The U.S. Supreme Court denied the California Trucking Association’s (CTA) petition to review AB 5, California’s controversial law that redefines independent contractors.

Absent intervention, it lifts an injunction and trucking companies are no longer exempt from the law. It likely ends the traditional leased owner-operator business model in California and forces fleets to fill driver seats.

“In addition to the direct impact on California’s 70,000 owner-operators who have seven days to cease long-standing independent businesses, the impact of taking tens of thousands of truck drivers off the road will have devastating repercussions on an already fragile supply chain, increasing costs and worsening runaway inflation,“ CTA in a statement following the SCOTUS decision.

“We are disappointed the Court does not recognize the irrevocable damage eliminating independent truckers will have on interstate commerce and communities across the state. The Legislature and Newsom Administration must immediately take action to avoid worsening the supply chain crisis and inflation,” CTA said.

California Governor, Gavin Newsom, signed AB 5 (Gonzalez) into law in September 2019, with a start date of January 1, 2020. CTA filed a lawsuit against the California Attorney General arguing that AB 5 conflicts with the Federal Aviation Administration Authorization Act of 1994 (FAAA).

With initial success at the trial level, the CTA received an injunction from enforcement of AB 5 but later lost at the 9th Circuit Court of Appeals. On June 30, 2022, the U.S. Supreme Court denied CTA’s Petition for Certiorari, effectively ending the lawsuit and the stay of implementation.

How does this affect truckers and the California supply chain?

Without any administrative action, Owner-Operator/Independent Truckers are now prohibited in California under AB 5. They will no longer qualify for business-to-business exemptions and cannot negotiate their rates with their motor carrier per Federal law. Additionally, AB 5 requires a separate business location and contracting requirements placing a barrier for owner-operators due to the requirements of the FAAA. 

Kahn, Soares & Conway, LLP and the California Trucking Association contributed to this article.

*Photo provided by the California Truckers Association