Truckers and AB5

Update: Federal Judge Roger T. Benitez has temporarily halted enforcement of AB5 when it comes to truckers and other motor carriers. The next hearing for the case is set for mid-January; we’ll keep you posted.

By now you’ve probably heard about Assembly Bill 5 (AB5), also called the “Employees and Independent Contractors Bill.” Rather, you may have heard rumblings of panic emerging from people you know in California — not just truckers, but also writers, drivers, musicians, and translators. The law officially kicks in on January 1, 2020.

Today we’re taking a look at what this law may do to the independent trucking industry in California, how it will affect individuals, and what you can do to learn more about it — or, if you’re inclined, how to change it.

Does AB5 even affect me?

Short answer: yes.

There are over 70,000 independent truckers in California. If you’re one of them, you need to know about this, so keep reading.

What is AB5 supposed to do?

AB5 sets out with good intentions. It wants people who are employed by a company to receive benefits like proper wages, healthcare, and the like. At first glance, it appears to target companies that call employees independent contractors but refuse to make them full-fledged employees. These workers are employees in every sense of the word: they work on assignments at the company’s direction and are required to be on-site during business hours. They just don’t get any of the perks of employment, like health insurance, paid time off, or worker protections.

AB5 was marketed to the public as targeting Lyft and Uber in particular, both of which rely entirely on independently contracted drivers. But they’re hardly the only groups affected. Independent truck owners are going to be hit hard by this well-meaning bill.

What is AB5 actually doing?

The short answer is it’s effectively making independent contracting as we know it illegal.

AB5 is a sort of extension of the Dynamex ruling, which the California Supreme Court handed down in 2018. Independent contractors must now pass a three-point test to make sure they’re actually independent and not misclassified employees. These points are:

1. Is the worker free from the direction and control of the company as they perform their services?
2. Are they performing work outside the usual business of the hiring company?
3. Are they established in their own business or trade, with multiple customers?

It’s #2 that ends up stabbing a knife into the heart of independent contractors. This means an independent owner-operator who owns their truck can’t contract with a freight company because they’re in the same line of work. The freight company would need to hire them on as a full employee and handle payroll, taxes, and all that.

That’s cool…if you want to be an employee.

But what if you don’t?

You may not have a choice.

When boiled down to its bare bones, the law assumes that everyone is an employee and must be granted the rights and protections of an employee. The restrictiveness of the ABC test means that a company can’t engage with independent contractors if they’re in the same line of work. The solution to this, according to lawmakers and other proponents, is for these companies to hire all these independent contractors.

Anyone want to take a bet on the odds of that actually happening?

Yeah, I didn’t think so.

Additionally, the law gives these supposedly misclassified independent contractors the ability to retroactively sue their hiring company for unpaid wages going back four years. Companies are going to look at independent contractors and see potential lawsuits instead of potential workers. They’ll look outside of California for contractors.

The repercussions for this ruling stretch across countless industries and will reach thousands (maybe even millions when all is said and done) of people. Numerous exemptions were carved out for some industries and Dordulian Law Group covers some of them here. As an example, fishermen, veterinarians, and real estate agents are exempt. Journalists and photographers have strange partial exemptions in some cases.

Truckers are not exempt at all.

What does this mean for truckers?

The bill “makes it virtually impossible for two trucking companies to contract together,” writes John Gallagher for Freight Waves. If a trucking company is hiring you to do something involving a truck — whether that’s transporting passengers or freight — you are therefore in the same line of work. You fail prong B of the three-part test and are not considered independent. In the eyes of the state, you are a misclassified employee — and the company you’re contracting with can get into big trouble.

Companies don’t want lawsuits. Rather than paint a giant target on their backs, they’re doing the sensible thing and breaking ranks with California-based independent contractors. Landstar recently sent out a letter to that end informing its California contractors of their options, which include moving out of state and simply not picking up freight in California. New Prime is no longer adding California-based contractors to its roster. Other industries tell the same story, with SF Weekly cutting back on its use of freelancers (including longtime columnists) and other freelance-driven entities like Patch and Rev specifying gigs will not be open to California-based writers.

Those are examples from two industries. There are and will be many more.

How AB5 and Dynamex directly affect you will depend on who you’re contracting for. Some companies may be willing to take the risk. Some are likely not even aware of it, as all the fanfare around the law centered around justice and fair wages for rideshare drivers. Others will likely try to carry on operations as usual and see what happens.

So what can you do, besides leave the state?

Who can you talk to?

Sadly, there isn’t a straight answer out of this issue just yet. You should absolutely contact your representative. Call, email, send a letter or hit them up on social media. Express your concerns about AB5 and Dynamex. Hearing the voices of their constituents — the people this law directly impacts — is the best way for lawmakers to educate themselves and move forward with changes.

There are also groups all over social media that are actively tackling AB5, and you may want to join them to learn more about what others are doing.

From there, it’s unfortunately largely a wait and see game.

(I, the writer, want to stress that employee misclassification is a Bad Thing and should be corrected. But what AB5 and Dynamex have done is taken a chainsaw to a situation that requires a scalpel. By the way, California already had a worker misclassification law in place. Alas, SB 459, we apparently never enforced you.)

Numerous groups have taken an interest in the situation. The California Trucking Association (CTA) has been busy keeping up with Dynamex and AB5, and in November filed a lawsuit against it. Its AB5 FAQ page is frequently updated. The Western States Trucking Association is also a good spot for updated Dynamex and AB5 information. There are also groups on Twitter and Facebook that give truckers a place to vent, discuss plans, and take action.

We’ll be keeping an eye on AB5 as we shift into 2020. For now, keep your eyes and ears open, and drive safe.