JANUARY 21, 2019 – The California trucking industry had a big win last week that will (at least in the short-term) allow owner-operators in the state to continue operating as independent contractors. As we wrote about last month, there has been a lot of uncertainly surrounding the future of trucking in California because of the “AB5” bill that was passed in the state last year. The bill, which was designed to protect workers in the state, severely limits who can be classified as an independent contractor. Because of this, and the way the language of the bill was written, owner-operators would have been required to be reclassified as employees for the motor carriers they drive for – effectively ending the owner-operator model of trucking in the state.
Related Article: How the AB5 Bill May Impact the Future of Trucking in California
The California Trucking Association (CTA) fought for an exemption before the law went into effect on January 1. Although one has yet to be given, a federal judge in San Diego did issue a preliminary injunction late last week that effectively blocks the state from enforcing that motor carriers comply with the AB5 bill. This injunction will stay in place until the CTA’s case has been decided.
“There is little question that the State of California has encroached on Congress’ territory by eliminating motor carriers’ choice to use independent contractor drivers, a choice at the very heart of interstate trucking, Judge Benitez wrote in his ruling. “In so doing, California disregards Congress’ intent to deregulate interstate trucking, instead adopting a law that produces the patchwork of state regulations Congress sought to prevent. With AB 5, California runs off the road and into the preemption ditch of the FAAAA. Accordingly, plaintiffs’ motion for a preliminary injunction is GRANTED.”
The CTA celebrated the decision, calling it a “significant win” for the more than 70,000 owner operators working in the state.
You can read more about the AB5 bill and it’s potential impact on the California trucking industry here. At Foley, we’ll continue to keep you updated as news about this case progresses.
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