlines, Inc., No. S248702, 2020 WL 3495310 (Cal. June 29, 2020); Oman v. Delta Air Lines, Inc., No. S248726, 2020 WL 3527091 (Cal. June 29, 2020).
[10] See Ward, 2020 WL 3495310 at *9; Oman, 2020 WL 3527091 at *3.
[11] Ward, 2020 WL 3495310 at *1, 11; Oman, 2020 WL 3527091 at *3
[12] See Ward, 2020 WL 3495310 at *1, 11, 14.
[13] Id. at *11.
[14] Id. at *10.
[15] Id.
[16] Id.
[17] Id. at *12-13.
[18] Id. at *9; Oman, 2020 WL 3527091 at *1-2.