AB5 Trucking Update – Resource Guide for Motor Carriers

This mega-thread provides AB5 trucking updates with the last news, rulings and resources for motor carriers affected by California Assembly Bill 5 (AB5).

[AB5 TRUCKING UPDATE] June 30, 2022 - Effective Immediately: Owner Operators must be reclassified under California law

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California’s Trucking Associations' petition against AB5 has been denied.

The decision from the Supreme Court to not hear the case allows the initial decision from the Ninth Circuit Court to stand. The preliminary injunction preventing AB5 on being enforced in the trucking industry will soon end, and is expected to happen within the next week.

Under the new law, a worker is considered an employee and not an independent contractor, unless the hiring entity satisfies all three prongs of the ABC test.

Carriers: You have compliance options.
Learn more in our webinar July 14th.

Recommended Resources:

• What is California AB5? or CA AB5?
  Learn the ins and outs of the law and how it came to be.
• What are the CA AB5 Business to Business Exemptions?
  Discover the 11 criteria you and your driver must meet to be exempt from AB5.
• AB5 FAQ: Frequently Asked Questions from Motor Carriers
  Get your questions answered now.
• AB5 Webinar: Hear from WSTA and Osterkamp (OnDemand)
  Osterkamp describes how they became compliant, and the impact.
• TransForce AB5 Compliance Solution
  Learn how we apply a 2-check system to bring your business into compliance seamlessly and fast.

UPDATE April 28, 2021 – Injunction Protecting California Trucking Independent Contractors Lifted

On April 28th 2021, the injunction protecting California Trucking Independent Contractors was overturned.

The 9th circuit, with a 3 judge panel, deemed in a 2-1 vote that AB5 was not preempted by FAAAA. The AB5 ruling is the codification, establishing the ABC test as the rule for determining if an independent contractor is an employee.

Under the ABC test, a worker is considered an employee and not an independent contractor, unless the hiring entity satisfies all three of the following conditions:

• A the worker is free from the control and direction of the hiring entity in connection with the performance of the work, both under the contract for the performance of the work and in fact;
• B the worker performs work that is outside the usual course of the hiring entity’s business;
• C the worker is customarily engaged in an independently established trade, occupation, or business of the same nature as the work performed.

For more information on becoming compliant, visit our AB5 Compliance for Motor Carriers page, or tune into: AB5 and the Big Impact of the ABC Test for Motor Carriers

UPDATE March 10, 2021 – House Passes PRO Act

On March 9, 2021, the House passed the PRO Act bill with a vote of 225-206. The pro-union legislation would apply the ABC test to the federal level when it comes to defining independent contractors, mimicking California’s AB5. The bill would also make it easier for workers to join a union and for unions to exist.

The bill is unlikely to get enough votes to pass the Senate. However, the inclusion of the ABC test, specifically the endorsement of the B prong, demonstrates the current administration’s commitment to re-defining what it means to be an IC.

UPDATE February 4, 2021 – House Democrats reintroduced the PRO Act

On February 4, 2021 the party put forward the Protecting the Right to Organize Act (PRO Act), a measure designed to promote union organizing and approved by Congress last year.

If adopted into law, the legislation would:

• Mirror similar but highly controversial California bill, AB5, that likewise forced the reclassification of independent contractors
• Make California’s ABC Test the measure for Independent Contractors a Federal Law
• Allow the National Labor Relations Board to levy fines against employers who violate workers’ rights
• Give employees more power to participate in strikes
• Weaken so-called right to work laws

While it was passed by House, it still faces a simple majority by the U.S. Senate.

UPDATE January 15, 2021 – ABC Test now applies retroactively

On January 14, 2021, the California Supreme Court ruled that the ABC test can be used retroactively. In April 2018, The Dynamex Court determined that anyone who performs work for a business is presumed to be an employee entitled to the protections afforded by the wage orders. According to this new ruling, the ABC provisions can now be used in litigation cases opened before the Dynamex decision was issued.

