If the California Senate approves the legislation codifying the provisions of the Dynamex decision regarding the classification of independent contract workers – like drivers – it likely won’t have an exemption for the trucking industry.
That’s the conclusion of Joe Rajkovacz, director of governmental affairs & communications for the Western States Trucking Association (WSTA), following comments made last week by the Senate’s top legislator.
“AB 5 is going to pass in this legislative session,” Rajkovacz said in an email to FreightWaves. “What isn’t likely to be dealt with in the few weeks remaining in the legislative session are amendments to protect various industries such as the ‘gig companies’ nor with increasing disappointment for us, trucking.”
AB5 passed the California Assembly in late May. It puts into law the provisions of the Dynamex decision – almost verbatim – that came out of that transportation services company’s decision to convert all its workers en masse from employees to independent contractors.
The Dynamex decision, handed down in early 2018, ruled against Dynamex in the lawsuit that followed the company’s changes. The decision was notable primarily for its so-called “ABC test,” three provisions that the court said should be used to determine if a worker is an employee or an independent contractor.
It is what Rajkovacz calls the “B prong” of that decision – and the legislation modeled after it in AB5 – that concerns the trucking industry. It states a worker can be an independent contractor if that person “performs work that is outside the usual course of the hiring entity’s business.” It is being interpreted by the trucking industry as meaning a trucking company could not hire an independent owner-operator or a driver on lease and consider them a contractor. Since the trucking company is hiring somebody to drive a truck – the hiring company’s primary business – that person should be considered an employee, according to the interpretation of the rule by WSTA and others.
The authors of AB5 made concessions to the fact that such a situation could be complicated. Their acknowledgment of that can be seen in the fact that they added carve-outs to a disparate group of professions that ranges from hairdressers to surgeons. And in an interview with a California public radio station, Senate President Pro Tem Toni Atkins conceded the issue was complex.
“And so I think, as we look at a gig economy, which provides some benefits to people who want to work in a different way – want to take advantage of innovation and just a change in how we work – we want to continue to make sure that those workers have the flexibility, but also have the ability to make a decent living,” Atkins said, according to a transcript of her remarks. “And that is about benefits, workers’ compensation and workers’ rights.”
But her statements gave no indication that those industries’ specific issues would get settled this year. The issue would be discussed “into next year.” Atkins said, “I think at some point, we move forward and we take action on this piece of legislation. And there’s no doubt in my mind that we probably have more work to do going into next year, as we continue to have conversations throughout the state for various professions.”
Rajkovacz expressed pessimism that the issue would be dealt with by the legislature. “What has been telegraphed by leaders in the legislature is that industries not included in current ‘carve outs’ will be addressed next year, if ever,” he said in his email.
Last month, Rajkovacz expressed optimism that discussions with legislative leaders would lead to a carve-out for trucking. “We are actively involved in what is going on behind the scenes,” Rajkovacz said at that time. “From a trucking industry standpoint, what we would like to see is where it is acknowledged that if you’re an independent contractor with your own authority, you are truly an independent contractor.”
That lack of optimism on the future may mean a trip to the court system for WSTA. “For trucking, the best hope lies with litigation to stop the application of the “B” prong,” he said.
Stephen Webster
This had to happen as to many truck drivers ended up in the homeless shelter system. This is costing the taxpayer a lot of money. When leased ops get sick or in a accident. I am one of thousands of drivers who have been cheated. I was hit from behind by a Advanced Auto Parts truck leased from Ryder. I was hit from behind at 60 mph in a snow storm when I stopped for a car blocking the road. I contacted the the the A T A and the C T A and both took the insurance company side I was one of hundreds of leased ops who told my story. We will lobby in other states and in Canada for the same rules California passed. The trucking companies have nobody but themselves to blame. Their actions in Quebec Canada alone cost the tax payers over $30 million dollars over 4 years. I have heard that California had over a hundred million dollars a year in medical and payment to injuried or short changed truck and Uber drivers in 2017. I cost the taxpayer over $30,000 in my case plus medical costs. I have seen many truck drivers I’m shelters when live or spend time there. 5195239586
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Norman
Of course the Trucking Industry (companies) want a “carve out”. I hate California and their crazyass laws and regulations but I heartily agree on this issue. The companies screw drivers over all the time. Come on. 10yrs ago the mileage pay of 0.34 to 0.40 cents per mile driven is still common pay today. O/O and L/P drivers are getting the worst of it. Average pay is 1.00 per mile and with FSC it’s about 1.23 per mile. We don’t get more when the cost of insurances for truck and trailer (which the government wants to increase greatly), health insurance or costs, fuel, wear and tear, plates, registration, inspections, etc. and income allhave to be squeezed from that small amount of money. We are tied to our trucks and loads literally until we are given or have to take time off. We are away from home, family and friends for weeks at a time and we have higher costs because we are not just able to go to a grocery store or restaurant or shopping in many instances and are therefore subjected to paying the high prices