The state of California has asked a federal court to lift the preliminary injunction against imposing AB5 on the California trucking business.
“The district court erred in concluding that Plaintiffs were likely to succeed on the merits of their preemption claim,” the state attorney general’s office said in the filing this week.
The request to the Court of Appeals for the 9th Circuit is part of the appeal of the successful attempt by the California Trucking Association (CTA) to be granted an injunction against the imposition of AB5 against the trucking industry. It has argued that AB5 was preempted by the Federal Aviation Administration Authorization Act (FAAAA), a law that dates back to the ’90s.
AB5 is the law enacted in California last year that seeks to legislate when a worker is an employee and when it is fair to describe him or her as independent. The so-called B prong of AB5 and the Dynamex court case that inspired it can be interpreted to mean that a trucking company hiring an independent owner-operator must view that driver as an employee, as opposed to a trucking company hiring a cleaning company to maintain the company’s headquarters. Trucking would be the company’s primary business; maintaining offices is not. Hence, the difference.
According to the filing by the attorney general’s office, the FAAAA “preempts state and local regulation that has a significant effect on the prices, routes or services of motor carriers.” (Italics added.) That was the position of the CTA as well.
But in its request for an end to the injunction, the attorney general’s office says other precedents in federal district court for the 9th Circuit Court — where the CTA’s request was granted — hold that “AB5 and its ABC test are the type of generally applicable background labor regulation that this Court has consistently held is not preempted by the FAAAA.”
The state’s action takes aim at the “prices, routes and services” part of the finding in the preliminary injunction. Interpreting that trio of standards “should not be read ‘with an uncritical literalism,’” the state wrote, quoting an earlier decision on FAAAA preemption. It cited legal precedents that it said should be interpreted as meaning that state labor regulations are not preempted by the FAAAA, including a 2014 case in which the court held that the FAAAA doesn’t preempt California’s meal and rest break laws.
The brief filed by the state quoted from the decision in that case: “The sorts of laws that Congress considered when enacting the FAAAA included barriers to entry, tariffs, price regulations, and laws governing the types of commodities that a carrier could transport. Congress did not intend to preempt generally applicable state transportation, safety, welfare or business rules that do not otherwise regulate prices, routes, or services.”
The California argument says AB5 doesn’t specifically block the hiring of independent contractors. “The [CTA] did not cite any language in AB5 prohibiting the use of independent contractors or mandating the use of employees for any business or hiring entity,” the request to lift the injunction stated. Rather, AB5 just “codifies” the ABC test “and states a rebuttable presumption that a worker is an employee.”
(The wording in the state’s appeal of the injunction is starkly in contrast to that conclusion by the district court. After running through several precedents, the court in that case said those earlier cases demonstrate that the FAAAA “likely preempts ‘an all or nothing’ state law like AB-5 that categorically prevents motor carriers from exercising their freedom to choose between using independent contractors or employees.”)
If the argument is correct that AB5 doesn’t literally ban the hiring of independent contractors as drivers by a trucking company, the state’s argument comes back to the question of “prices, routes and services.”
The ABC test and the earlier standard used to determine the question of employee versus contractor, known as the Borello test, do not “define the rights or benefits that a motor carrier must provide its drivers,” the state argues. The decision to grant the injunction then “offers no substantive analysis on what impact labeling motor carriers’ drivers to be ‘employees’ will have on prices, routes and services,” the state argues.
The temporary injunction blocking AB5 came down on New Year’s Eve, a day before AB5 went into effect. (The highly controversial law remains in effect for a host of other California industries.) The injunction’s transition from temporary to preliminary came down several weeks later.
The state argues that what might be viewed as the last-minute nature of the CTA action is a reason to overturn the injunction. In essence, the argument the state makes is that if the imposition of AB5 was going to be so detrimental to their business, what took them so long?
The state’s filing says the ABC test first became a reality for trucking companies with the Dynamex decision handed down in April 2018, but the request for the injunction came down on Dec. 2, 2019. “Nothing prevented plaintiffs from seeking injunctive relief during this period, particularly if they in fact faced irreparable harm absent such relief,” the state’s filing said.
The International Brotherhood of Teamsters made the same request to have the preliminary injunction lifted.