Independent contractors, drivers and AB 5

The Santa Clarita Valley Business Journal
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Michael R. Fostakowsky, Esquire for Poole, Shaffery & Koegle

On Jan. 13, U.S. District Judge Roger Benitez extended the temporary restraining order he issued on Dec. 31, precluding California from enforcing Assembly Bill 5 against motor carriers. (California Trucking Association et al. v. Attorney General Xavier Becerra et al., Case No.: 3:18-cv-02458-BEN-BLM.)

AB 5 is a law codifying a three-part test commonly referred to as the “ABC test” in establishing independent contract status.

The test requires an affirmative finding for all of the following: 

The worker is free from the control and direction of the hiring entity in connection with the performance of the work, both under the contract for the performance of the work and in fact;

The worker performs work that is outside the usual course of the hiring entity’s business;

The worker is customarily engaged in an independently established trade, occupation, or business of the same nature as that involved in the work performed. 

Stated simply, while independent contractors are not subject to the Labor Code provisions for overtime compensation, rest breaks and/or meal period penalties, requiring these drivers to be classified as employees would subject trucking companies to a panoply of enforcement obligations, incurring significant fees, employee time and likely costly litigation, including Private Attorney General Act (PAGA) claims, should they not comply with these mandatory provisions.  

However, in People ex rel. vs. Cal Cartage Transportation Express LLC, et al. (LASC Superior Court case No. BC689320), Judge William F. Highberger granted a motion in limine to preclude the application of the ABC test at trial. Significantly, under the FAAAA, states are prohibited from “enact[ing] or enforc[ing] a law, regulation, or other provision having the force and effect of law related to a price, route, or service of any motor carrier … with respect to the transportation of property (49 U.S.C. § 14501(c)(1).”

The current challenges to AB 5 and its implications for California business reinforce the oft-repeated advice to retain skilled counsel to guide you through the legal maze that is California employment law.

Fostakowsky is a member of the employment and labor law department of Poole Shaffery & Koegle. For more information on Poole Shaffery & Koegle, call (855) 997-7522, or visit pooleshaffery.com. ν

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