Federal Court Offers Truckers and Organized Labor a Significant Victory Against Big Business Interests

The power of independent trucking was diminished from the Golden State. On Wednesday, a federal appeals court ruled the tens of thousands of so-called”freelance” California truckers should be classified as employees instead of independent contractors.

“Because AB-5 is a generally applicable labour law which affects the relationship between a motor carrier and its own workforce, and doesn’t bind, compel, or otherwise freeze into position a specific cost, route, or use of a motor carrier in the level of its clients, it is not preempted by [federal law],” Circuit Judge Sandra Segal Ikuta wrote.
The CTA had contended that the Federal Aviation Administration Authorization Act (F4A) of 1994, that preempts any state law”related to a price, route, or service of any motor company” was the controlling laws in the case due to its preemption clause.
The Ninth Circuit disagreed, however, because AB-5 isn’t really a law about cost rates, avenues or services-but, instead , a law which allows state authorities to enforce labour law protections against employers who misclassify their employees as independent contractors.
The ruling explains at length:
[L]aws of general applicability which impact a motor carrier’s relationship with its workforce, and compel a specific wage or preclude discrimination in hiring or firing decisions, aren’t significantly related to rates, routes or providers. Consequently, enforcement of California’s prevailing wage law against motor carriers, the use of California’s meal and rest break laws, and”using California’s common-law test for ascertaining whether a motor carrier has properly classified its drivers as independent contractors” aren’t preempted, since they affect motor carriers’ business in the point at which the motor carriers interact with their employees.
Regardless of the lengthy debate of the F4A’s possibility to preempt the California law, the prevailing issue in the case is whether the so-called”ABC test” included in AB-5 is permitted to stand. Since the CTA’s preemption argument did not succeed, the ABC test is now the standard by which authorities can judge whether trucking businesses have misclassified their employees.
The ABC test is a legal doctrine imported from Massachusetts through case law. The test was codified by the state legislature in AB-5 and it determines the employment relationship as follows:
[A] person supplying labor or services for remuneration shall be considered an employee as opposed to an independent contractor unless [(A)] the hiring entity shows that the man is totally free of the control and management of their hiring entity in connection with the performance of the job, [(B)] the person performs work that is outside the usual course of their hiring entity’s business, and [(C)] the man is customarily engaged in an independently established trade, occupation, or company.
The district court expressly decided that prong B of the above mentioned test was preempted by the F4A and issued the injunction based on the notion that the CTA would probably be determined by the merits of the claim since that prong”effectively mandates that motor carriers handle owner-operators as employees” and therefore”motorists won’t ever be considered independent contractors under California law”
The Ninth Circuit reported the exact opposite was true.
“[W]e have concluded that such indirect consequences have’only a tenuous, remote, or peripheral connection to rates, routes or providers,'” Judge Ikuta notes.
“By neglecting to follow our precedent regarding labour laws of general applicability, the district court committed a legal error on which we cannot defer, even in the preliminary-injunction point”
Labor leaders hailed the appellate court’s conclusion as an unmitigated success for employees.
“Today’s ruling in the 9th Circuit is a huge success for California’s truck drivers, that for much too long have confronted manipulation and misclassification in the control of trucking businesses which put corporate profit ahead of motorists’ security and well-being,” said the International Brotherhood of Teamsters in a statement. “The court’s ruling affirms that California’s AB 5 law can be levied against trucking businesses which misclassify their employees – and it needs to be obvious to everybody that motorists that run work for a trucking company are employees of the firm, independent contractors.”
“Together with the Ninth Circuit’s conclusion, we have state law protections to resist misclassification and also make sure these drivers are employees, not independent contractors, entitled to the very same rights and protections as any other employee,” Teamsters Port Division Director Ron Herrera added.
[image via screengrab/KCRA]
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