Trucking Exemption

What Is the Trucking Exemption?

The trucking exemption refers to the complex interplay of federal and state laws that determine which California labor protections apply to commercial truck drivers. Due to federal preemption under the Federal Aviation Administration Authorization Act (FAAAA) and ongoing litigation regarding AB 5's application to trucking, the rules for motor carriers and their drivers exist in a state of legal uncertainty.

Understanding these exemptions is critical for motor carriers, owner-operators, and fleet managers operating in California.

Federal Preemption: The FAAAA

What Is Federal Preemption?

Federal preemption occurs when federal law supersedes state law. The FAAAA prohibits states from enacting laws that affect the "price, route, or service" of motor carriers.

FAAAA Provisions

The Act states:

"A State may not enact or enforce a law related to a price, route, or service of any motor carrier... with respect to the transportation of property."

How This Affects California Laws

California meal and rest break laws have been challenged under federal preemption:

California Law	Federal Preemption Status
Meal breaks	Preempted for property carriers (9th Circuit)
Rest breaks	Preempted for property carriers (9th Circuit)
Overtime	NOT preempted (still applies)
Minimum wage	NOT preempted (still applies)
Wage statements	NOT preempted (still applies)

Dilts v. Penske (9th Circuit)

In 2014, the 9th Circuit ruled that California meal and rest break laws were NOT preempted because they don't significantly affect routes, prices, or services.

International Brotherhood of Teamsters v. FMCSA

In 2023, the 9th Circuit held that California meal and rest break requirements ARE preempted for motor carriers of property operating under federal Hours of Service regulations.

Current Status: California meal and rest break laws do not apply to drivers of property-carrying commercial motor vehicles subject to federal HOS rules.

AB 5 and the Trucking Industry

The ABC Test

California's AB 5 codified the "ABC test" for determining worker classification:

A worker is an employee unless the hiring entity proves:

Factor	Requirement
A	Worker is free from control and direction
B	Worker performs work outside hiring entity's usual business
C	Worker is engaged in an independently established trade or business

The Problem for Trucking

Under the ABC test's "B" prong, owner-operators hauling freight for trucking companies appear to be employees because hauling is the company's usual business.

California Trucking Association v. Bonta

The trucking industry challenged AB 5 as preempted by the FAAAA.

Timeline:

2019: CTA files lawsuit
2020: District court grants preliminary injunction
2021: 9th Circuit affirms injunction
2022: Supreme Court denies certiorari
2023: 9th Circuit rules AB 5 IS preempted as applied to motor carriers
2024-2025: Ongoing enforcement uncertainty

Current Status (as of 2025)

The application of AB 5 to the trucking industry remains subject to litigation. Key points:

Issue	Status
ABC test for trucking	Likely preempted for property carriers
Owner-operator model	Legally uncertain, subject to change
Passenger carriers	AB 5 may apply (not covered by FAAAA)
Intrastate vs. interstate	May affect analysis

Overtime Rules for Truck Drivers

Despite meal and rest break preemption, California overtime laws generally apply to truck drivers.

Hours of Service vs. California Overtime

Federal Hours of Service (HOS) regulations limit driving hours but don't affect overtime pay requirements.

Federal HOS	California Overtime
Limits total hours for safety	Requires premium pay for excess hours
Doesn't require overtime pay	Applies regardless of HOS status
Covers driving and on-duty time	Covers all compensable work time

California Overtime for Drivers

Most non-exempt truck drivers are entitled to:

Hours	Rate
First 8 hours/day	Regular rate
Hours 8-12/day	1.5× (overtime)
Over 12 hours/day	2× (double-time)
Over 40 hours/week	1.5×
7th consecutive day	1.5× (first 8 hrs), 2× (over 8 hrs)

Motor Carrier Overtime Exemption

Under federal law, certain drivers are exempt from overtime under the Motor Carrier Act exemption:

Requirements for exemption:

Employee of a motor carrier or private carrier
Vehicle weighs over 10,001 pounds OR transports hazardous materials
Employee's duties affect safety of operation in interstate commerce

If exemption applies:

No federal overtime requirement (FLSA)
California overtime may still apply (not preempted)

Employee vs. Independent Contractor

Factors Courts Consider

Even with AB 5 litigation ongoing, courts examine:

Factor	Employee Indicator	IC Indicator
Equipment	Company-provided	Worker-owned
Routes	Company-assigned	Worker-selected
Customers	Company's customers	Worker's own customers
Rates	Company sets rates	Worker negotiates rates
Hours	Company schedules	Worker sets schedule
Branding	Company branding	Worker's own business identity
Multiple clients	Works only for one company	Multiple companies served

IRS Factors

The IRS uses different tests than California:

Category	Factors
Behavioral control	Instructions, training, evaluation
Financial control	Expenses, investment, profit opportunity
Relationship	Contracts, benefits, permanence

Practical Guidance

Given legal uncertainty, motor carriers should:

Document relationships carefully - Maintain evidence of independence
Consult legal counsel - Get current advice on classification
Prepare for both scenarios - Have plans if law changes
Monitor litigation - Stay current on court decisions

Wage and Hour Compliance

Even with exemptions, several California requirements apply.

