The California Trucking Assn. (CTA) and two California independent owner-operator truck drivers were granted a stay for an amended complaint with the U.S. Southern District Court seeking declaratory and injunctive relief against the employment test set forth in the Dynamex Operations West Inc. vs. Superior Court (Dynamex) decision, which was subsequently codified by the California Legislature in the form of Assembly Bill 5 (A.B. 5).
The bill was passed by the legislature and signed into law on Sept. 11, 2019, by California Gov. Gavin Newsom. As applied to the motor carrier context, A.B. 5, which was to take effect on Jan. 1, 2020, provided a mandatory test for determining whether a person driving or hauling freight for another contracting person or entity is an independent contractor or an employee for all purposes under the California Labor Code, the Industrial Welfare Commission wage orders and the Unemployment Insurance Code.
“A.B. 5 threatens the livelihood of more than 70,000 independent truckers,” CTA chief executive officer Shawn Yadon said. “The bill wrongfully restricts their ability to provide services as owner-operators and, therefore, runs afoul of federal law.”
In the suit, plaintiffs argued that the classification test in the Dynamex decision and codified by A.B. 5 is pre-empted by the Supremacy and Commerce clauses of the U.S. Constitution and is in direct conflict with the Federal Motor Carrier Safety Act and the Federal Aviation Administration Authorization Act of 1994.
The new test denies a significant segment of the trucking industry the ability to continue operating as independent owner-operators in California, forcing them to abandon $150,000 investments in clean trucks and the right to set their own schedule and be their own boss.
A statement from the Agriculture Transportation Coalition (AgTC) welcomed the judge’s order, issued on Dec. 31, just one day before it would have begun to “wreak havoc on trucking in California and on the hundreds of thousands employed in U.S. agriculture/forest products exports, directly and indirectly, who depend on California's export gateways to world markets."
AgTC said agricultural/forestry products are the nation's largest export by volume. “Our exporters have struggled to stay competitive during these trade wars, which, thankfully, appear to be ebbing, but competition is intense and growing. To be competitive in the Asia Pacific and global marketplaces, our exporters require transport and ports to be affordable and efficient. Already, California gateway ports, upon which so [many] U.S. ag exporters depend, are losing market share. By leading to significantly higher trucking costs in California, A.B. 5 would accelerate this trend, undermining access of U.S. agriculture to our foreign markets," AgTC stated.
In its statement, AgTC acknowledged that the temporary restraining order against implementation of the bill is in response to CTA’s petition, but at the same time, on behalf of the agricultural and forestry product exporters who utilize the Port of New York/New Jersey and others, the coalition is hopeful that the legislatures in New York and New Jersey -- which are now considering a similar limitation on independent contracting -- will take note of the stay of California's legislation.
AgTC said it "believes that federal law must continue to control interstate commerce and should pre-empt individual state efforts to dramatically change our trucking laws, causing severe damage to our nation's export competitiveness."