Home News Trucking Industry Challenge: Association Disputes New Independent Contractor Rule

Trucking Industry Challenge: Association Disputes New Independent Contractor Rule

The California Trucking Association (CTA) and two independent truck drivers have challenged a California Supreme Court ruling that altered state guidelines for identifying whether a worker is an employee or independent contractor.

The case, Dynamex Operations West, Inc. v. Superior Court, “prohibits independent owner-operator drivers from contracting and performing trucking services for licensed motor carriers in California,” CTA argued.

Prior to the April Dynamex ruling, California courts and regulators used a set of rules called the “Borello test” for defining whether a worker is an employee or independent contractor. The test was named for the 1989 case S.G. Borello & Sons, Inc. v. Department of Industrial Relations, and established nine factors for identifying independent contractors. Following the Dynamex ruling, the Borello test has been replaced with a three-factor “ABC” test.

According to Chris Shimoda, vice-president of government affairs at CTA, the ABC test “practically eliminates the independent contractor model in California” and places the burden on an employer to demonstrate that an independent contractor is: A) free from direction and control; B) does not perform work in the usual course of the employer’s business; and C) is customarily engaged in an independently established occupation, trade or business. “Failure to satisfy any prong of the test means the worker is an employee,” Shimoda said.

That is in contrast to the Borello test, which focused more on a company’s “right to control” a worker and evaluated its multiple factors in their entirety to account    for different industries and professions.

Part B of the ABC test will make it difficult for some employers to justify classifying their workers as independent contractors because they will have to prove that the contractors’ services are unrelated to their own. CTA argues that this impacts all freelance truckers that work in California because they contract with motor carriers, companies that transport goods.

“This unprecedented decision by the court will take away the [agency of the] estimated 70,000 California truck drivers who choose to work as independent owner-operators,” Shimoda said.

Shimoda added that the “ABC” test will impact a wide range of independent contractors beyond the trucking industry, including emergency room doctors, music instructors, barbers, sales representatives, software engineers and consultants.

“CTA and our two independent owner-operator co-plaintiffs believe elements of the ‘ABC’ test are preempted by federal law,” Shimoda said. “Five years ago, the Ninth Circuit Court of Appeals and the U.S. Supreme Court found an effort by the City of Los Angeles to mandate employee truck drivers at the ports to be preempted. Recently, an almost identical ‘ABC’ test in Massachusetts was found preempted by their courts. Simply put, you cannot restrict the ability of half a million owner operators from making a living.”

CTA’s challenge to Dynamex was filed October 25 in the Southern District of California. With the case still in its initial stages, Shimoda said there was no estimate yet for when a ruling might be reached.

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