UPDATE November 20, 2020 – CA Appeals Court says ABC test is not preempted by federal law

On November 19, 2020 the California Court of Appeals reversed the earlier trial court decision in People v. Cal Cartage Transportation Express,. The court ruled that the ABC Test is not preempted by federal law.

“The ABC test does not mandate the use of employees for any business or hiring entity,” the state appeals court said. “Instead, the ABC test is a worker-classification test that states a general and rebuttable presumption that a worker is an employee unless the hiring entity demonstrates certain conditions.”

Note this case is separate from the federal litigation CTA v. Becerra. This is an ongoing case awaiting the 9th circuits decision to determine the pending injunction.

UPDATE October 20, 2020 – U.S. Labor Department proposes a new way to classify drivers

The Fair Labor Standards Act has proposed a rule that will evaluate the current classification of Independent Contractors.

Here’s what the new proposed rule would look like in determining the classification:

• Adopts an “economic reality” test to determine a worker’s status as an FLSA employee or an independent contractor. The test considers whether a worker is in business for himself or herself (independent contractor) or is economically dependent on a putative employer for work (employee).
• Identifies and explains two “core factors,” specifically the nature and degree of the worker’s control over the work, and the worker’s opportunity for profit or loss based on initiative and/or investment. These factors help determine if a worker is economically dependent on someone else’s business or is in business for himself or herself.
• Identifies three other factors that may serve as additional guideposts in the analysis: the amount of skill required for the work, the degree of permanence of the working relationship between the worker and the potential employer and whether the work is part of an integrated unit of production.

• Advises that the actual practice is more relevant than what may be contractually or theoretically possible in determining whether a worker is an employee or an independent contractor.

Note this does not affect the AB5 ruling in California, but will provide further clarification on classification guidelines for Independent Contractors for both Federal and State.

UPDATE August 10, 2020 – Uber and Lyft must classify drivers in California as employees under AB5

A California judge has granted the state’s request for a preliminary injunction blocking Uber and Lyft from classifying their drivers as independent contractors rather than employees. As Reuters reported, Uber and Lyft had been accused of violating Assembly Bill 5 (AB5), a new state law requiring companies to classify workers as employees if they controlled how workers did their jobs, or the work was part of their normal business.

For now, trucking remains exempt from Bill AB5, which took effect January 1, 2020. In early January, the court granted an injunction to halt enforcement of AB5 against motor carriers. On September 1, the Ninth Circuit will listen to oral arguments about whether or not the injunction should remain in effect.

UPDATE January 16, 2020 – Motor carriers in California are no longer required to enforce AB5, at least temporarily

The preliminary injunction against AB5 was granted. This order will remain in effect until trial or appeal. The date for either of these options is still to be determined.

On January 13, 2020, Federal District Court Judge Roger Benitez extended the injunction originally ordered on New Year’s Eve. With this temporary restraining order in place, motor carriers operating in California are not mandated by law to enforce the requirements of the ABC Test under AB5 for independent contractors. Timing of a final decision is still unclear, but according to transportation law firm Scopelitis, the TRO is anticipated to be extended for at least 14 days or until the order ruling on the preliminary injunction is filed.

UPDATE September 18, 2019 – California Governor Gavin Newsom signed Bill AB5 into law

Under AB5, 2 million independent contractors, including truck drivers, may need to be reclassified as employees. The law will go into effect January 1, 2020.

UPDATE July 10, 2019 – The California Senate Labor Committee passed Bill AB5

This decision expands a groundbreaking California Supreme Court decision last year known as Dynamex, where the CA Supreme Court adopted a new test for classifying workers that presumes workers are employees. Businesses need to prove that a given worker is not an employee but actually an independent contractor (IC).35559739

The Impact: In California, employers must follow IWC orders and are susceptible to claims for minimum wages, overtime, meal and rest breaks, and wage violations. Contractors do not have these obligations.335559740

Get AB5 Compliant with TransForce

By partnering with TransForce, we can help you get compliant with AB5 regulations quickly and eliminate the risk of misclassifying workers – so you can continue to keep your trucks moving without disruption to your customers.