AB5 Enforcement in Trucking: How California Is Targeting Motor Carriers
· Michael R. Holt
An analysis of how California actually enforces AB5 against trucking companies — who investigates, what triggers an audit, real penalty exposure, and the defense file every carrier needs.
AB5 Enforcement in Trucking: How California Is Targeting Motor Carriers
For the first three years of AB5’s life, most motor carriers treated it as a theoretical problem. The law was on the books, but a federal injunction kept it off the industry’s back, and enforcement felt like something that happened to gig-economy apps, not trucking companies.
That era is over. Since the injunction dissolved in 2022, California’s enforcement machinery has been working through the trucking industry methodically — and the carriers being hit are rarely the ones who expected it.
The Timeline That Got Us Here
September 2019. AB5 signed into law, codifying the ABC test from the Dynamex decision.
January 2020. The California Trucking Association wins a preliminary injunction, arguing federal law (FAAAA) preempts AB5 for motor carriers. Trucking operates as if AB5 doesn’t exist.
June 2022. The US Supreme Court declines to hear CTA v. Bonta. The injunction dissolves within days. AB5 applies to trucking, retroactively enforceable.
2023 onward. The Labor Commissioner’s Office and the Employment Development Department (EDD) begin systematic audits of carriers operating with 1099 owner-operators domiciled in California.
Who Actually Comes Knocking
Enforcement is not a single agency. Three separate doors can open, and each has different powers:
The Labor Commissioner’s Office (DLSE) handles wage claims. When a former owner-operator files a claim arguing they were really an employee, the DLSE adjudicates it — and applies the ABC test. One successful claim from one driver routinely triggers a company-wide investigation, because if driver A was misclassified, drivers B through Z probably were too.
The EDD audits payroll tax. This is the door that opens most often, and the one carriers underestimate. EDD audits are frequently triggered by something mundane: a former 1099 driver files for unemployment benefits. The EDD sees no wage history, asks why, and pulls the carrier’s entire contractor roster for the past three years.
The Franchise Tax Board and civil courts handle the rest — including PAGA lawsuits, where a single driver can sue on behalf of all “aggrieved employees” and the carrier faces penalties per driver, per pay period.
The pattern in nearly every trucking enforcement case since 2022 is the same: the carrier was not caught by a state inspector at a port. It was reported by one of its own former drivers.
What the Numbers Look Like
Misclassification exposure compounds in ways that surprise carriers used to thinking in per-violation terms. A carrier found to have misclassified ten drivers over three years is typically facing, simultaneously: unpaid payroll taxes with interest, wage-and-hour liability (minimum wage, overtime, meal and rest break premiums), expense reimbursement for fuel and equipment the drivers paid for themselves, statutory penalties under Labor Code 226.8 — which run $5,000 to $15,000 per violation, rising to $25,000 for a “pattern or practice” — and, where willfulness is found, personal liability for owners and officers.
The arithmetic is why settlements in trucking misclassification cases regularly reach seven figures for fleets that never considered themselves large.
The Defense File
Carriers still running owner-operator models in California generally survive scrutiny in one of two ways, and both depend on documentation built before the audit letter arrives.
The first is the two-check structure — leasing the truck from the driver as a genuine equipment transaction while employing the driver on W-2 wages. Auditors look for whether the lease reflects market rates and whether the equipment payment actually varies with the equipment, not the labor.
The second is contracting exclusively with drivers who hold their own operating authority — their own DOT number, their own insurance, their own customers when they choose. This targets the business-to-business exemption, and the file that supports it includes the contractor’s MC authority documentation, certificates of insurance in the contractor’s name, and evidence the contractor markets services beyond your loads.
What does not survive scrutiny: a driver who hauls exclusively for one carrier, under that carrier’s authority, with a truck financed through that carrier, reclassified on paper as an “independent business.” Auditors have seen the costume before.
The insurance dimension of this problem — what happens to your workers’ comp and liability structure when a 1099 driver is retroactively ruled an employee — is covered in our guide to workers’ compensation for truck drivers. For the ABC test itself and the restructuring models carriers are using statewide, see California Commercial Trucking Laws: AB5 and Fleet Liability.