The U.S. Supreme Court on Thursday (6/30) formally denied a petition by the California Trucking Association to review a California federal court's ruling on the controversial 2019 legislation known as AB5. That legislation codifies the so-called "ABC Test" employment classification test in California, making it nearly impossible for carriers to continue to use independent contractor drivers within the state.
The court's decision will bring to an end the injunction that has been in place for nearly two years that has prohibited California from enforcing AB5 against trucking companies. As a result, carriers with owner-operator fleets in the state will face additional exposure to state reclassification efforts and class action lawsuits. The injunction is not yet dissolved but will be once the lower courts act to do so in the near future.
AB5 essentially codifies a 2018 California state court decision which adopted the "ABC Test" to evaluate wage and hour classification cases involving California workers. That test provides that to be considered independent contractors, the following conditions must be met:
Prong A - The worker is free from the direction and control of the putative employer
Prong B - The worker performs work that is outside the usual course of the putative employer's business; and
Prong C - The worker is customarily engaged in an independently established trade, occupation, or business.
For the trucking industry, in particular, Prong B is virtually impossible to pass, which, as a practical matter, means that trucking companies with owner-operator fleets in the state will be hard pressed to prevail in any action seeking to reclassify their drivers.
The decision and resulting implementation of AB5 will undoubtedly have long ranging effects in the industry. For more information on the decision and its potential impact to fleets, be sure to join us for a special edition of Trucksafe LIVE! in which we'll be joined by transportation attorney and CEO of the Grawe Group, Doug Grawe. (Chat and participate live by joining us on LInkedIn, Facebook, or YouTube).