Trucking’s challenge to AB5 was not successful. Review your driver classification compliance now.

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On Friday, March 15th, a California judge ruled against exempting trucking companies from AB5. This law makes it very difficult for motor carriers to hire independent contractors as truck drivers and essentially requires companies to hire them as full-time employees.

Since January 2020, AB5 has made classifying workers as independent contractors difficult. However, the trucking industry has been fighting these changes since its implementation in 2020.

As the law is written, the industry suffers because many truckers have historically operates as owner-operators—indepdent contractors who own and operate their own truck—and may engage with multiple companies. Both trucking companies and independent contractors have benefited from the inherent flexibility now removed under this new law.

Judge Roger Benitez of the U.S. District Court of the Southern District of California rejected the argument by the California Trucking Association (CTA) and the Owner-Operator Independent Drivers Association case that owner-operators want the freedom to run their own business and want to pick their own hours and routes. He ruled that this issue should be solved through legislation rather than the judicial branch. In 2020, Judge Benitez had granted the CTA’s request for a preliminary injunction but that ruling was later overturned by the Ninth Circuit Court of Appeals.

What does this mean for trucking companies?

CTA has stated that they intend to appeal the ruling, but that could take several years to run its course.  Since 2020, many trucking companies have already transitioned to other business models that should comply with AB5. Those approaches include converting to a broker-carrier model, using a “two-check” model, converting to employees with company trucks, and trying to fall within AB5’s “business-to-business” exemption.

For those carriers still working with owner-operators, waiting for the outcome of CTA’s appeal is risky.  It is the time to start ensuring drivers are working in compliance with AB5. Learn about our experience in transportation law. Need to discuss a plan? Contact us.