California Trucking Employment Lawsuits: AB5, PAGA, Fair Chance Act

California trucking employment lawsuits over the past decade have concentrated on four issues: whether owner-operator drivers are employees or independent contractors under Assembly Bill 5, unpaid wages and missed meal and rest breaks, Private Attorneys General Act penalty claims, and, more recently, hiring practices under the state’s Fair Chance Act. These cases have produced settlements in the tens of millions of dollars, forced carriers to abandon the independent contractor model in the state, and tested how far California labor law reaches into an industry that operates across state lines.

AB5 and Driver Misclassification

The biggest legal fight in California trucking is over classification. AB5, signed in 2019, codified the ABC test from the state Supreme Court’s 2018 Dynamex decision. A worker is presumed to be an employee unless the hiring company shows the worker is free from company control, performs work outside the company’s usual business, and is independently established in that trade.¹ The middle prong is fatal for most trucking arrangements: a driver hauling freight for a trucking company is doing the same work as the company itself.

The California Trucking Association and the Owner-Operator Independent Drivers Association fought the law for years, arguing it was preempted by the Federal Aviation Administration Authorization Act, which bars states from enacting laws “related to a price, route, or service of any motor carrier.” A federal district court blocked enforcement with a preliminary injunction.² The Ninth Circuit reversed in April 2021, calling AB5 a “generally applicable labor law” that does not bind carriers to specific prices, routes, or services.¹ The U.S. Supreme Court declined review on June 30, 2022.³

Follow-up challenges have failed too. On March 15, 2024, District Judge Roger Benitez dismissed a renewed suit from the same trade groups, writing that further challenges were “best suited for the political arena.”⁴ The Ninth Circuit upheld AB5 again on May 16, 2025, finding the law “neither discriminates against interstate commerce nor imposes an excessive burden upon it,”⁵ and in July 2026 denied OOIDA’s request for en banc rehearing.⁶

How Carriers Have Responded, and What Enforcement Looks Like

With the courts closed off, carriers have made structural changes. Many have stopped contracting with owner-operators in California rather than reclassify them and take on employment taxes, benefits, overtime, and workers’ compensation. Some multi-state carriers route independent contractors to loads outside California. Some owner-operators have obtained their own California motor carrier authority to operate as genuinely independent businesses. Others have reportedly been advised to move out of state. Non-compliance carries fines of up to $25,000 per misclassified employee.⁷

The First AB5 Enforcement Action

In October 2025, the California Labor Commissioner’s Bureau of Field Enforcement issued its first AB5 citations against trucking companies, naming Mega Nice Trucking, Ryder Last Mile, and Costco Wholesale. Investigators, working from wage theft complaints filed in July 2024, found that Costco and Ryder Last Mile acted as joint employers with Chula Vista-based Mega Nice Trucking by controlling driver scheduling, uniforms, protocols, and performance monitoring.⁸ The state assessed $868,128 in penalties covering 58 drivers, with $662,978 designated as back pay for minimum wage, overtime, and meal and rest break violations.⁹ All three companies have appealed.

SB 809 and the Construction Trucking Amnesty

The legislature passed SB 809 in 2025. It clarifies that owning a vehicle used for work does not by itself make a driver an independent contractor, and it requires employers to reimburse employee-drivers for vehicle use, upkeep, and depreciation through a check separate from wages. For construction trucking, the law created a narrow amnesty: contractors who reclassified drivers as employees on or before January 1, 2026, and paid all owed wages, benefits, and taxes could avoid civil and statutory penalties for past misclassification, as long as they kept those workers on as employees going forward.¹⁰

Major Misclassification Settlements

Misclassification cases had already produced large recoveries before AB5’s enforcement ramped up:

Swift Transportation, $100 million (2019). About 20,000 drivers alleged they were misclassified and denied overtime, minimum wage, and expense reimbursement. Van Dusen v. Swift Transportation, filed in federal court in Arizona, produced one of the largest trucking employment settlements on record.¹¹
XPO Logistics, roughly $30 million (2021). XPO settled two class actions over port driver misclassification for nearly $30 million. A separate XPO Last Mile case involving close to 4,000 California drivers settled for $5.5 million over missed meal and rest breaks, on top of two earlier settlements totaling $20 million.¹²
STG Logistics, $4.2 million (2024). A February 2023 class action in the Central District of California alleged that STG, the successor to XPO’s logistics operations, misclassified long-haul drivers and failed to pay for waiting time, safety meetings, and business expenses. U.S. District Judge Andre Birotte Jr. granted final approval on June 25, 2024, distributing roughly $7,500 to each of more than 400 drivers. STG also ended its independent contractor owner-operator model in California as part of the deal.¹³
Roadrunner Intermodal, Central Cal Transportation, and Morgan Southern, $9.2 million. About 796 California drivers alleged misclassification that denied them overtime, minimum wage, expense reimbursement, and breaks. The average payout was roughly $7,355 per driver.¹⁴

Port trucking has been an especially active front. Since 2011, port truck drivers have filed more than 1,000 complaints with the California Division of Labor Standards Enforcement over wage theft tied to misclassification. The Labor Commissioner’s Office has issued 448 decisions finding that drivers were collectively owed more than $50 million.¹⁵

Wage and Hour Cases Beyond Classification

Plenty of California trucking suits involve carriers who already treat their drivers as employees but are accused of not paying them correctly.

