Despite handing down important victories for gun rights and school choice, the Supreme Court declined to hear two cases challenging California’s Assembly Bill 5 (AB5). This is seen as a minor setback for freelancer rights.
One case was filed by journalists and photographers challenging the law’s unlawful carve outs that severely restricted their right to freelance, while the second suit pertained to California’s trucking agency.
By not hearing California Trucking Association v. Bonta, a “2020 stay” on AB5 applying to trucking thawed and now goes into effect against owner-operators in the Golden State.
FreightWaves reports, “This winding history leads us back to Thursday, when the Supreme Court, without comment, declined to review the Bonta case, leaving the 9th Circuit’s decision intact and clearing the way for AB5 to apply to motor carriers operating in California. The stay previously issued by the 9th Circuit directs that its mandate will take effect immediately upon the denial of certiorari by the Supreme Court.”
The ABC test was adopted to discourage independent contracting. If workers don’t meet the following three conditions (three-prong test), they are considered, by default, employees:
- The worker is free from the control and direction of the hiring entity in connection with the performance of the work, both under the contract for the performance of the work and in fact;
- The worker performs work that is outside the usual course of the hiring entity’s business; and
- The worker is customarily engaged in an independently established trade, occupation, or business of the same nature as that involved in the work performed.
IWF Center for Economic Opportunity Director Patrice Onwuka testified before the California Advisory Committee to the U.S. Commission on Civil Rights highlighting the law’s negative impacts. She highlighted some of the law’s negative impacts:
AB5 applied to most independent contractors in the state when first passed. According to the California legislature’s legislative Analysis Office, roughly 1 million workers were expected to be affected by the passage of AB5. Because the business they work for would no longer be able to treat them as independent contractors, proponents assumed the businesses would hire these workers as employees. That proved to be an incorrect and costly misunderstanding of business and economics, as thousands of these workers found themselves out of jobs. While subsequent legislation exempted over one hundred occupations from AB5, many more workers still remain under its ABC test.
The immediate impact of the Court’s refusal to hear these cases could lead to work loss and reduced incomes for independent contractors. Price hikes—coupled with 40-year-high inflation—and more supply chain disruptions are expected.
With AB5 now extending to owner-operators and making them employees, many truckers who identify as independent contractors will be driven out of the Golden State.
As Paul Brashier, Vice President of ITS Logistics, a commercial transport company, explained in response to the Court’s inaction: “It’s going to adversely affect everybody. And at the end of the day, with where we are with inflation being as high as it is, this is going to put inflationary pressure on the consumer, right?”
Workers are increasingly seeking out independent contracting to liberate themselves from 9-to-5 jobs. But California’s law is a setback that’ll have national ramifications.
To learn more about California AB5’s impact on freelancers, check out IWF’s Chasing Work series.