SAN FRANCISCO — The California worker classification law, commonly known as AB5, has been upheld by the U.S. Court of Appeals for the Ninth Circuit.
The 11 judges who make up the court’s full panel handed down the ruling on Monday, June 10.
According to California officials, AB5’s goal was to prevent businesses from misclassifying workers as independent contractors.
However, many in the trucking industry disagreed.
The California Trucking Association and Owner-Operator Independent Drivers Association (OOIDA) recently filed an appeal to the Ninth Circuit over AB5.
“The California Trucking Association and OOIDA have argued that AB5 imposes undue burdens on interstate commerce in violation of the dormant Commerce Clause,” OOIDA said in a statement. “In addition, OOIDA and the state trucking group have said that the law’s decisions on who it exempts violate the U.S. and California constitutions’ equal protection clauses.”
AB5 was signed into law in 2019 after Lydia Olson and Miguel Perez, — drivers for Uber and Postmates — filed a lawsuit that same year.
The Ninth Circuit on June 10 unanimously upheld a lower court ruling that said Uber failed to show that the 2020 state law known as AB5 unfairly singled out app-based transportation companies while exempting other industries.
AB5 was originally designed as a general labor law that would cover a variety of industries, including trucking, app-based delivery companies and journalism. Exemptions were later granted to workers in multiple fields.
Opponents, such as OOIDA, contend that the law now targets gig workers and the trucking industry.
They argued AB5 violates the Equal Protection Clause.
A federal court previously ruled that AB5 applies to some 70,000 truck drivers who can be classified as employees of companies that hire them instead of independent contractors, giving them a right to overtime, sick pay or other benefits.
Judge Jacqueline Nguyen wrote in her June 10 opinion that AB5 does not directly classify any particular workers as employees or independent contractors.
“Rather, under AB5, as amended, arrangements between workers and referral agencies that provide delivery or transportation services are automatically subject to the ABC Test adopted by the California Supreme Court,” the judge wrote.
The ABC Test says that a worker is considered an employee unless three factors are established:
- A — The company does not control or direct what the worker does, either by contract or in actual practice.
- B — The worker performs tasks outside of the hiring entity’s usual course of business.
- C — The worker is engaged in an independently established trade, occupation or business.
“Under the deferential rational basis standard, the en banc (full panel) court concluded that there were plausible reasons for treating transportation and delivery referral companies differently from other types of referral companies, particularly where the legislature perceived transportation and delivery companies as the most significant perpetrators of the problem it sought to address — worker classification,” Nguyen wrote.
Born in Pine Bluff, Arkansas, and raised in East Texas, John Worthen returned to his home state to attend college in 1998 and decided to make his life in The Natural State. Worthen is a 20-year veteran of the journalism industry and has covered just about every topic there is. He has a passion for writing and telling stories. He has worked as a beat reporter and bureau chief for a statewide newspaper and as managing editor of a regional newspaper in Arkansas. Additionally, Worthen has been a prolific freelance journalist for two decades, and has been published in several travel magazines and on travel websites.
