Why The California Trucking Association Is Appealing AB 5

Yet another group is taking aim at AB 5: California Trucking Association (CTA). On April 28, a three-judge panel of the 9th Circuit Court of Appeals rejected a lower court’s preliminary injunction that blocked enforcement of AB 5, which aims to reclassify independent contractors as employees. In response, CTA CEO Shawn Yadon said CTA will seek an “en banc” review by the full appellate court. 

The three-judge appellate panel said the lower district abused its power by blocking the state of California from enforcing the law against motor carriers doing business in California. The panel stated the law is a “generally applicable labor law that affects a motor carrier’s relationship with its workforce and does not bind, compel or otherwise freeze into place the prices, routes or services of motor carriers, and is not pre-empted by the Federal Aviation Administration Authorization Act.”

The opposition, including CTA, disagrees, claiming the FAAA does, in fact, pre-empt AB5. 

Court rules require an appeal to be filed within 14 days of its ruling, after which the 29 judges in the 9th Circuit will vote on whether or not to rehear the case. If a simple majority agrees to review the panel’s decision, a clerk will assign 11 judges to hear the case. The case could spend up to two years in the appellate courts and if it reaches the U.S. Supreme Court, there is a high chance the case will be ruled in CTA’s favor.

Speaking against the latest ruling, Yadon said, “We continue to stand by our initial claim that the implementation of AB-5’s classification test is preempted by federal law and is clearly detrimental to the long-standing and historical place California’s 70,000 owner-operators have had in the transportation industry.”

Cheering the panel’s decision is the Teamsters Union which holds that “truck drivers are full employees and not just independent contractors of the trucking fleet that pays them, and should thus qualify for job benefits such as sick leave, health insurance, and worker’s compensation,” according to DC Velocity.

Though AB 5 only applies to business operations in California, the law has been closely watched by transportation industry experts because it could set a standard for other states to follow. 

Sources:

https://www.dcvelocity.com/articles/50524-california-court-says-trucking-fleets-must-provide-drivers-with-full-employment-benefits 

https://www.ttnews.com/articles/california-trucking-association-appeal-ab-5-decision