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California Trucker Protest: Worker Classification Feud Explained

July 22, 2022, 2:26 PM

Truckers protesting their inclusion under a California worker classification law that made it harder for companies to continue using business models that rely on independent contractors have shut down the state’s third-busiest port for five days.

The 2019 law, Assembly Bill 5, codified a three-prong “ABC test” for whether workers can be considered independent contractors or employees entitled to job benefits and union representation. Protests erupted across California last week after the US Supreme Court declined to review a case challenging the application of A.B. 5 to truckers.

The trucking industry has long fought to be exempt from state worker classification laws, and now about 70,000 truck owner-operators in the state are expected to be required to comply with the law.

The protests led the Port of Oakland to close most operations starting July 18. Unionized dockworkers have supported the truckers in their protest even though the two unions representing dockworkers and employee-designated truckers outwardly support A.B. 5.

1. What is the ‘ABC test’?

A.B. 5 codified a 2018 California Supreme Court decision requiring employers in the state to apply a three-part test to determine whether a worker is an employee entitled to job benefits or an independent contractor who isn’t.

To prove that a worker is an independent contractor, an employer must show: (A) the worker has freedom from control over how to perform the service; (B) the service is outside the company’s usual course of business or workplace; and (C) the worker is engaged in an independently established role.

California Gov. Gavin Newsom (D) in 2020 signed legislation that added exemptions to A.B. 5 for some gig workers, but not truckers.

Trucking companies typically contract with truckers as independent owner-operators for the bulk of their normal operations, meaning they can’t satisfy Prong B.

2. What are the truckers’ arguments?

The California Trucking Association argued that the ABC test is preempted by the Federal Aviation Administration Authorization Act, which overrides state laws related to interstate commerce. Trucking companies have also argued that they will face economic hardship if they’re forced to upend their business model.

Contracting out the driver’s role allows companies to shift the cost of truck ownership and operation to individual drivers, according to a report from the Labor Center at the University of California, Berkeley. The report found that the capital costs of operating trucks can reach as much as $120,000. Drivers classified as independent contractors also must keep up with strict regulatory standards imposed in the state.

But not all truckers—including current independent contractors affected by A.B. 5—want to be classified as employees. Those drivers fear that they may lose a sense of freedom and control they currently have by not being on a company’s payroll.

3. What do the courts say?

The US Court of Appeals for the Ninth Circuit ruled that A.B. 5 doesn’t conflict with the FAAAA because the state law doesn’t impermissibly regulate truckers’ prices, routes, and services.

The appeals court ruling lifted a January 2020 preliminary injunction that prevented enforcement of the ABC worker test within the trucking industry. The Supreme Court’s decision not to hear the case leaves in place the Ninth Circuit holding, meaning the trucking industry will need to change its practices to comply with A.B. 5.

It’s unclear when California will begin enforcing the law against the trucking industry.

A.B. 5 has been subject to multiple challenges from other gig economy companies, including Uber Technologies Inc. and Postmates Inc., whose case is pending in the Ninth Circuit.

4. Why are unions involved?

Unionized dockworkers at the Port of Oakland refused to enter the port terminal while the truckers were protesting, citing safety concerns.

The ILWU’s West Coast section is negotiating a new contract with the 70 employers represented by the Pacific Maritime Association. The previous contract lapsed on July 1, leading to concerns about a potential dockworker strike.

Dockworkers are represented by the International Longshore and Warehouse Union, which states as one of its guiding principles that “every picket line must be respected as it were our own.”

But the ILWU and the International Brotherhood of Teamsters, which represents truckers currently classified as employees, have been vocal in their support for A.B. 5. The Teamsters union stands to gain tens of thousands of members if truckers now classified as independent contractors are considered employees.

READ MORE:

Justices Pass on California Truckers’ Worker Classification Spat

California Port Closes Gates for Third Day Amid Protests (1)

Trucker Protest Keeps Dockworkers Off Work at Key California Hub

West Coast Port Truckers Can Unionize: Labor Board Official

To contact the reporter on this story: J. Edward Moreno in Washington at jmorenodelangel@bloombergindustry.com

To contact the editors responsible for this story: Laura D. Francis at lfrancis@bloomberglaw.com; Martha Mueller Neff at mmuellerneff@bloomberglaw.com