PRESS RELEASE: WASHINGTON, D.C. – The National Retail Federation this week asked a federal appeals court to overturn a recently passed California worker classification law, saying the measure makes it harder for companies to contract with independent truck drivers by narrowing the circumstances under which an individual can work as a contractor rather than an employee.
“The court’s decision will have a significant impact on retailers’ ability to deliver merchandise to their stores and distribution centers across the country,” NRF Vice President for Government Relations and Workforce Development Lizzy Simmons said. “Owner-operators play an important role in maintaining a nimble supply chain. This law narrows opportunities for independent truckers, reducing flexibility in delivery and upending the retail supply chain.”
NRF, the Retail Litigation Center and the U.S. Chamber of Commerce filed a friend-of-the-court brief in the U.S. Court of Appeals for the 9th Circuit on Wednesday. The case was brought by the California Trucking Association and challenges the application of Assembly Bill 5, which took effect in January, to motor carriers.
The sweeping new law codifies and expands a 2018 California Supreme Court ruling that established the state’s “ABC test,” which sets strict criteria that must be met for a worker to be classified as an independent contractor. There are about 70,000 independent truckers based in California, including many who work at ports where the bulk of imported merchandise enters the United States and others who drive beyond the state’s borders.
The brief argues that AB 5 violates the Federal Aviation Administration Authorization Act, a 1994 federal law that expressly preempts any state law or regulation related to the “price, route or service” of motor carriers and was intended to prevent a patchwork of state regulations that could undermine federal deregulation of interstate trucking.
“California Assembly Bill 5 frustrates Congress’s aims by prohibiting motor carriers from hiring the independent owner-operators they have historically relied on to transport property in American commerce, with drastic impacts on carriers’ prices, routes and services,” the brief said. “AB 5 will impose an impossible choice between violating the law, backed by potential criminal penalties, and incurring unrecoverable costs from the forced restructuring of business operations.”
The California Trucking Association won an injunction against the law in U.S. District Court earlier this year. In addition to the truckers’ lawsuit, it has been challenged by lawsuits brought by freelance journalists and rideshare companies.
The National Retail Federation, the world’s largest retail trade association, passionately advocates for the people, brands, policies and ideas that help retail thrive. From its headquarters in Washington, D.C., NRF empowers the industry that powers the economy. Retail is the nation’s largest private-sector employer, contributing $3.9 trillion to annual GDP and supporting one in four U.S. jobs — 52 million working Americans. For over a century, NRF has been a voice for every retailer and every retail job, educating, inspiring and communicating the powerful impact retail has on local communities and global economies.