As of January 1, Assembly Bill 5, commonly referred to as the gig-worker law, went into effect. California lawmakers passed the law in May of 2019. The law requires all employers to use the ABC Test to classify workers, which would significantly decrease the number of independent contractors in the workforce.
The changes that AB5 would bring worried many employers as 2019 came to a close, especially trucking companies, as we discussed in a past blog post. However, trucking companies do not have to worry about complying with AB5 – yet.
A FEDERAL JUDGE PUT AB5 IMPLICATIONS ON HOLD FOR TRUCKERS
A federal judge in California, U.S. District Judge Roger Benitez, has issued a preliminary injunction to prevent the State from enforcing AB5 on trucking companies. Judge Benitez is also currently considering a permanent exception for truckers as the case goes on.
Last November, the California Trucking Association (CTA) filed a lawsuit against the law, claiming it:
- Violates federal trucking laws and interstate commerce;
- Would cause irreversible damage to companies and the industry; and
- It would be far too expensive for trucking companies.
Most truck drivers are classified as independent contractors since they often own their own rigs and deliver for many agencies. Therefore, the CTA claimed that AB5 would not be good for the industry drivers either.
Judge Benitez agreed; so, even though AB5 went into effect for other California companies as of January 1, 2020, trucking companies are currently exempt.
WHAT DOES THIS MEAN FOR TRUCKING COMPANIES?
In order for Judge Benitez to have granted the preliminary injunction, he concluded that the CTA’s lawsuit would likely prevail at trial. If that occurs, then trucking companies would continue to be exempt from AB5’s regulations and rules.
For now, these companies can continue operating how they usually do, though it might be beneficial to keep a close eye on the developments of this case as time goes on.