Kyle Winnick Quoted in “Ruling Threatens Independent Trucker Business Model in California”

SHRM

Kyle D. Winnick, Associate in the Employment, Labor & Workforce Management practice, in the firm’s Newark office, was quoted in SHRM, in “Ruling Threatens Independent Trucker Business Model in California,” by Dinah Wisenberg Brin.

Following is an excerpt:

Motor carriers that use independent truck drivers to haul freight in California may need to adopt a new operating model and reclassify drivers as employees if a recent 9th U.S. Circuit Court of Appeals decision stands.

Freight carriers have long contracted with drivers who own and operate their own rigs, but a 2019 California law, AB5, has threatened such arrangements by establishing a three-part test to determine whether workers are employees or independent contractors.

In California Trucking Association v. Bonta, a federal appeals panel ruled 2-1 to uphold California's authority to enforce that test against motor carriers. Legal experts expect motor carriers and independent truckers to appeal the decision.

"If the ruling stands, motor carriers will likely have to rethink how they structure their relationship with drivers," said Kyle Winnick, an attorney with Epstein Becker Green in Newark, N.J. He noted that many motor carriers use independent contractors to move goods, and some owner-operators in turn use their own subcontractors. …

Broader Implications

The appeals panel decision could possibly have broader implications for other independent contractors in California, according to Winnick. "It certainly strengthens the argument that other federal law does not pre-empt AB5. For example, the Airline Deregulation Act, which covers air carriers, uses a similar, albeit broader, pre-emption clause as the one at issue in CTA v. Bonta," he said, noting that AB5 creates uncertainty for employers.

"Many of the exemptions to AB5 are vague and ambiguous. For example, the business-to-business exemption contains 12 criteria that an employer must meet. It will take time for the courts to clarify these criteria and other exemptions to AB5," he said. "California employers would do well to audit their contractor relationships and err on the side of caution."