Is AB-5 a win or a loss for truck drivers in California?
California Governor Gavin Newsom has officially signed Assembly Bill-5 into law, which can have a lasting impact on owner-operators throughout the state.
The law sets stricter requirements regarding the classification of employees and is set to take effect on Jan. 1, 2020.
Owner-operators who are currently leased or frequently operate within the state may be faced with significant change. Drivers may have to choose whether they want to switch carriers, become a carrier employee, or become an independent owner-operator with authority, according to Overdrive Magazine.
The law uses a three-part test that helps determine whether an employee is miscategorized as an independent contractor, which is known as the ABC test.
Putting the burden of proof on employers, they have to prove that A) a worker is free from control and direction of the employer B) a worker performs work dissimilar to that of the business and C) a worker does not have independent enterprises of the same nature as the work for the employer.
By far, the most worrisome aspect of the test for carriers is prong-B, as many owner-operators are involved in the trucking industry outside of carriers that they work with. Because owner-operators have full control over what freight they pick up, there is still a case for them to continue being labeled as independent contractors, but that would ultimately require an exemption for the trucking industry.
According to Overdrive Magazine, the California Trucking Association has opposed the bill in its current form, as an exemption for the trucking industry seems unlikely.
“A.B. 5 would put…legitimate owner-operators out of business,” says Chris Shimoda, head of government affairs for CTA, per Overdrive.
Nevertheless, another notable organization in the trucking industry has come out in support of the law. The Owner-Operator Independent Drivers Association believes that the legislation has the ability to help drivers gain more independence.
“Our hope is that this legislation will force motor carriers in California to rethink the way they treat drivers and either hire them as employees or restructure traditional lease agreements to give owner-operators real independence,” the group said in an interview with Overdrive.
Nonetheless, it’s clear that companies as a whole find the law less than ideal. Swift and Werner have already decided to no longer work with owner-operators in California, which could pave the way for more companies to join them as the January inches closer.
If companies continue to pull out of working with owner-operators, the law could be seen as a huge loss for drivers, as many in the industry feel that owner-operators could start going out of business.
On the other hand, companies that continue to work with owner-operators in California can now provide them with an onslaught of benefits. Owner-operators may be able to earn better wages and earn other benefits such as health care, which could be viewed as a net positive.
So what do you think about the legislation? Do you think that it’s fine as is or should an exception be added for owner-operators? Let us know in the comments or on social media!
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