Challenges have abounded since the AB5 in California was first introduced. AB5, short for and also known as the "Gig Worker Law," has technically been in effect for some time (it hs about a five year history at this point), but the trucking industry along with companies that employ gig workers like Uber and Lyft continue to put it through its paces in court. So where do those challenges stand currently, and what's the overall status of the trucking industry there?
What Is AB5?
When it comes to the CA AB5 law or rule, the original intent appeared to be to protect rideshare drivers particularly, by requiring companies who employed those gig workers to classify them as employees rather than independent contractors. This reclassification means those companies would have to offer them benefits as well.
To that end, the law says that if a worker doesn't pass strict criteria known as the ABC test, they may not be considered an independent contractor and would thus need to be an employee of a carrier. At issue for truckers (many in the drayage arena) - and even some gig workers - is, they want to maintain their independence rather than work for a large carrier (or rideshare company). The new regulations first passed in 2019 and were set to become law as 2020 began, but court challenges and relatedly spotty enforcement have made the situation cloudy.
AB5 Law California Update 2023 - End of Year
As the end of the 2023 year approaches, the latest AB5 law update out of California is that legal challenges continue to be heard. In spite of what looked like the end of those - the U.S. Supreme Court's decision not to reinstate an injunction relating to a California Trucking Association (CTA) case in June of 2022, legal briefs are still being filed and heard.
Just last month, the Owner-Operator Independent Drivers Association (OOIDA) - which joined CTA's case last year - filed its latest brief in a challenge heard in the U.S. District Court of the Southern District of California. In it, the OOIDA argued the bill violates the Commerce Clause as it "discriminates against and imposes undue burdens" on interstate commerce. The organization also says it violates the state and federal equal protection clauses due to exemptions created for construction and certain business to business scenarios.
The California Attorney General's office mentions the case in a brief related to the state's equal protection test in a brief regarding another case in the Supreme Court of California, saying the plaintiff (OOIDA and others) assert the statute is invalid because it exempts "fisherman, barbers and cosmetologists," but not truck drivers. But the state argues the plaintiff makes "virtually no effort" to show those professions "bear any of the same characteristics" as truck drivers, and the state asks the court to clarify a "similarly situated" threshold. The equal protection angle first gained steam in challenges earlier this year.
For a thorough rundown of all the arguments between the state and CTA/OOIDA - which were scheduled for a hearing in court last week - John Kingston at FreightWaves breaks things down. In his piece, what comes up again and again is that the state can now point to both previous rulings and the passage of time with the law ostensibly in effect as a counter to many of the plaintiffs' arguments.
Finally, while this case is limited to the industry in the State of California, it's being watched across the country, as other states - including New York and Illinois - and even the U.S. Department of Labor look to revisit definitions of independent contractors and potentially create their own rules and tests. In the meantime, the legal challenges continue with no clear end in sight.
Need freight and logistics assistance? Reach out to us, and we'll get back with you to discuss solutions to fit your unique business needs. For more information about InTek, or logistics and supply chain issues in general, check out our Freight Guides. And subscribe to our blog to keep up with the latest industry news like this.
Commentaires