Posted on 05/09/2021 5:47:33 AM PDT by EBH
Appeals court panel says interstate haulers are not exempt from AB 5 law.
Interstate truckers could soon come under California’s highly restrictive independent contractor law because of a recent federal appeals court decision.
A three-judge panel for the U.S. Ninth Circuit Court of Appeals voted 2-1 that a federal law called the Federal Aviation Administration Authorization Act (FAAAA) does not preclude application of the state’s AB 5 contractor law to trucking companies operating in interstate commerce.
In early 2020, before the new law went into effect, a federal district court judge granted an injunction barring the state from enforcing it against interstate truckers while the court heard the case they were making that federal law pre-empted the state statute.
Because of the Ninth Circuit action, parties on the other side are expected to ask the district court to vacate the stay, although that had not yet happened at the time this was written.
Trucking interests are expected to appeal the three-judge decision to the full Ninth Circuit, and if the court chooses to uphold it, to the U.S. Supreme Court. The issues arising from how to define and apply the FAAAA to freight transportation have inspired skirmishes, pitched legal battles and seeming last stands over interpretations of the law’s somewhat imprecise language and uneven application.
The nub of the controversy stems from the AB 5 law’s three-part criteria for determining who can be defined as an independent contractor and who must be considered an employee for legal purposes. The “ABC test,” as it has been termed, consists of three criteria, all of which must be present if the person is to be considered a contractor:
• The person 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.
• The person performs work that is outside the usual course of the hiring entity’s business.
• The person is customarily engaged in an independently established trade, occupation, or business of the same nature as that involved in the work performed.
As you can see, the second criterion would be devastating to the trucking industry, which since its founding in the early part of the last century has depended on drivers who choose to lease their trucks and their driving services to other trucking companies. Of course, organized labor, including the Teamsters Union, has been seeking this outcome for decades since they began shedding dues-paying members after the advent of economic deregulation in 1980.
The California law proved to be so controversial that it has been rewritten by the state legislature after a public uproar arose from various types of freelance workers. The law also resulted in the passage of a referendum last year in which voters excluded ride share drivers who work for Uber and Lyft, and drivers for home delivery services like DoorDash.
However, the law continues to pose an even more ominous threat for truckers and other companies that use independent contractors. AB 5 was passed in 2019 by the state legislature to engrave into law a decision handed down in 2018 by the California Supreme Court creating the same ABC test. In January 2020, the same court ruled that the standard would be applied retroactively.
To make matters more complicated, the Ninth Circuit Appeals Court also has held previously that the California Supreme Court’s original decision that established the ABC test also should be applied retroactively to employers.
However, the same law could be coming soon to where you work if Congress succeeds in passing the Protecting the Right to Organize Act (PRO Act), a bill favored by labor unions and strongly supported by Democrat legislators that would outlaw right-to-work laws in states, authorize secondary boycotts, institute card check and subject management to personal civil liability for labor law violations.
Among the other provisions boosting the interests of organized labor, it also would apply the same California ABC test for contractors nationwide. That legislation has already been approved by the U.S. House of Representatives and now is undergoing consideration by the Senate.
Legislative efforts seeking to replicate California’s law have been mounted in other states, and federal agencies like the Department of Labor have grappled with the issue over the years. One thing is certain—it’s not going away anytime soon.
Glaringly left out of the article. Did California dictators bother to ask the gig workers affected by these rules?
Eventually shipping companies would find other west coast alternatives, whether Canada, Mexico or even Central America.
The problem is this would take years to do, so the immediate impact would be a disaster.
Have all of that an more and a working farm. Family has owned/operated farms in this county since 1889.
Produce is seasonal, much of it comes from MX and Central America in off season.
CA is being destroyed by the insane. Pure #ComDem_Insanity! Aimed at destroying the USA.
Problem is most clients will not be allowed to send you a 1099 if you don’t meet the contractor test.”
If you form a one-person corporation instead of being a sole proprietorship you do not need a 1099.
It is cheap to form the corporation but there are more hoops to jump through as far as filing a separate tax return for the business.
There’s already a truck driver shortage. This should do wonders for the problem.
I suspect that’s because a lot of those owner/operator drivers are operating in multiple states, and this is just a precautionary measure.
But the truckers from Mexico crossing under NAFTA?
ultimately, this is just another fascist ploy to destroy ALL small businesses and require EVERYONE who wants a job to be employed by one of a handful of oligarchs because that’s how fascism works: control of a small number of monopolies is SO much easier than trying to control millions of small, independent businesses ... that’s EXACTLY how Hitler did it ...
Is no one going to ask what the devil the FAA has to do with anything regarding the trucking industry? The FAAAA is mighty impressive, isn’t it?
Flight instructors faced this problem in CA in the 80’s as I recall. They were always considered independent contractors and won their battle and the FAA had absolutely nothing to do with any of the idiotic proposed legislation in Sacramento. We owned and operated a flight school in Southern CA and all our instructors set their own schedule with their own students. That profession WAS always run that way and I assume (being out of it for a number of years now) is still conducted in the same manner and the legislation was probably defeated on that basis.
Appeal from the United States District Court for the Southern District of California
Roger T. Benitez [Dubya judge], District Judge, Presiding
Argued and Submitted September 1, 2020 - Pasadena, California
Filed April 28, 2021
Before: Sandra S. Ikuta [Dubya judge/Federalist Society member] and Mark J. Bennett [Trump judge], Circuit Judges, and senior judge Douglas P. Woodlock [Reagan judge],** District Judge [District of Massachusetts].
Opinion by Judge Ikuta;
Dissent by Judge Bennett
“I suspect that’s because a lot of those owner/operator drivers are operating in multiple states, and this is just a precautionary measure”
SS No the companies cannot comply with the regulations with the owner ops domiciled in California that are leased to them.
Even if those owner ops just do intrastate deliveries the companies still cannot comply with the regulations.
The only way the trucking companies can run leased owner ops interstate and intrastate in California is if the company and the owner op is not domiciled in .Ca.
This is the death of owner operator Truckers that live in .Ca.
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