AB 5 updates: Legislature could clarify, modify and San Diego court takes on trucking industry

AB 5 exempted certain professions and contractual arrangements from the ABC test, subjecting them to a more flexible framework that focuses mostly on the degree of control the hiring entity has over the manner in which the work is performed. The UC Berkeley Labor Center reported in November 2019 that about 64 percent of California workers who do most of their work as independent contractors are subject to the ABC test. The center found the ABC test applies to another 27 percent of California independent contractors unless strict criteria are met under AB 5. To say that AB 5 makes the ABC test fully or partially applicable to 91 percent of California’s independent contractors is not to say that all those workers are misclassified and must be reclassified as employees. The preliminary order means Judge Benitez believes the truckers ultimately probably will win their suit challenging the application of the law to their industry. Judge Benitez concluded application of the ABC test to the truckers is trumped by the Federal Aviation Administration Authorization Act. Judge Benitez called prong B the “Achilles heel” of the ABC test that precludes its application to truckers covered by the federal law. Thus, it follows that Prong B of the ABC test requires motor carriers to artificially reclassify all independent-contractor drivers as employee-drivers for all purposes under” California’s labor laws, resulting in a significant impermissible impact on the truckers’ prices, routes, or services. In considering whether the ABC test applies retroactively, the California Supreme Court will be focusing on the law, not public pressure. Dan Eaton is a partner with the San Diego law firm of Seltzer Caplan McMahon Vitek where his practice focuses on defending and advising employers.