Overturned Injunction Against California Trucking and AB5
An injunction that previously prevented the California trucking sector from being impacted by AB5, the state law that regulates independent contractors, has now been reversed.
In a decision made on Wednesday, a three-judge panel from the U.S. Court of Appeals for the 9th Circuit voted 2-1, following oral arguments presented in early September.
Judge Mark Bennett, who dissented, expressed the potential consequences of the appellate court’s ruling in terms that have long worried the California trucking industry, which was originally involved in a legal battle initiated by the California Trucking Association (CTA).
“California will now be free to enforce its preempted law,” Bennett stated. “Members of the CTA will experience irreparable harm, and the implications for policies mandated by Congress are likely to be significant.”
Case Background and Legal Issues
The central question in this case revolves around whether a federal law from the 1990s, known as the Federal Aviation Administration Authorization Act (F4A), has preempted California’s enforcement of AB5. Just before AB5 was set to take effect on New Year’s Eve 2019, a lower court granted the CTA an injunction based on the argument that F4A obstructed the implementation of AB5. This injunction effectively kept AB5 from being enforced in California since its full implementation began on January 1, 2020.
AB5’s ABC Test and its Implications
The critical concern for the trucking industry regarding AB5 lies in the “B prong” of the ABC test. This provision permits the hiring of independent contractors, provided that they perform work that falls outside the regular scope of the hiring entity’s business. Since trucking companies engage independent drivers to transport freight, it has generally been assumed that such activities would not be permissible under AB5.
FreightWaves will be providing ongoing coverage of this developing story throughout the day.
For more insights, check out other articles by John Kingston, including discussions on U.S. Xpress, innovative fuel strategies, and trends in the factoring business.
