The Supreme Court and AB5
I understand that many of y’all (I can say that because I am from Oklahoma) may not really care which cases the U.S. Supreme Court decides to hear. Perfectly understandable. Many of the cases they hear are boring and lack any real sex appeal. And by sex appeal, I mean something that impacts you, me and the transportation industry as a whole.
Well, the court will have an opportunity to change that by granting certiorari to a case that will greatly impact our industry …. and is pretty sexy.
Some of you may have already figured out that I am talking about the California Trucking Association (“CTA”) case challenging AB5. If you already knew that you really need to get a hobby.
Now as background, and in case you have forgotten in the past few years, California adopted AB5 to deal with wrongly classified employees. The bill was originally directed toward the “gig” economy (think Uber and Lyft) but found a home in the trucking industry. In essence, when the bill was signed into law it basically made the independent contractor business model for trucking companies in California extinct.
How can that be you ask? Simple. In passing the bill the legislature adopted the test handed down by the California Supreme court in the Dynamex case. As a result, companies will now be required to use the ABC test set forth in Dynamex to determine independent contractor status.
For those of you keeping score at home, for a person to be classified as an independent contractor the ABC test requires:
A. That the worker is free from the control and direction of the hiring entity in connection with the performance of the work and in fact;
B. That the workers perform work that is outside the usual course of the hiring entity’s business; and
C. That the worker is customarily engaged in an independently established trade occupation or business of the same nature as the work performed.
Now you don’t have to be a genius to understand that part “B” of the ABC test is basically an impossible standard for a carrier to meet. Any independent contractor hauling freight for a carrier will now be classified as an employee.
At this point, I could go into the discussion about how this really benefits the unions by allowing them to unionize at various state ports. But I won’t go there. Instead, I offer this helpful holiday tip……..if you are struggling for something to discuss around the dinner table this Thanksgiving bring this up. As long as you have a union member and somebody who wants to independently contract for their services there will be no shortage of conversation.
Ok….back to the subject at hand. As I mentioned the CTA has asked the U.S. Supreme Court to review the case on the grounds that motor carriers should be exempt from enforcement based on federal pre-emption.
In essence, they are saying that the state law is invalid because it conflicts with federal law. When this happens federal law wins. Think of it like a card game….federal law trumps.
In this case, the CTA bases its case on an “express conflict in the federal circuit court on an exceptionally important question of federal law: Does the Federal Aviation Administration Authorization Act of 1994 preclude states from adopting worker-classification rules that prohibit or substantially restrict motor carriers’ use of owner-operators?”
For decades, the classification of California truck drivers has been governed by the “multifactor test” handed down in S.G. Borello & Sons, Inc. v. Department of Industrial Relations. This test examines the total circumstances of the relationship between the business and the person performing the work. While there is no single rule that makes this determination, included in this consideration is the “right to control” the manner of means of completing the task.
Most independent contractors I know exercise control of the what, when, and where of what they do. Accordingly, this test would favor the independent contractor.
According to the CTA, “in California more than 70,000 owner-operators chose to work independently because of the freed, flexibility and business growth potential that business model provides.”
So at the end of the day (actually probably in October or November), the U.S. Court will determine whether to grant certiorari and hear this case. For me personally, I hope it happens. This matter is too important to our industry and independent contractor business model to not have the uniformity brought by a U.S. Supreme Court decision.
Brad Klepper, Esq. is President of Interstate Trucker Ltd., a law firm entirely dedicated to legal defense of the nation's commercial drivers. Interstate Trucker represents truck drivers throughout the forty-eight (48) states on both moving and non-moving violations. Brad is also Executive Vice President & General Counsel of Drivers Legal Plan, which allows member drivers access to his firm’s services at greatly discounted rates. Brad spent almost a decade with the largest law firm in Oklahoma where his practice included extensive experience in transactional law, business defense litigation, and intellectual property. In addition, Brad is a licensed architect and serves as General Counsel to the Oklahoma Board of Architects, Landscape Architects and Interior Designers. Brad has dedicated much of his time to DataQs challenges, which are challenges posed to the FMCSA for CSA incidents, to examine data and reports filed by law enforcement.
800-333-DRIVE (3748) or www.interstatetrucker.com