The long-running battle over who is an employee versus a contractor in California has been put on hold after the Supreme Court denied cert in California Trucking Association v. Bonta. The ABC test adopted by the California Supreme Court in Dynamex Operations West, Inc. v. Superior Court of Los Angeles, adopted by the state legislature in 2019 as AB 5, stands—for now.
Under AB 5, all workers are assumed to be employees, not contractors, unless the employer can affirmatively satisfy the ABC test by proving three things: (A) that the worker is free from the control and direction of the hirer when performing the work, both under the contract for the work and in fact; (B) that the worker performs work that is outside the usual course of the hiring entity’s business; and (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. AB 5 also expanded applicability of the ABC test beyond wage orders.
AB 5 faced immediate challenges, including from the California Trucking Association (CTA), alleging that AB 5 was preempted by the Federal Aviation Administration Authorization Act. The CTA achieved an early win—obtaining a preliminary injunction against enforcement of AB 5 back in January 2020. Last year, however, a panel of the Ninth U.S. Circuit Court of Appeals reversed.
The CTA filed a petition for a writ of certiorari with the Supreme Court. On June 30, the justices denied cert without comment. The denial leaves in place the Ninth Circuit’s decision, lifts the injunction against AB 5 and allows enforcement of the law.
Why it matters: Now that AB 5 is enforceable, workers will be presumed employees, not contractors, absent an employer’s specific showing otherwise. Employers should be careful with how they classify workers and how they direct the work of contractors.