Off-the-Clock Work and Missed Breaks

A class action filed in August 2025, Padilla v. Sandair Corporation (dba California Freight Sales), alleges the freight company required non-exempt employees to work before and after shifts and during meal breaks without pay. The suit, in San Joaquin County Superior Court, also alleges failures to provide compliant meal and rest periods, reimburse business expenses, and issue accurate wage statements.¹⁶ The case remains pending as of mid-2026.¹⁷

Trainee Wage Claims

CRST Expedited, one of the country’s largest truckload carriers, faced a class action in Massachusetts federal court over its driver training program. In Montoya v. CRST Expedited, thousands of former trainees alleged the company did not pay them for mandatory training hours, paid nothing during initial training and orientation, and deducted tuition, lodging, and fees with 1.5% monthly interest, plus a $6,500 penalty for leaving before ten months.¹⁸ The case settled for $12.5 million, with another $2.5 million set aside for potential sleeper berth claims. A federal court granted final approval in October 2024.¹⁹ A related California federal case, Markson v. CRST, reached its own settlement.²⁰

Overtime Exemption Fights

A separate line of cases asks whether trucking companies can use the federal Motor Carrier Act exemption to deny drivers overtime. In Madero v. McLane Foodservice, drivers are arguing in the Ninth Circuit that those performing local deliveries should not be treated as interstate commerce workers exempt from overtime. The question is when the “interstate journey” ends for a driver who picks up goods that crossed state lines but delivers them locally. As of mid-2026, the case remains pending on appeal after a lower court ruled for the employer.²¹

Where Federal Law Limits California Break Claims

One important boundary: California’s meal and rest break rules no longer apply to most commercial truck drivers on interstate routes. While the Ninth Circuit ruled in Dilts v. Penske Logistics (2014) that the FAAAA does not preempt those rules,²² the Federal Motor Carrier Safety Administration issued a preemption determination in December 2018 concluding that California’s break rules are incompatible with federal hours-of-service regulations for property-carrying commercial motor vehicle drivers and impose an “unreasonable burden on interstate commerce.”²³

The Ninth Circuit affirmed the reach of that determination in Valiente v. Swift Transportation Co. of Arizona (2022), holding it applies to pending lawsuits regardless of when the underlying conduct occurred. Drivers with claims predating 2018 can have them barred retroactively.²⁴ California’s break rules still apply to drivers not subject to the federal hours-of-service rules.

PAGA Claims Against Carriers

California’s Private Attorneys General Act lets individual workers sue on behalf of the state to recover civil penalties for Labor Code violations, and it has been used often against trucking companies. Industry representatives have described PAGA as enabling “serial plaintiffs” who work briefly at a carrier and then file suit, sometimes over minor issues like missing digits on pay stubs. The California Trucking Association said in 2024 that, despite predictions, it was unaware of PAGA being used to target AB5 misclassification.²⁵

A December 2025 appellate decision, Dieves v. Butte Sand Trucking Company, addressed PAGA in trucking. The trial court had dismissed the plaintiff driver’s PAGA claim as “unmanageable” because it would require individual testimony from 75 drivers. The Third District Court of Appeal reversed, citing the California Supreme Court’s 2024 Estrada v. Royalty Carpet Mills decision that trial courts lack inherent authority to strike PAGA claims on manageability grounds. The court also reversed the denial of class certification for meal break claims, holding that when a plaintiff produces time records showing missed meal breaks without premium pay, the burden shifts to the employer to prove the breaks were actually provided.²⁶

Dieves involved pre-reform PAGA rules. Legislation passed in mid-2024 changed several of them: courts can now manage PAGA claims by limiting their scope, plaintiffs must have personally experienced the violations they allege, employers have expanded ability to cure violations after receiving a PAGA notice, and a one-year statute of limitations applies.²⁵

Hiring Practices and the Fair Chance Act

Not every California trucking employment case is about wages. In April 2025, the California Civil Rights Department announced a settlement with CRST Expedited over allegations that it unlawfully rescinded a job offer for a senior leadership role in Southern California based on the applicant’s criminal history. The complaint alleged CRST failed to conduct the individualized assessment required by California’s Fair Chance Act, which prohibits automatic disqualification of applicants based on criminal records. Without admitting liability, CRST agreed to pay $100,000 to the applicant, provide Fair Chance Act training for all hiring personnel, and review its policies for compliance, including a prohibition on considering convictions older than seven years.²⁷

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2
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19
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20
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21
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24
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