The California Supreme Court created quite the stir in the trucking industry when it revealed in April a new test for determining if a worker is an employee or an independent contractor.
As part of its decision in Dynamex Operations West v. The Superior Court of Los Angeles County, the state’s high court adopted the ABC test, which considers all workers to be employees unless the hiring business demonstrates that a worker satisfies each of three conditions:
- A. That the worker is free from the control and direction of the hirer in connection with the performance of the work, both under the contract for the performance of the work and in fact.
- B. That the worker performs work that is outside the usual course of the hiring entity’s business.
- C. That the worker is customarily engaged in an independently established trade, occupation, or business of the same nature as that involved in the work performed.
“The hiring entity’s failure to prove any one of these three prerequisites will be sufficient in itself to establish that the worker is an included employee, rather than an excluded independent contractor, for purposes of the wage order,” the California Supreme Court wrote in its decision.
Not surprisingly, the decision rattled a few cages within the trucking industry.
The Western States Trucking Association and California Trucking Association both filed lawsuits in opposition of the Dynamex decision.
In addition, an opinion issued by a federal judge in California on Nov. 15 said that the ABC test is pre-empted by federal law.
“The court … finds that the ABC test – as adopted by the California Supreme Court – “relates” to a motor carrier’s services in more than a “tenuous” manner and is therefore preempted by the Federal Aviation Administration Authorization Act,” Judge James Otero wrote in his order for the case of Angel Omar Alvarez et al. v. XPO Logistics. “However, there is a distinction to be made between a statutory cause of action and the test for interpreting the statute in question. Thus, the court would emphasize that it is the application of the Dynamex ABC test that is preempted by the FAAAA, not the underlying California Labor Code claims.”
However, the decision by the California Central District Court doesn’t set precedent.
Oral arguments for the Western States Trucking Association lawsuit were heard by the U.S. District Court in Eastern California this past November. A ruling in the case is expected soon.
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