NASSTRAC Leads Coalition Filing Amicus Brief
In May, NASSTRAC along with six shipper associations, filed an Amicus brief supporting the California Trucking Association in an appeal currently pending in the Ninth Circuit that presents an important labor-law question whose resolution will significantly impact trucking companies and their customers in California and beyond. It is our hope that the brief will help the Ninth Circuit understand shippers’ needs for reliable, efficient, and cost-effective trucking services and the adverse impacts that application of the ABC test would have on their supply chains and interstate commerce.
ISSUE: The trucking industry has asked trade associations whose shipper members depend on trucking services to pick up, distribute and deliver goods to jointly submit an amicus brief in California Trucking Association v. Becerra, which is an appeal in the Ninth Circuit that concerns federal preemption of California’s AB-5 law.
BACKGROUND: California adopted Assembly Bill 5 (“AB-5”), which codified the “ABC Test” for determining whether a worker should be classified as an independent contractor or employee for the purposes of California labor laws.1 Under the ABC test, all workers are treated as employees unless the hiring entity establishes: that the worker is free from the control and direction of the hirer in connection with the performance of the work ...; (B) that the worker performs 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 for the hiring entity.
In order to promote efficiencies and address seasonal demands for trucking services, motor carriers in California and throughout the United States routinely depend on independent trucking operators who are classified as independent contractors and not employees. However, under the ABC test, owner-operators performing truck transportation in California will be treated as employees subject to California’s labor laws, since they cannot satisfy prong B.2
The California Trucking Association (“CTA”) and two individual owner-operator plaintiffs challenged AB-5 in federal court and obtained a preliminary injunction preventing enforcement of the law, based on a finding that the ABC test, as applied to motor carriers, is preempted by the Federal Aviation Administration Authorization Act of 1994 (“FAAAA”).3 The State of California and the Teamsters union have appealed the ruling to the Ninth Circuit.
IMPACTS AND IMPORTANCE TO SHIPPERS: A reversal of the trial court’s preemption finding would completely disrupt the trucking industry’s business model by preventing motor carriers operating in California from treating owner-operators as independent contractors. This would likely reduce competition in the industry and increase costs since some carriers would simply stop operating in California. It would reduce efficiencies by eliminating the flexibility that currently allows trucking companies to rely on owner-operators to meet seasonal demands and specialized services. It could force shippers with interstate shipments involving California to contract with two different carriers, placing unnecessary burdens on interstate commerce. It could also lead other states to adopt similar measures creating a patchwork of inconsistent laws that would also harm interstate commerce.
NASSTRAC is proud to be able to support our trucking industry providers and want our members to know that our assistance is appreciated by the trucking industry. In a letter received from Shawn Yadon, CEO of the California Trucking Association he acknowledged our help “I thank you for your support and commitment to us winning this lawsuit and protecting the independent contractor model for trucking. Every step of this lawsuit is vitally important…”