Supreme Court Declines to Hear Trucking Challenge to California's AB5

On June 30, 2022, the US Supreme Court declined to hear the California Trucking Association's challenge to Assembly Bill 5, California's worker-classification law. The order, issued without comment, left in place a ruling by the US Court of Appeals for the Ninth Circuit. It also meant the end of a preliminary injunction that had kept the state from enforcing AB5 against motor carriers.

What AB5 does

AB5, passed in 2019, wrote the "ABC test" into California law, making it harder to classify a worker as an independent contractor. The provision most at issue for trucking was the B prong. It requires that a contractor's work fall outside the usual course of the hiring company's business. As FreightWaves noted, a trucking company hiring an owner-operator to haul freight would presumably fail that test.

The California Trucking Association argued that the Federal Aviation Administration Authorization Act (F4A) preempted AB5. That law bars states from enforcing laws related to a motor carrier's prices, routes or services. A federal district court had granted a preliminary injunction blocking enforcement against motor carriers. In 2021, a divided Ninth Circuit panel ruled 2-1 that AB5 was a generally applicable labor law and called for the injunction to be lifted. CTA then petitioned the Supreme Court. In May 2022, the US solicitor general recommended that the court deny the petition.

Reaction

CTA said in a statement reported by Land Line Media that "Gasoline has been poured on the fire that is our ongoing supply chain crisis." The association said the decision would directly affect California's 70,000 owner-operators.

OOIDA, which had filed an amicus brief supporting CTA, said California had provided no guidance on how owner-operators could keep working as independent contractors. "With AB5 now set to go into effect, thousands of owner-operators driving in California face an uncertain future," OOIDA President Todd Spencer said. He added that the association expected to take part in future challenges to the law.

A spokesperson for the California Attorney General's Office said the state was pleased with the decision.

What it means for drivers and fleets

With the injunction ending, carriers in California that relied on leased-on owner-operators faced a choice. They could restructure those relationships, convert contractors to employees, or risk enforcement and litigation under the ABC test.

For owner-operators, the decision raised hard questions about whether they could keep running under their own authority, lease to a carrier or become company drivers. OOIDA said there was little guidance on how the law would be applied to trucking.