California’s Assembly Bill 5 (AB5) has caused headaches for many owner-operators in the state for the past year. One Southern California-based fleet owner fears AB5’s implementation could harm the livelihoods of California’s older Hispanic trucker population in particular.
FreightWaves reported in October on the growing number of Hispanics in the U.S. trucking industry. With estimates currently around 12% of drivers nationwide, Hispanic representation in the industry is not far behind the ethnic group’s total percentage of the U.S. population, which is currently second behind non-Hispanic whites at 18%.
Sandra Alzate, vice president of Southwest Trucking Group LLC, recently told FreightWaves that complying with AB5 poses a threat to California’s Hispanic drivers, specifically the older drivers who’ve grown accustomed to life on the road as independent truckers.
“In my opinion, the older Hispanics are a little more afraid or don’t exactly know how to go about it,” Alzate said. “They have no resources a lot of times to find out what needs to be done.”
Although a federal judge has issued a preliminary injunction that temporarily blocks enforcement of AB5 against the trucking industry, many veteran Hispanic drivers have leaned on Alzate for advice on complying with the law, she said.
AB5 determines whether a worker is an employee or a contractor. It is the result of a decision by the California Supreme Court, which found that a package and document delivery company had misclassified employed delivery drivers as independent contractors.
AB5 requires California-based companies that use independent contractors to use a three-step “ABC test” in determining whether a worker is a contractor rather than an employee:
- Trucking companies must prove the worker is free from the control and direction of the hirer in connection with performing the work.
- The worker performs work outside the usual course of the hiring entity’s business.
- The worker is normally engaged in an independently established trade, occupation or business of the same nature as the work performed for the hirer.
Many California truckers have established their livelihoods as independent drivers, and in turn, many fleets have relied on their services. As a fleet owner, Alzate said that for many years she has depended on owner-operators to ensure her clients receive top-notch service.
She and her husband founded Southwest Trucking Group in 2003 as owner-operators with a single truck. The company’s fleet, which operates primarily in Southern California, has fluctuated in size over the years, reaching six trucks at one point. Due to California’s burdensome regulatory environment, she added, her fleet currently consists of two trucks.
“In the 17 years that we’ve run Southwest Trucking Group, it’s been getting harder and harder to do business and it’s getting more and more expensive,” Alzate said of running a trucking company in California. “It’s very hard and tedious, a lot of paperwork, and more regulations are involved.”
Despite the harsh market conditions, Alzate considers herself more fortunate than the “one-man-shop” drivers who find themselves struggling to keep up with California’s arduous trucking regulations.
“The California Air Resources Board (CARB) has made these guys upgrade to $200,000 trucks, they’re being told they won’t be able to get work, they have to be incorporated, they have to pay themselves payroll,” Alzate said. “A lot of these truckers just don’t want to deal with it, and they’re not finding work.”
AB5 coupled with all the CARB requirements could realistically result in a trucker shortage, she said.
On a hopeful note, Alzate said that contrary to the situation for aging Hispanic drivers, conditions appear more favorable for the younger generation. She believes AB5 won’t deter younger Hispanics from entering the industry, largely because many are getting behind the wheel with a college diploma in hand.
Census data shows a growing number of truckers under the age of 35 are women, Hispanic and more educated than drivers over age 55. In fact, the number of Hispanic truck drivers between the ages of 25 and 34 comes to more than half the number of their white counterparts.
“I think that younger Hispanics are a little more aware of what they need to do to comply. They’re covering themselves more than older Hispanics are,” Alzate said.
Although many truckers have left the Golden State in anticipation of worsening conditions under AB5, Alzate and her husband have no plans to move their company away from their home in the Los Angeles area.
“If the AB5 advocates would see that it is detrimental to these people and that they’re just one-man shops, … they could carve out an exemption for the true owner-operator, Alzate said. “I think that would be a great compromise.”
Alzate also serves as president of the Western States Trucking Alliance (WSTA), which filed a lawsuit against AB5 in December, days before the law was scheduled to go into effect on Jan. 1. The lawsuit challenged the law’s construction trucking-specific provisions. It states AB5 provides no test whatsoever for motor carriers providing construction-related services. It instead mandates that workers are employees rather than independent contractors.
