January 10, 2020 Update to AB 5 Challenges
Trucking Industry: On Wednesday, January 8, 2020, a California state court ruled that AB 5 does not apply to the trucking industry because the state statute is preempted by federal law. This state court ruling lays a solid foundation for the federal court hearing on the trucking industry’s request for a preliminary injunction on January 13, 2020 based on the same federal preemption argument. The Federal Aviation Administration Authorization Act of 1994 prevents states from enacting laws that affect the prices, routes, or services of trucking companies in transporting goods. The court found on January 8 that AB 5 does just this because it effectively bars trucking companies from using independent contractor drivers.
Uber and Postmates: Also on January 8, 2020, Uber, Postmates, and two of their drivers moved for a preliminary injunction to bar AB 5 from being enforced against gig-economy companies and on-demand workers while their case to invalidate AB 5 proceeds. The hearing is scheduled for February 8, 2020. In support of their request, they argue that if AB 5 is enforced, harm will be done to the “..companies, drivers, consumers, merchants, and to the public at large.” The drivers allege that the law interferes with their constitutional right to “follow a chosen profession free from unreasonable governmental interference.”
As of January 10, 2020, there are three hearings scheduled to hear requests for preliminary injunctions to stay enforcement of AB 5 in three different industries: (1) trucking; (2) the so-called “gig-economy,” including Uber and Postmates, and (3) freelance journalists and photographers. The hearings are scheduled for January 13, February 8, and March 9, respectively. The outcome of these hearings will demonstrate the courts’ temperament in regards to AB 5’s restrictive independent contractor analysis.
****** Original Post – January 7, 2019 *******
As expected, two new California laws relating to arbitration and independent contractor status that were set to take effect on January 1, 2020 were promptly challenged in court as unconstitutional. District courts have already issued temporary restraining orders blocking the laws from taking full-effect immediately. We expect these forays into court will merely be the first step in protracted legal proceedings that could very well end up at the Supreme Court. This post summarizes each law, the legal challenges made, and the current status of the law. Continue Reading