Call:(949) 436-2785
On April 28, 2021, the Ninth Circuit Court of Appeals in California Trucking Association v. Bonta, issued a decision that California’s AB-5 law, now Labor Code Section 2775, is not preempted by federal law. The three-judge panel ruled that the District Court was wrong when it granted a preliminary injunction that prohibited the application of Labor Code Section 2775 to motor carriers and independent owner operators including those providing services to the Construction Industry.
What does this mean? AB-5 restricts most workers from being independent contractors and with its 3-prong, hard to satisfy test, in California, almost everyone now is an employee. The injunction had basically created an exception for trucking, construction and other industries that rely heavily on Owner/ operators of trucks and other vehicles. Now this means that all those drivers who owned their own trucks and other vehicles and basically operated their own business, would be considered employees.
This decision has been referred to as “disappointing” to many in the transportation industry who have also called it “strained” and “lacking significant analysis”. Unfortunately, the trucking industry will now be faced with legal challenges and difficulties in complying with Labor Code Section 2775.
The decision, if it stands, will have a large impact beyond the trucking industry. Construction is one of those industries that will feel its crunch as well as many other California businesses across many industries that will be impacted with increased driver costs and increases in the cost of owning equipment. Of course, these increased costs will ultimately be passed on to consumers.
One possible solution is for drivers to be paid wages for their driving as employees but also be paid a rental fee for their equipment as business owners. This blended practice used to be common in the trucking industry and could be coming back into practice depending on how subsequent rulings play out. Stay tuned for more updates!
This article is informational only and meant to provide guidance. It is not meant to be legal advice and it does not create an attorney-client relationship. For what to do in your specific situation, please consult with a qualified Construction Law attorney.
December 20, 2023
June 29, 2023
June 07, 2023
5Ghassemian Law provided thoroughly constructed and effective legal strategies for successful outcomes in the complex world of construction law for our small company. Core competence, due diligence, and a commitment to client needs are strengths that inspire confidence and keep producing results when it counts most.
Mahyar and her team possess a wealth of construction and business law expertise. Expertise to both guide a client away from litigation and, if not possible, to skillfully represent them in court.
Mahyar Ghassemian and her firm are the best construction dispute litigators and negotiators in the industry. Mahyar is an expert in this area. Her firms knows the law and are very tenacious in obtaining the best results for their clients. I have been involved in very lengthy litigation as co-counsel in a very big case and jury trial. Mahyar is one of the hardest working and most effective advocates I have ever had the privilege of working with.
Small Firm Value – Large Firm Expertise
