Recently enacted California trucking labor laws may force owner-operators to flee the Golden State.
Gov. Gavin Newsom signed controversial Assembly Bill 5 (AB5) into law in September; it was intended to reduce the number of workers classified as â€śindependent contractorsâ€ť and put them on payrolls where state and federal income taxes would be automatically deducted. The move was also reportedly designed to increase the number of unionized workers.
The language used to reclassify what constitutes someone working for themselves seems to have targeted controversial Lyft and Uber drivers, among others. This class of drivers usually uses a personal vehicle to earn wages and remains responsible for paying their own taxes. Although CDL professionals may not have been the focus, AB5 has effectively become one of the new California trucking laws that threaten drivers who own and operate rigs. That may be due to the laser-focus of the stateâ€™s Assemblywoman who crafted the legislation and appeared determined to transition independent workers onto payrolls.
â€śBy applying a strict test to determine who is an independent contractor and making employment status a default under the law, working Californians who have been kept off payroll as employees will gain access to basic labor rights for the first time, including rights to minimum wage, overtime, unemployment insurance, workersâ€™ compensation, paid sick days, paid family leave, workplace protections against harassment and retaliation, and the right to form or join a union,â€ť San Diego Assemblywoman Lorena Gonzalez reportedly said. â€śSome of the many workers who will benefit include janitorial workers, construction workers, port truck drivers, home health aides, hotel and hospitality workers, delivery, and ride-hail drivers.â€ť
During the legislative process, Teamster Joint Councils 7 and 42 participated in the lobbying process. Swelling union member ranks was certainly in their best interest, and those who are improperly classified as independent contractors could be integrated into union shops. Despite owner-operatorsâ€™ push to maintain their status, the new California truck labor laws steamrolled them.
The new trucking labor laws were scheduled to take effect Jan. 1, 2020, until the California Trucking Association (CTA) and a pair of owner-operators reportedly interceded. On Nov. 12, the CTA and truckers filed a federal lawsuit in the U.S. District Court of the Southern District of California. The lawsuit contends that reclassifying independent tractor-trailer operators under the California trucking laws threatens the livelihood of upwards of 70,000 CDL holders.
â€śAs a practical matter, for a motor carrier to comply with the Labor Code and Wage Order No. 9â€”which include detailed requirements governing hours and days of work, minimum wages, reporting-time pay, meal periods, rest periods, uniforms and equipment, recordkeeping, itemized wage statements, reimbursement, and other mattersâ€”the motor carrier must exercise significant control over each driverâ€™s route and working conditions,â€ť the CTA lawsuit reportedly states. â€śIt would be impracticable if not impossible for CTAâ€™s motor-carrier members to continue using the owner-operator modelâ€¦ Therefore, to avoid violating the Labor Code and Wage Order No. 9 under the new ABC test, motor carriers operating in California, including CTAâ€™s members, will be forced to discontinue using the owner-operator model and instead use only employees to provide trucking services to their customers.â€ť
The federal lawsuit attempts to prevent the California trucking laws from taking effect on New Yearâ€™s Day. The ideal outcome would be to force the state assembly to rewrite the trucking labor laws in a fashion that accurately identifies privately-owned rig drivers and secures their right to work on their own terms.
â€śIndependent truckers are typically experienced drivers who have previously worked as employees and have, by choice, struck out on their own,â€ť CTA CEO Shawn Yadon reportedly said. â€śWe should not deprive them of that choice. We can protect workers from misclassification without infringing upon independent truckersâ€™ right to make a living in California.â€ť
National freight-hauling outfits are taking proactive measures, and a driver purge may already be occurring in California. Landstar System, based out of Jacksonville, Florida, recently sent out information to the owner-operators and business capacity owners (BCO) it works with in California. The letters and communications explain that Landstar would be unable to continue its relationship with owner-operators once AB5 took effect.
â€śDue to the uncertain legal environment created by the new law, Landstar will be reaching out to each BCO and operator who has a California-based address on file with Landstar to discuss some options relating to the potential impact of the new law,â€ť the letter reportedly states. â€śIt will be up to each interested California-based BCO or operator to make its own informed business decisions with respect to how it wishes to react to AB5.â€ť
Landstar has indicated that CDL professionals would need to relocate, establish residency, and secure a license and registration in another state to continue contractual work. Independent drivers have already indicated they plan to move out of state due to the impending California trucking laws. The threat of owner-operators having their ability to support their families disrupted is not worth the risk of remaining in the Golden State.
Contact Southwest Truck Driver Training, Inc.
If you are interested in getting your commercial driverâ€™s license (CDL), learning how to drive a big rig and keep abreast of laws that could impact your livelihood,Â contact Southwest Truck Driver Training.Â Weâ€™re here to help you drive your future.