AB5 Upheld as Supreme Court Declines Case

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The U.S. Supreme Court, in an end-of-term note, on Wednesday declined to hear a California appellate case that leaves in place AB5, a 2020 state law that calls for so-called gig workers to be reclassified as employees, causing a seismic shift in the state’s transportation sector, among others.

The California Trucking Association (CTA) had petitioned the high court to review the case, asserting AB5 would wreak havoc on the transportation industry. The case was CTA vs. (Rob) Bonta, attorney general for the state of California.

The ruling will impact Uber, Lyft, DoorDash and many smaller operators whose businesses are built on a gig driver model. It will also likely cause many owner/operators who value the freedom and flexibility of being their own boss to flee the state. And it will require any out-of-state carrier moving goods into California to adhere to the “employees only” mandate.

The Supreme Court denied the CTA’s so-called writ of certiorari, essentially ruling in favor of the U.S. Solicitor General. That office had recommended the court not review the decision of the Ninth Circuit Court of Appeals upholding AB5. The high court’s actions removed a lower appellate court injunction that was in place while the case was moving through the process, which held the law in abeyance.

The CTA took issue with the Ninth Circuit’s assertion that AB5’s requirements are easily met and will not impact carriers or owner-operators in the state. The circuit court also ruled AB5 met the Federal Aviation Administration Authorization Act (FA4) and its three-pronged test of the law’s impact on prices, routes and services.

“In fact, AB5 was designed to, and surely will, upend the operation of the trucking industry,” the CTA’s attorneys asserted in its filing.

The CTA also asserted enactment of AB5 “would cause motor carriers and owner-operators to bear the substantial, if not insurmountable, costs and burdens associated with shifting to an employer/employee business model.”

“Indeed, that is already happening: Even the prospect of AB5 taking effect has led carriers to limit or abandon operations in California,” the filing states. “Review by (the Supreme Court) is urgently needed.”

The CTA also took issue with the state of California’s position that carriers can simply hire owner-operators using their own trucks, and thereby avoid the impact of AB5.

Shortly after the law passed in 2020, regional carrier OnTrac flipped to a master contractor model, requiring companies making deliveries on its behalf to use employees as drivers instead of independent operators. OnTrac was acquired last fall by Lasership for $1.3 billion.