Legislature Passes AB 5- Codification of Dynamex California Supreme Court Decision

Last week, the California State Assembly passed Assembly Bill (AB) 5 by Assemblymember Lorena Gonzalez that codifies the California Supreme Court’s Dynamex decision, upending 30 years of established law and giving uncertainty to 70,000 owner operators.

The Assembly passed AB 5 on a mostly party line vote of 56-15, capping off months of negotiations and lobbying by CTA seeking to include an exemption for the trucking industry. The night before, the Senate voted to pass the bill by a vote of 29-11. From here, AB 5 will be sent to the Governor’s desk where he has till October 13 to sign or veto it. However, Governor Newsom is expected to sign AB 5 quickly, in a recent editorial in the Sacramento Bee he wrote of his support for the measure.

Since the bill’s introduction, CTA has advocated for changes to AB 5, including requirements for operating authority, ownership of vehicles, exclusivity and transparency about pay. These changes would have set a clear criterion and established independence in a way that protected employees from misclassification without hurting clearly legitimate owner-operators.

Unfortunately, due to opposition from the Teamsters and the State Building and Construction Trades, an exemption for trucking was not included. The author did include exemptions that help a small number of union construction companies to continue contracting directly with owner operators and also allowed for motor clubs (ex. AAA) to continue contracting with tow trucks.

The author and proponents of AB 5 have tried to portray the construction trucking language as an exemption for owner operators, when in fact it only benefits a few large construction contracting firms. It creates a model where subcontractors providing construction trucking services, including sole proprietor owner-operators, must register with the Department of Industrial Relations as a public works contractor and must contract directly with the licensed construction contractor. Subcontractors must utilize their own employees to perform the construction trucking services, unless the subcontractor is a sole proprietor who operates their own truck to perform the entire subcontract and holds a valid motor carrier permit issued by the Department of Motor Vehicles. For work performed after January 1, 2020, any business entity that provides construction trucking services to a licensed contractor utilizing more than one truck shall be deemed the employer for all drivers of those trucks, effectively eliminating brokering. This clause sunsets in 2022 unless renewed.

The construction exemptions will not help owner operators and were not negotiated with the trucking industry.

Despite the exemption not being included, several Senators and Assemblymembers cited trucking not being addressed and expressed their hope that discussions will continue into the new year.

While the passage of AB 5 is a major setback, CTA continues to believe that the trucking industry’s best hope is to win in court. CTA’s lawsuit claiming federal preemption is still the trucking industry’s best hope in preserving the Owner Operator model.

Following the Governor’s signature of AB 5, CTA will be conducting a webinar and will provide members an extensive overview of the bills’ impact to the trucking industry. More information regarding the webinar will be sent in the coming days.

For more information on AB 5, you can contact CTA’s Director of Legislative Affairs, Matt Roman at mroman@caltrux.org.