May 1, 2021
The Ninth Circuit Court of Appeals voided a prior district court injunction that shielded motor carriers and owner-operators from A.B. 5. As a result, motor carriers are now subject to California’s heightened legal standard for classifying workers as independent contractors.
Governor Newsom signed A.B. 5, which codified the ABC test into Labor Code section 2750.3 and established the presumption that workers are employees, unless the ABC test is satisfied in September of 2019. Under the ABC test, an employer can only classify workers as independent contractors if: (A) the worker is free from the control and direction of the hiring entity; (B) the worker performs work that is outside the usual course of the hiring entity’s business; and (C) the worker is customarily engaged in an independently established trade, occupation or business.
Employers in the motor carrier and trucking industry can expect that litigation over this issue will follow due to the negative impact on motor carrier operations. Businesses should examine their business model as the legal authority governing this industry shifts toward upholding A.B. 5.
Pearlman, Brown, and Wax attorneys are available to share more about the new legal standards and the details of these changes.