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California truckers not subject to gig economy law, judge says

Brittany De Lea

Turns out California truckers may not be in for an extra painful 2020 after all.

A Superior Court judge in Los Angeles ruled this week that independent drivers are exempt from the state's gig economy law, which went into effect Jan. 1, because the law conflicts with a federal statute regulating interstate commerce.

AB-5 clearly runs “afoul” of the Federal Aviation and Administration Authorization Act of 1994, according to Judge William Highberger, and is preempted by it. That act endorses the use of owner-operators in all 50 states to increase competition and to reduce the cost of trucking services.

The goal of the 1994 statute was to provide a uniform law to eliminate a patchwork of state regulations that had made it difficult for the motor carrier industry to operate.

Highberger also said the authorization act “demonstrates Congress’ intent to protect the owner-operator business model in the trucking industry and preclude its replacement by an 'employee-operator' regime.”

The decision will be appealed by Los Angeles City Attorney Mike Feuer, his office confirmed to FOX Business.

"As the Court itself stated, '... there are substantial grounds for difference of opinion,'" Feuer said in a statement.

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AB-5 is intended to prevent workers from being wrongly classified as independent contractors, and deprived of basic labor protections as a result.

Under the statute, in order for a company to treat a worker as a contractor, it must prove that the worker is independent and able to perform services free of company control, that the services the worker provides are not part of the company’s typical course of business and that the person separately works in the same type of business outside of the contracted work.

The California Trucking Association filed a lawsuit to prevent the measure from being implemented earlier this month because the law would restrict the activities of independent owner-operators. The group alleged it would put 70,000 owner-operators out of work.

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Some companies even began taking preemptive measures to fend off fallout from the law. Landstar, the largest lease-contracting entity of owner-operators in the U.S., issued a note to hundreds of California operators cautioning them that they would need to make their own informed business decision with respect to how they want to react to the law.

At the end of last month, in a separate case, a federal judge issued a temporary restraining order to stop the law from applying to the trucking industry.

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