California's AB5 Under Fire: The Fight for Owner Operators

December 13th, 2023

California's Assembly Bill 5: An Overview

California's Assembly Bill 5, also known as AB5, has been a controversial law since it was signed in 2019.  The stated goal of AB5 is to properly classify workers as employees instead of Independent Contractors.  However, opponents argue that the law's effect essentially eliminates the Independent Contractor business model, especially in the trucking industry.  The California Trucking Association (CTA) and Owner-Operator Independent Drivers Association (OOIDA) claim that AB5 violates the U.S. and California constitutions.

The ABC Test: A Hurdle for the Trucking Industry

AB5 is based on the ABC test, which requires companies to prove three factors to classify workers as Independent Contractors.  The "B prong" of this test appears to prevent trucking companies from classifying truck drivers as Independent Contractors, regardless of the level of control or other factors.  Shortly after AB5 became law, the CTA filed a lawsuit arguing that the law violated the Federal Aviation Administration Authorization Act.  A judge granted a preliminary injunction against enforcing AB5 on the trucking industry until June 2022.

The case was then sent to the U.S. District Court for the Southern District of California, where OOIDA joined as an intervenor to represent small trucking businesses.  OOIDA and CTA argue that AB5 places undue burdens on interstate commerce, violating the dormant Commerce Clause.  They also claim the law's exemptions violate the equal protection clauses of the U.S. and California constitutions.  California is defending AB5, with the International Brotherhood of Teamsters intervening on the state's behalf.

A Critical Hearing: Judge Benitez Weighs In

At a November 13, 2023 hearing, Judge Roger Benitez questioned how an out-of-state truck driver could comply with AB5 and how it would be enforced.  Benitez voiced concerns over different laws in each state and that the defendants had no answer for how Owner Operators could pass the ABC test.  The attorney for OOIDA argued that AB5's effect on interstate trucking was that Owner Operators avoided California loads, creating an undue burden.

The Road Ahead: Uncertainty Looms Over AB5



A ruling is expected in the coming months.  If the judge sides with the plaintiffs, he could issue another injunction or amend AB5 to exempt interstate truckers.  Either way appeals to higher courts are likely, and the case could continue for up to two years.  The future of California's controversial worker classification law remains uncertain as opponents continue fighting for independent truckers' rights.

As we continue to monitor the situation, we encourage businesses and individuals within the trucking industry to familiarize themselves with AB5.  Stay tuned for further information on the final rule as it's released, and know that we are here to support you every step of the way as we navigate these changes together.

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