The California Trucking Association (CTA) is petitioning the U.S. Supreme Court, asking it to ignore the recommendation of the U.S. Solicitor General and instead review an appellate court decision upholding the state’s AB5 law, which calls for recognition of contract drivers as employees.
If allowed to stand, AB5 would have a major impact on the trucking industry, which uses many contract drivers. This would be the case not only for those based in California but in other states, as the latter companies would still need to comply if they run routes into California.
In asking for the Supreme Court to review the ruling of the Ninth Circuit Court of Appeals, the CTA takes issue with that court’s assertion that AB5’s requirements are easily met and will not impact carriers or owner-operators in the state. The appellate court also states 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 asserts 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 petition attacks the state of California’s assertion that carriers could simply hire owner-operators using their own trucks, and thereby avoid the impact of AB5.
“This proposed workaround assumes that owner-operators will give up their independent businesses and become employees of carriers,” the CTA said in its filing. “But in fact, a great many owner-operators would not respond to AB5 by becoming employees. That is what owner-operators themselves say; they regard independence and flexibility as far more important than do employee drivers.”
The CTA also said AB5 would change the economics for owner-operators who suddenly became employees, making it unlikely for them to switch. “Substituting an employment for an owner-operator relationship therefore would alter the incentives governing the transport of goods, with impossible-to-quantify consequences,” it said.
AB5 is also unworkable, the CTA contends, as it makes no exemption for carriers based in other states, where the law allows drivers to be classified as owner-operators. Carriers, it argues, would either have to use an employee driver when operating in California, or bear the delay and expense of transferring loads when entering or leaving the state. “The government makes no attempt to explain how this problem could be addressed,” the CTA states.
A lower 2020 court injunction that held AB5 in abeyance, based on its ruling that it could impact the trucking industry using the three prongs of the FA4 test, is in place pending the outcome of the appeals process. The Supreme Court term ends in June and resumes in October; AB5 will become law if the high court refuses to hear the case.