An injunction that stopped the California trucking industry from coming under AB5, the state’s law governing the use of independent contractors, has been overturned.
A three-judge panel in the U.S. Court of Appeals for the 9th Circuit, in a 2-1 vote, handed down its decision Wednesday after hearing oral arguments back in early September.
In his dissent, Judge Mark Bennett summed up the impact of the appellate court’s decision in language that the California trucking sector has been dreading for many months in the case originally brought by the California Trucking Association.
“California will now be free to enforce its preempted law,” Bennett said. “CTA’s members will now suffer irreparable injury. And the damage to the policies mandated by Congress will likely be profound.”
The primary issue in the case is whether a federal law, the Federal Aviation Administration Authorization Act, which dates back to the ’90s, preempted the implementation of AB5 in the state. On New Year’s Eve 2019, right before AB5 went into effect, the suit brought by the CTA was able to get an injunction handed down by a lower court on the grounds that F4A, as it’s known, preempted implementation of AB5. That has kept AB5 out of the state since the law’s full state implementation on the first day of 2020.
The key issue for the trucking sector in AB5 is the so-called B prong of the ABC test, which allows the hiring of independent contractors if the contractor “performs work that is outside the usual course of the hiring entity’s business.” Given that a trucking company hires independent truck drivers to move freight, it has always been assumed that activity would not be permitted under AB5.
FreightWaves will continue to report on this story as the day progresses.