AB5 Passage Changes California's Independent Trucking Model

Legislators in the California Senate have approved legislation that, in the opinion of many independent truck drivers, would allow them to get involved in their business, forcing them to close their doors or move to another state. .

The Employees and Independent Contractors Bill, known as the AB5, was passed by the Senate on Sept. 10 by 29 votes to 11, with no specific amendment for owner-operators in the freight sector. The bill, when passed by California Governor Gavin Newsom, is meant to protect workers employed in the so-called economy "gig" economy – as in carpool companies, Uber and Lyft – against the exploitation of certain salary and medical benefits. .

But the bill will also prevent two trucking companies from contracting together, according to the owner-operator representatives, which would place significant responsibilities on companies that contract with owner-operators.

"AB5 could have been changed to address the issues of misclassification of workers, as well as to protect the 70,000 majority-owned truckers currently operating as independent contractors," said Shawn Yadon, CEO of the company. California Trucking Association (CTA). "There is no reason why protecting workers does not include defending the right of tens of thousands of drivers who have built their business according to the independent owner model, invested hundreds of thousands of dollars in their trucks and running their own business for decades. . "

Yadon said the impact of the legislation could mean that tens of thousands of owner truckers who operate in the agriculture, retail and other sectors will be shut down. The implications could also go beyond the misclassification of employers and the supply and demand of drivers, he said.

"Like the rest of the country, California is experiencing a shortage of truckers. This measure will worsen the problem by removing thousands of drivers from the list, as many said they would move to other states or seek a different job together. "

AB5, which was passed at the California Assembly in May, codifies the provisions of the California Supreme Court decision of 2018, Dynamex Operations West Inc. v. The Los Angeles Superior Court, which has established a new classification test of workers.

The decision was notable for its so-called "ABC test", three provisions that, in the court's view, should be used to determine whether a worker is an employee or an independent contractor. This "B" component of this test sets a key in the trucking owner-operator model, as it is interpreted by the industry to mean that a trucking company could not hire an independent owner-operator or a rental driver and consider them a contractor.

The work applauds the decision

The reaction of CTA and other representatives of independent freight companies contrasts with that of the International Brotherhood of Teamsters. The union considers that the passage of the bill is a victory in its struggle to organize the drivers of the port in drayage, which, according to him, are exploited by employers because of a misclassification.

"Misclassification is an attempt to weaken the power of workers, including thousands of truck drivers in California who deserve a living wage and full rights as employees," said Jim Hoffa, General Chairman of the Teamsters.

"With this vote, the California Senate has taken a firm stand with workers who should earn a living wage and enjoy the protection to which they are entitled."

The union said the port truck drivers working at NFI / Cal Cartage in southern California, which had been the union's target for a year, began an "unfair labor practices" strike at the Port of Los Angeles. Angeles. Drivers at the port and the nearby Long Beach port dispute their misclassification as "independent contractors" and exercise their rights as employees, according to the Teamsters.

Keep hope

The Western States Trucking Association (WSTA), which had been fighting with the CTA for a trucking exception, recently dismissed its appeal to the US Court of Appeals for the Ninth Circuit, challenging the Supreme Court's decision of the state in the Dynamex case. Withdrawing from the record, however, will allow a lawsuit filed by the federal government on behalf of the CTA – pending pending the WSTA's appeal – to proceed, according to Joe Rajkovacz, Director of government affairs of the WSTA.

"We were going to appeal an unfavorable decision, but the judge said that he did not see this as a matter of pre-emption," Rajkovacz told FreightWaves. "The CTA case does not have this problem, and the judge has yet to make a decision on it. It would certainly be more beneficial for the industry to ask a federal judge to make a different judgment from that of the judiciary than it did in our case. "

Rajkovacz added that although everything indicates that Newsom would have signed the bill, the WSTA will ask members to contact the governor's office before he is forced to sign it or veto it by 13 October. "It's an ultimate effort," he said, "otherwise, in many ways, it will put an end to the owner-operator model in this state as we know it."