We have written about AB-5 and its federal counterpart before. The law, intended to curb workplace abuse by making it harder to classify a worker as an independent contractor, has legal issues for owner-operators hoping to work under a larger carrier such as Landstar. If this is you and you were worried about losing your work, you can breathe easy for now: the law is on hold for now.
The Judicial Process
Near the start of the year, U.S. District Judge Roger Benitez issued a preliminary injunction against AB-5. He forbade California from enforcing the law on carriers and owner-operators until a pending lawsuit brought by the California Trucking Association (CTA) resolves.
Now, the federal Ninth Circuit of Appeals has stated it will hear if trucking should be exempt from AB-5. This session is scheduled for some time in the fall, while a lawsuit brought forth by the (CTA) against California may take years to reach a resolution.
Judge Roger Benitez and the CTA argue that AB-5’s application towards truckers violates the Federal Aviation Administration Authorization Act (F4A or FAAAA). It reads that no state can create a law that has “the force and effect of law relating to intrastate rates, intrastate routes, or intrastate services of any freight forwarder or broker.”
Could the F4A be an overstep of congressional power? There is a little more nuance than that. The United States Constitution says Congress has the power to regulate interstate commerce, but it does not say Congress cannot dabble its feet in regulating intrastate commerce as well. Additionally, enough Representatives and Senators, each representing their own state’s interests, agreed to the F4A and made it law.
In any case, the bill’s application on owner-operators working under larger carriers continues to be delayed.
Owner-operators can rest easy knowing that AB-5 will not be affecting them for the time being.
For now, the Borello test is what determines a worker is an employee or an independent contractor. It is slightly more complicated but also has some flexibility as to which factors it can fail and still register someone as an independent contractor. With the ABC test of AB-5, in contrast, even one “no” makes someone classified as an employee.
If you are interested in learning more about the ABC test and the Borello test, you can do so on this webpage.