The Great AB5 Law Conflict Explained: Lease OTR Truck Drivers in Peril

OOIDA Challenges AB5 Law, Warns It Could End Lease Driver Jobs

The Owner-Operator Independent Drivers Association (OOIDA) is fighting against California’s AB5 law, arguing that it could put an end to lease driver jobs in the state. AB5 is a law that sets strict rules on whether workers can be classified as independent contractors. OOIDA says the law is especially tough on truck drivers who lease their trucks and work as independent contractors for motor carriers.

What is AB5 and Why is It Controversial?

AB5 became law in California in January 2020. It introduced a new test, called the “ABC test,” to determine if a worker is an employee or an independent contractor. The law has caused a lot of controversy in the trucking industry. The problem lies mainly with the “B prong” of the test. This rule says that to be considered an independent contractor, the work a person does must be outside the usual business of the company hiring them. For truckers who lease their trucks to carriers, this is almost impossible to meet.

The legal fight over AB5 started in late 2019. A judge blocked the law from being enforced on truckers at the time, but in 2021, the 9th Circuit Court of Appeals overturned that decision. The U.S. Supreme Court refused to review the case in 2022, so OOIDA and the California Trucking Association (CTA) are still fighting the law in court.

OOIDA’s New Argument: The Dormant Commerce Clause

In a recent legal brief to the 9th Circuit Court of Appeals, OOIDA is making a new argument. This time, they are focusing on something called the Dormant Commerce Clause. This clause is part of the U.S. Constitution. It says that states cannot pass laws that unfairly restrict or burden interstate commerce. OOIDA claims that AB5 does just that.

OOIDA points to the Business-to-Business (B2B) exemption in AB5 as a big problem. This exemption is a 12-part test that allows some independent contractors to stay classified as such. But OOIDA says it’s almost impossible for lease drivers to meet this exemption, especially since federal leasing laws require motor carriers to have full control of the trucks operated by these drivers.

How AB5 Could Hurt Lease Drivers

OOIDA argues that AB5 will hurt lease drivers by making it nearly impossible for them to work as independent contractors in California. The law’s strict rules will likely force many of these small business truckers out of the state or out of business altogether. OOIDA says this not only harms the truckers but also disrupts interstate commerce since many of these drivers move goods across state lines.

The association also says that the B2B exemption creates an unfair playing field that favors California-based businesses over out-of-state operators. This, they argue, violates the Dormant Commerce Clause.

Broader Concerns

OOIDA also questions whether AB5 really helps workers who might be wrongly classified as independent contractors. Before AB5, California used something called the Borello test to determine if someone was an employee or an independent contractor. The Borello test leaned toward classifying workers as employees, but it wasn’t as strict as the ABC test. OOIDA argues that the supposed benefits of AB5 don’t outweigh the harm it will cause to lease drivers.

OOIDA also addresses the suggestion that independent truckers could get motor carrier authority from the Federal Motor Carrier Safety Administration (FMCSA) to keep working under AB5. But they argue that this is not a realistic option for many lease drivers. The responsibilities and rules involved in holding such authority are too much for most of these drivers to handle.

What’s Next?

The legal fight over AB5 is still ongoing. The California Trucking Association and the state’s Attorney General are expected to file more legal briefs in the coming months. This case raises important questions about state versus federal authority, workers’ rights, and the future of independent contractor work in the trucking industry.

Right now, the future of lease drivers in California is uncertain. The outcome of this case could have a big impact on the entire U.S. trucking industry.