Judge temporarily blocks AB5 enforcement for trucking, citing merits of CTA suit

UPDATE: Jan. 1, 2020: U.S. District Judge Roger Benitez issued a restraining order temporarily blocking enforcement of Assembly Bill 5 (AB5) regarding truck drivers Tuesday night. The written decision cites the California Trucking Association’s suit and covers “any motor carriers in California, pending this Court’s resolution of Plaintiffs’ motion for a preliminary injunction.” A hearing on CTA’s request for an injunction is scheduled for Jan. 13.

Dive Brief:

The California Trucking Association (CTA) filed a lawsuit Tuesday challenging Assembly Bill 5 (AB5), according to the Associated Press. The legislation will take effect on Jan. 1, 2020, and is expected to make it illegal for carriers to hire owner-operator truck drivers.
The Association says AB5 will result in 70,000 drivers in the state losing their ability to work and claims the state-level legislation defies federal law. The suit was filed in federal court in San Diego, according to the AP.
The office for Democratic Assemblywoman Lorena Gonzalez of San Diego, the author of AB5, told the AP this was the first legal challenge of the law.

Dive Insight:

Some brokers and carriers who work with owner-operators in California have begun to reach out to these drivers to let them know their options when the legislation takes effect in less than two months.

Prime, a Missouri-based trucking company, is still working with owner-operators in California for the time being, but is planning for a future where that won't be possible, according to Keith McCoy, the director of marketing at Prime.

"We've already communicated with the folks that are associated with us and gone through the legislation with them and have presented them with a package of options that we think are the best solutions for everybody and are waiting for them to evaluate and ask us questions," McCoy told Supply Chain Dive.

McCoy said these options were proprietary information.

One option may have been revealed in a letter sent to Landstar System drivers and first obtained by Freightwaves. The Florida-based carrier gives its drivers the following options: get a new drivers' license in a new state, get their own authority, or deliver into California without picking up loads in the state.

Landstar declined to comment when contacted by Supply Chain Dive. Other carriers, including XPO, Werner and Schneider, did not immediately respond to request to comment.

Its unlikely truckers will be given an exemption under AB5 before the Jan. 1, 2020 deadline, something even CTA acknowledges on an AB5 FAQ page on its website. This means carriers will have to figure out how to find capacity formally filled by these owner-operators.

"California bears the burden of [AB5] in terms of the capacity shortage it's going to create and the prices it's going to inflate," said McCoy.

Are you an owner-operator driver in California? Let us know how your carrier is communicating its plans with you here.

This lawsuit by CTA comes a week after truck owner-operators in the state protested the legislation at government offices. But with the deadline for compliance with the new law quickly approaching it's unclear what if anything can be done before it takes effect.

"These owner-operators didn't seem to be paying attention during the time of when the sausage was getting made," Joe Rajkovacz, the director of Governmental Affairs and Communications for the Western States Trucking Association, told Supply Chain Dive last week. "And now that AB5 is law it seems to have gotten people's attention."