In the latest update of the AB-5 saga, the California Trucking Association, disgruntled with the 9th Circuit Court’s ruling on Justice Roger Benitez’s injunction on California Assembly Bill 5, hopes to take the fight to the Supreme Court.
In case the previous sentence made your head spin, here is the story so far.
In an attempt to curb worker exploitation, the state of California made Assembly Bill 5 (AB-5) law. It lowers the standard needed for a worker to be classified as an employee rather than an independent contractor. It did this with what is called the “ABC” test. Employees are legally entitled to more benefits out of their employer than if they were an independent contractor, such as overtime pay if working above 40 hours in a week.
While primarily geared towards “gig economy” work such as DoorDash and Uber, the wording also applied to owner-operators driving under the Authority of a larger carrier. Proposition 22 was passed by voters in California to carve out an exemption for gig economy work, but AB-5 still applied to trucking.
On January 16th, 2020, U.S. District Judge Roger Benitez issued a preliminary injunction against AB-5, meaning it did not apply to truckers until the relevant court cases were resolved.
In the spring, the 9th Circuit ruled that AB-5 is not in conflict with the Federal Aviation Administration Authorization Act (F4A), saying that the relationship between motor carrier and workforce is not a direct influence on prices, routes, or services.
This is not the only time the 9th Circuit has disagreed with Judge Roger Benitez. Much more recently, the circuit overturned a ruling on California’s ban on assault weapons, including magazines that carry 11 or more rounds of ammunition.
The United States Court of Appeals for the Ninth Circuit has granted the California Trucking Association’s (CTA) request for a stay of the AB-5 mandate to allow CTA to petition the United States Supreme Court. This means that the injunction is still in place until, at a minimum, the Supreme Court rejects hearing the case.
Essentially there are three potential outcomes left:
- Supreme Court declines case; AB-5 applies to trucking.
- Supreme Court hears the case and sides with the Ninth Circuit; AB-5 applies to trucking.
- Supreme Court hears the case and sides with Roger Benitez; AB-5 does not apply to trucking.
The CTA is confident that the first outcome will not be the case, as history has shown that a disagreement at differing court levels makes a case a prime candidate for a hearing. CTA CEO Shawn Yadon said in a statement that the CTA is “committed to continuing our efforts to protect California’s 70,000 independent truckers.”
Ultimately the case comes down to whether AB-5 has a direct impact or an indirect impact on prices, routes, or services. The Ninth Circuit says it may impact them, while Judge Roger Benitez says it will impact them. While it is anyone’s guess as to what happens next, we at TopMark Funding are ultimately of the opinion that it will impact services, as the independent contractor model allows larger carriers to do more deliveries than it could otherwise. The last time we checked, however, we do not have any judicial seats.
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