In a previous post, we talked about California shifting gears to the so-called “ABC test” for determining whether a worker is an employee or independent contractor in a law called “AB-5.” Compared to California’s previous standard, the ABC test classifies far more workers as employees. However, a provision in AB-5 says that where the ABC test can’t be applied in a particular context—because a court says so—California’s former “Borello” standard kicks back in.

Perturbed by the Golden State’s maneuver, the California Trucking Association—an industry group representing motor carriers that hire independent owner-operator truckers—challenged AB-5, arguing the new test can’t be applied to its carriers because a federal deregulation statute—the Federal Aviation Administration Authorization Act (FAAAA)—expressly preempts state laws “related to a price, route, or service of any motor carrier . . . with respect to the transportation of property.” A district judge agreed and tapped the brakes on applying AB-5 to CTA’s truckers, but last week the Ninth Circuit reversed in a 2-1 split decision. The case is CTA v. Bonta, No. 20-55106 (Apr. 28, 2021).

The Ninth Circuit reasoned that AB-5 is a generally applicable labor rule that targets a motor carrier’s relationship to its workforce, not one that effectively binds carriers to specific prices, routes, or services. The majority acknowledged that AB-5 might increase carriers’ employee costs—an expense likely to be passed along to consumers—but viewed that impact as too indirect to trigger preemption under the FAAAA.

Although the ruling appears to pave the way for application of California’s ABC test to the trucking industry, it might not last for the long haul. The Ninth Circuit’s holding trades paint with a contrary decision from the First Circuit, meaning the issue is likely to go en banc or even reach the Supreme Court.

Over and out.