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Jun 21 Attorney Articles

Injunction on enforcement of AB 5 will be lifted as Ninth Circuit denies California Trucking Association’s Petition for Rehearing

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On June 21, 2021, the United States Court of Appeals for the Ninth Circuit denied the California Trucking Association’s petition for rehearing in California Trucking Association v. Rob Bonta (“CTA v. Bonta”). As a result, the Ninth Circuit’s prior decision to reverse the district court’s preliminary injunction remains in place. The California Trucking Association’s remaining option is to petition the United States Supreme Court to review the Ninth Circuit’s decision. However, the United States Supreme Court is not under any obligation to hear the California Trucking Association’s petition and few cases are reviewed each year.

In the meantime, carriers will need to change their business practices to avoid the consequences of AB 5 and the underlying claims pursuant to the California Labor Code and Industrial Welfare Commission Wage Orders. Once the preliminary injunction is lifted, the State of California will be able to enforce AB 5 against carriers for misclassification, among other Labor Code violations, which include steep penalties. Overall, the Ninth Circuit’s decision has major implications for carriers in terms of conforming with wage and hour laws and complying with insurance and tax requirements as an employer. Even if the State of California decides not to immediately investigate misclassification complaints, carriers face a risk of lawsuits by individual owner-operators. Such lawsuits could include various wage and hour claims that create significant exposure to statutory penalties and the recovery of attorneys’ fees. Higgs Fletcher & Mack’s attorneys will continue to monitor any developments with AB 5 and CTA v. Bonta. If you have any questions about the effects of this decision or your employment practices, contact Higgs Fletcher & Mack to speak with an attorney.