In lawsuit, state group says more than 70,000 owner-operators could be hampered by Calif. IC law

Updated Nov 17, 2019
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The California Trucking Association and two independent owner-operators based in the state have filed a lawsuit that seeks to derail California’s test for determining whether a worker should be classified as a company employee or an independent contractor.

The so-called ABC test, set in place by the California Supreme Court in April 2018 in the Dynamex case and then made state law by the California legislature in September, mostly prohibits carriers from contracting freight to owner-operators, both leased or independent. The Dynamex case prompted a wave of carriers to shy away from the traditional owner-operator-lessee model since last April, while California’s new law, known as A.B. 5, will establish state regulations against use of independent contractors who don’t meet the ABC test requirements.

The law could impact more than 70,000 owner-operators in the state, says CTA head Shawn Yadon. “The bill wrongfully restricts their ability to provide services as owner-operators and, therefore, runs afoul of federal law,” he says.

CTA’s lawsuit is one of multiple prongs in the group’s approach to challenging A.B. 5 and its impact on carriers and owner-operators in the state. In September, CTA’s Chris Shimoda said the group also intended to work with California lawmakers to try to find a path forward for legitimate owner-operators to continue working in the state and for carriers to continue contracting with owner-operators.

The group argues in its lawsuit, filed Nov. 12 to the U.S. District Court in Southern California, that the 1994 Federal Aviation Administration Authorization Act places the federal government in charge of regulating trucking and, thus, California’s law should be superseded by federal regulations. CTA is asking the court to provide an injunction relief for trucking from A.B. 5 and from the Dynamex decision.

“We can protect workers from misclassification without infringing upon independent truckers’ right to make a living in California,” said Yadon.

Speaking from the annual conference of the National Association of Small Trucking Companies two weeks ago, Joe Rajkovacz of the Western States Trucking Association noted he believed litigation such as this is the “most viable solution” to the problems presented to trucking companies and independent owner-operators by A.B. 5. WSTA, he noted, recently withdrew its own lawsuit, on appeal after an adverse decision by a federal district judge. The CTA’s prior lawsuit had not yet received such a judgment, and “they got permission to refile it” from a judge in light of California’s passage of A.B. 5 in September.

“What we want to see is the best case move forward to the ninth circuit,” the appeals court that would decide the litigation if unsuccessful in federal district court, Rajkovacz adds. The ultimate place this is headed, he believes, is the Supreme Court, given conflict between a Massachusetts district’s own past judgment relative to the ABC independent contractor test. The Massachusetts district court “did preempt the B prong of an ABC test,” Rajkovacz says. “If the Ninth Circuit does what a lot of us think it will do, you set up two federal circuits that have opposite decisions on something that’s pretty fundamental. That is the No. 1 way that cases get to the Supreme Court.”

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