California Trucking Association drops AB5 appeal -

The California Trucking Association is dropping its case against the state’s worker classification law, AB5, the trucking group confirmed.

The decision reverses the trucking group’s previous intentions of appealing a lower court’s ruling to the U.S. Court of Appeals for the Ninth Circuit.

“The California Trucking Association has litigated AB5 for four-and-a-half years and (has) decided not to pursue further appeal of the district court’s latest decision,” California Trucking Association Chief Executive Officer Eric Sauer said in a statement. “While we strongly believe that the court’s initial finding of preemption was correct, California and the bill’s union sponsors had to take the position that the state’s 70,000 owner-operators had a right to conduct business in the state in order to overcome our arguments. This is a win for the working-class entrepreneurs that make up the backbone of the state’s supply chain.”

Meanwhile, the Owner-Operator Independent Drivers Association is continuing its appeal, citing Constitutional concerns regarding how AB5 singles out interstate truck drivers.

AB5 provides a Business to Business exemption to the ABC Test that California intrastate truckers can use but federally regulated interstate truckers cannot.

“AB5’s prohibition of leased owner-operators applies not only to truckers who live in California,” OOIDA wrote in its opening brief to the Ninth Circuit filed on Aug. 5. “It extends to all leased owner-operators who work in California, regardless of where they are from or how little time they spend in California to pick up or drop off freight in interstate commerce. This prohibition of leased owner-operators was not an accidental byproduct of a law that was purportedly passed to address worker misclassification. The sponsor of the legislation, a then-former (and again current) International Brotherhood of Teamsters official, publicly stated that one of AB5’s purposes was to eliminate this sector of the trucking industry.”

Background

California signed the controversial Assembly Bill 5, known as AB5, into law in 2019.

The law is based on the ABC Test and requires a business to demonstrate three factors are established before a worker can be considered an independent contractor. The B prong of the ABC Test requires the worker being used as an independent contractor to provide a service that is outside the company’s usual course of business.

Soon after AB5 became law, the California Trucking Association filed a lawsuit against the state, and a preliminary injunction was issued. In 2022, the case was kicked back to the lower courts after the Supreme Court declined to hear arguments related to AB5 violating the Federal Aviation Administration Authorization Act. OOIDA joined the case to represent out-of-state truckers who could be harmed by the California law.

This past March, a district court ruled in favor of the state. In April, OOIDA and the California Trucking Association filed notices of appeal with the Ninth Circuit. In August, the California Trucking Association elected not to file an opening brief.