Minimum Wage

All truck drivers, regardless of classification disputes, must receive at least minimum wage for all hours worked.

Year	California Minimum
2024	$16.00/hour
2025	$16.50/hour

Piece-Rate and Per-Mile Pay

If drivers are paid by the mile or load:

Must still equal minimum wage for all hours
Non-productive time (waiting, inspections) must be paid separately
Overtime calculated on actual hours, not miles

Example calculation:

Driver earns $0.50/mile
Drives 500 miles in 12 hours (includes waiting time)
Earnings: $250
Minimum required: 12 hours × $16.50 = $198 (satisfied)
But: 4 hours overtime premium still owed

Waiting Time Pay

Time spent waiting at loading docks, inspection stations, or customers is typically compensable:

Situation	Compensable?
Waiting for cargo at shipper	Yes
Waiting at inspection station	Yes
Sleeper berth time (off-duty)	No
Waiting during detention	Yes

Wage Statements

Employers must provide compliant wage statements showing:

Hours worked (all categories)
Pay rates (regular, overtime)
Deductions
Net pay
Pay period

Meal and Rest Breaks: Current Rules

Property Carriers (Interstate)

Following the 2023 9th Circuit ruling:

Break Type	California Requirement
Meal breaks	Preempted - federal HOS applies
Rest breaks	Preempted - federal HOS applies

Drivers must still comply with federal HOS requirements for breaks.

Passenger Carriers

The FAAAA does not cover passenger transportation, so:

Break Type	Requirement
Meal breaks	California law applies
Rest breaks	California law applies

Bus drivers, shuttle drivers, and passenger carriers must receive California meal and rest breaks.

Intrastate Operations

For purely intrastate operations not subject to federal HOS:

California meal and rest break rules may apply
Legal analysis depends on specific circumstances
Consult legal counsel for specific situations

Compliance Checklist for Motor Carriers

Classification Analysis

Document relationship with each driver
Maintain evidence of independence (if IC)
Review contracts for proper IC provisions
Monitor AB 5 litigation developments
Consult legal counsel on classification

Wage and Hour

Track all hours worked (including waiting time)
Ensure minimum wage is met for all hours
Calculate overtime on actual hours worked
Pay for non-productive time separately (if piece-rate)
Provide compliant wage statements

For Employee Drivers

Maintain accurate time records
Pay overtime as required
Comply with federal HOS (which covers breaks)
Provide workers' compensation coverage
Withhold required taxes

For Owner-Operators (if IC Status Applies)

Obtain written IC agreement
Document equipment ownership
Allow driver to work for others
Let driver set their own schedule
Issue 1099 (not W-2)

Risk Management

Misclassification Exposure

If owner-operators are later deemed employees:

Liability	Amount
Back wages	2-4 years of unpaid overtime
Meal/rest break penalties	1 hour per day per violation
Wage statement penalties	$50-$4,000 per employee
Tax penalties	Back taxes + penalties + interest
PAGA penalties	$100-$200 per pay period
Attorney fees	Plaintiff's fees if they prevail

Insurance and Bonding

Motor carriers should:

Maintain adequate liability insurance
Consider EPLI (employment practices liability insurance)
Require owner-operators to carry their own insurance
Document insurance requirements in contracts

Technology Solutions

Fleet management and compliance technology helps:

ELD integration: Track hours of service and work time
Automated payroll: Calculate complex pay including detention
Compliance tracking: Monitor overtime thresholds
Document management: Maintain classification evidence
Audit trails: Support wage and hour compliance

Industry Resources

Resource	Purpose
FMCSA	Federal hours of service regulations
California DLSE	State wage and hour information
California Trucking Association	Industry advocacy and guidance
Owner-Operator Independent Drivers Association	Driver resources

The trucking industry operates under significant legal uncertainty in California. Motor carriers should work closely with legal counsel to navigate the evolving landscape of federal preemption, AB 5, and California labor law.