If your California operation uses owner-operators or independent contractors, AB 5 applies to you. There are no trucking exemptions. The legal challenges that kept enforcement uncertain for years have run their course, and the California Labor Commissioner has started issuing penalties.
This is not DOT compliance territory. It is employment law, and classification decisions require a California employment attorney. What follows is an overview of how the law arrived where it is and what the current landscape looks like.
Where This Started
In April 2018, the California Supreme Court issued its decision in Dynamex Operations West v. Superior Court (No. S222732), scrapping the decades-old Borello multi-factor test for worker classification under California’s Wage Orders. In its place, the Court adopted the “ABC test,” shifting the burden of proof onto the hiring entity to demonstrate that a worker qualifies as an independent contractor rather than an employee.
AB 5 Made It Law
California’s Assembly Bill 5, signed in September 2019 and effective January 1, 2020, codified the ABC test across California labor law, extending its reach well beyond the Wage Orders that Dynamex covered. For trucking, enforcement was paused while legal challenges worked through the courts. That pause is over.
How the ABC Test Works
Under AB 5, a worker is presumed to be an employee. To classify someone as an independent contractor, a motor carrier must satisfy all three of the following:
(A) The worker is free from the control and direction of the hiring entity in the performance of the work, both under the contract and in practice.
(B) The worker performs work that is outside the usual course of the hiring entity’s business.
(C) The worker is customarily engaged in an independently established trade, occupation, or business of the same nature as the work performed.
Prong B is where trucking consistently fails. Hauling freight is the core business of a motor carrier. A plumber fixing a pipe at a retail store is providing a service outside that store’s usual business. A driver hauling freight for a trucking company is not. Failing any single prong means the worker is an employee as a matter of law.
The Legal Challenges Are Finished
The California Trucking Association filed suit in November 2019, and a federal district court paused AB 5’s application to trucking the day before it was set to take effect. In June 2022, the U.S. Supreme Court declined to hear the case, at which point AB 5 went into full effect for the trucking industry. The CTA officially dropped its legal challenge in August 2024 after four and a half years of litigation.
Current California Labor Code language is available at the California Legislative Information website.
Enforcement Has Arrived
For several years after AB 5 took effect in trucking, there were no major public enforcement actions in the sector. In late 2024, the California Labor Commissioner’s Office cited Mega Nice Trucking, Ryder Last Mile, and Costco Wholesale for approximately $868,000 in penalties, including roughly $663,000 in back wages, for misclassifying 58 delivery drivers as independent contractors. Costco and Ryder were held jointly liable after regulators concluded they exercised operational control over the drivers, regardless of who held the contract.
The California Labor Commissioner’s Office handles enforcement and maintains current guidance on worker classification.
What Motor Carriers Should Do Now
If your California operation currently uses owner-operators or independent contractors, review those arrangements with a California employment attorney. Classification decisions under AB 5 are fact-specific and the financial exposure is significant.
If you have questions about the DOT compliance side of your California operation, we are glad to help. Contact us for a free initial consultation.
Updated: June 14, 2026