at truckstops and our choices are very limited. We are not paid for our time as we should be. We are paid by the mile and if we are delayed at shippers and receivers as often happens we are not paid because the “if the wheels ain’t turnin, you ain’t eranin” so we do not have consistent or steady pay and the cost of fuel and tolls and such are reimbursed only if it’s something we can negotiate otherwise we get an FSC (fuel surcharge) that averages 0.14 to 0.26 cents per mile which is just a minimal fuel cost offset. Do the math. Average 5.5 miles per gallon at an average cost of 3.00 to 3.50 dollars per gallon. That’s a reimbursement of an average of 1.32 per gallon of fuel used, not even half the cost of diesel fuel today. O/O and L/P driver’s are bringing in big money for the companies but getting little in return but being treated like an employee but not receiving the benefits of an actual employee is wrong. And in this isolated situation I agree with California and New York who is also in the process of putting in place protections for contract (1099) drivers. Deregulation in the 70’s screwed over the drivers and gave companies the ability to give low wages and poor working conditions and little to no life outside that truck. It’s inconceivable that only 2 groups of workers in the USA are exempt from being paid minimum wage overtime pay or to even be paid for their actual time. Wait staff is the first group and truck drivers are the second group. It’s time that truckers are paid for every minute they are in that truck or logged into their ELD. How many of you in the general public would work away from home for 3-8 weeks at a time living in a space slightly smaller than a jail cell, not able to leave your truck and go do as you please even when your off duty and only have 10hrs off between shifts for years on end for $300-$1400 (not consistent pay) per week and only get to go home for 2-3 days before doing it again with no health insurance or benefits? There is a reason that these companies are having 2 orientation/new hire classes a week for 49 weeks a year. If it was good pay and good conditions they wouldn’t have 90% to 300% driver turnover in every company. Top 3 careers with the highest divorce rates? In order 1. Doctors 2. Cops 3. Truck drivers. The only thing different is that the first two groups get consistent wages and benefits and are at least able to go home after their shifts. Truck drivers live in that truck and family or personal emergencies are often not something a truck driver can address in much the same way as deployed military personnel. Your a long way from home and it’s not like you can just hop out of a truck and catch a plane or whatnot and you certainly can’t just turn around and drive that truck home without a lot of legal repercussions. But the companies will do their best to fight this on the premise of doing it for the drivers. They’re doing it for themselves because using contractor’s has a lot of financial advantages and with minimal to no responsibility or costs for the companies. I’m a conservative but I believe it’s time for fair wages and treatment for all legally employed individuals.
Jan
Been a contractor for 24 years. You forgot these company’s use lease owner ops as slave labor. Yes
Slave labor always cheating us out of money. Can I list some names buddy oh ya! Will I get my money hell no!
But you can bet if they can w-9 you
You better doubled check that . I got two companies that added extra on me I don’t mean it hits the bank either!
Jimmy Wells
Nobody is forcing you to live in your truck. Get a local job or move to a better state and get one there. OTR trucking is for losers. The megas have made it that way and any Independent Owner Operator running for $1.23/mile gets whatever he deserves….bankruptcy.
Lester
Locsl jobs that pay anything are non existant. Maybe you have some insight on where to get said work. If everyone goes to get those jobs how fast do you anticipate those would pay minimum wage.
Albert Ferguson
“Get a job!” What kind of solution is that to offer? The trucking mob are scum for trying to use the excuse of “authority ” to dump responsibility for paying trucking costs on drivers! NO EXCUSE FOR THAT!
Stephen Webster
Many of these leased ops have been lied to . The taxpayer and non-profit organization and churches end up paying the cost. The large truck ass A T A and Insurance companies. The same thing is happening in Canada. The homeless shelter in Canada has many truck drivers in them.
Lester
I agree I started in 1968 have waited all of thes years for decent return on my investment. They have blowed smoke up my boxers for so many years I thougjt eventually my rates would raise. The ELD finally took out enough capacity that we could get the rates that I felt justified being out there. On 11-18 my rates dropped by 20%. I had planned on driving another 5 years but told myself if the brokers and shippers were not willing to pay for my services they wouldn’t be recieving them. My truck was paid for so it was parked. I’m a hoe but tired of being a cheap hoe.
Evelyn
I think people should pick jobs according to what they choose to do in their life. Also military should be paying for every minute from home at at least minimum wage 24 hours a day. Trucking companies barely make $1.00 per mile and need to pay high everything insurance, fuel, tires he’ll oil changes jumped up over $100.00 per for what reason greed. You want trucks safe but at the rates they get for hauling not possible to keep up with all the hicks in the industry. If people don’t like what they do don’t do it. I don’t do septics don’t want to play in crap but bet that pays good. When does all this stop? Cable bills are $250.00 to watch TV. Get real start with stopping the greed if you don’t there will never be enough.
RCJ
I wonder how this law would impact a 100% independent contractor fleet? That asset-light fleet could contend that they’re primarily in the business of providing logistics’ solutions to shippers, while the independent contractors actually haul the individual loads. This law, if passed, will drive up costs to shippers in CA and not because they’ll be forced to use union drivers but instead because it will remove significant amounts of competition from the CA market.