January 20, 2021
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This mega-thread is frequently updated with the last news, rulings and changes related to California Assembly Bill 5 (AB5). For more information on AB5 compliance and how this law impacts motor carriers, check out our blogs:
On April 28th 2021, the injunction protecting California Trucking Independent Contractors was overturned.
The 9th circuit, with a 3 judge panel, deemed in a 2-1 vote that AB5 was not preempted by FAAAA. The AB5 ruling is the codification, establishing the ABC test as the rule for determining if an independent contractor is an employee.
Under the ABC test, a worker is considered an employee and not an independent contractor, unless the hiring entity satisfies all three of the following conditions:
On March 9, 2021, the House passed the PRO Act bill with a vote of 225-206. The pro-union legislation would apply the ABC test to the federal level when it comes to defining independent contractors, mimicking California’s AB5. The bill would also make it easier for workers to join a union and for unions to exist.
The bill is unlikely to get enough votes to pass the Senate. However, the inclusion of the ABC test, specifically the endorsement of the B prong, demonstrates the current administration’s commitment to re-defining what it means to be an IC.
On February 4, 2021 the party put forward the Protecting the Right to Organize Act (PRO Act), a measure designed to promote union organizing and approved by Congress last year.
If adopted into law, the legislation would:
While it was passed by House, it still faces a simple majority by the U.S. Senate.
On January 14, 2021, the California Supreme Court ruled that the ABC test can be used retroactively. In April 2018, The Dynamex Court determined that anyone who performs work for a business is presumed to be an employee entitled to the protections afforded by the wage orders. According to this new ruling, the ABC provisions can now be used in litigation cases opened before the Dynamex decision was issued.
On November 19, 2020 the California Court of Appeals reversed the earlier trial court decision in People v. Cal Cartage Transportation Express,. The court ruled that the ABC Test is not preempted by federal law.
“The ABC test does not mandate the use of employees for any business or hiring entity,” the state appeals court said. “Instead, the ABC test is a worker-classification test that states a general and rebuttable presumption that a worker is an employee unless the hiring entity demonstrates certain conditions.”
Note this case is separate from the federal litigation CTA v. Becerra. This is an ongoing case awaiting the 9th circuits decision to determine the pending injunction.
The Fair Labor Standards Act has proposed a rule that will evaluate the current classification of Independent Contractors.
Here’s what the new proposed rule would look like in determining the classification:
Note this does not affect the AB5 ruling in California, but will provide further clarification on classification guidelines for Independent Contractors for both Federal and State.
A California judge has granted the state’s request for a preliminary injunction blocking Uber and Lyft from classifying their drivers as independent contractors rather than employees. As Reuters reported, Uber and Lyft had been accused of violating Assembly Bill 5 (AB5), a new state law requiring companies to classify workers as employees if they controlled how workers did their jobs, or the work was part of their normal business.
For now, trucking remains exempt from Bill AB5, which took effect January 1, 2020. In early January, the court granted an injunction to halt enforcement of AB5 against motor carriers. On September 1, the Ninth Circuit will listen to oral arguments about whether or not the injunction should remain in effect.
The preliminary injunction against AB5 was granted. This order will remain in effect until trial or appeal. The date for either of these options is still to be determined.
On January 13, 2020, Federal District Court Judge Roger Benitez extended the injunction originally ordered on New Year’s Eve. With this temporary restraining order in place, motor carriers operating in California are not mandated by law to enforce the requirements of the ABC Test under AB5 for independent contractors. Timing of a final decision is still unclear, but according to transportation law firm Scopelitis, the TRO is anticipated to be extended for at least 14 days or until the order ruling on the preliminary injunction is filed.
Under AB5, 2 million independent contractors, including truck drivers, may need to be reclassified as employees. The law will go into effect January 1, 2020.
This decision expands a groundbreaking California Supreme Court decision last year known as Dynamex, where the CA Supreme Court adopted a new test for classifying workers that presumes workers are employees. Businesses need to prove that a given worker is not an employee but actually an independent contractor (IC).
The Impact: In California, employers must follow IWC orders and are susceptible to claims for minimum wages, overtime, meal and rest breaks, and wage violations. Contractors do not have these obligations.
By partnering with TransForce Group, we can help you get compliant with AB5 regulations quickly and eliminate the risk of misclassifying workers – so you can continue to keep your trucks moving without disruption to your customers.