Calif. lawmakers could act on ruling that threatens owner-operators — but it may not be positive

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Competing bills filed in the California state legislature this month aim to address an April ruling by the state’s Supreme Court that has threatened the traditional owner-operator model within the state.

However, one bill would codify the court decision into state law — a likely damaging measure for the owner-operator setup within California. The other bill would do the opposite; it would effectively nullify the California Supreme Court’s ruling and scrap the court’s stringent criteria for determining whether a driver is an employee or an independent contractor.

Both bills were filed in the state’s General Assembly on Dec. 3.

Trucking groups within the state, such as the Western States Trucking Association and the California Trucking Association, favor the bill to nullify the court’s ruling. They argue the decision, which came in the case Dynamex Operations West vs. Superior Court of Los Angeles, threatens the ability of carriers to hire owner-operators, particularly those who lease to carriers and run under the carrier’s operating authority.

In short, the ruling dictates that employers (motor carriers, in the case of trucking) cannot use independent contractors (owner-operators) whose tasks are part of the business’s core functions, meaning a “trucking company can’t contract with an owner-operator,” says Joe Rajkovacz, head of government affairs for the Western States Trucking Association.

Both WSTA and CTA have filed lawsuits challenging the decision, hoping to see a federal court intervene in the short-term and, long-term, the state legislature to alter the state’s laws to ensure that owner-operators and other independent contractors can work in the state. Western States’ lawsuit came before the U.S. District Court of Northern California in November for oral arguments.

Those who support the state’s Supreme Court Decision include labor groups like the Teamsters Union. They hope to see the so-called ABC test established by the court be made state law by the state’s legislature, arguing that many independent contractors in the state are misclassified and should instead be company employees.

Rajkovacz says trucking companies within the state have found somewhat of a work-around, though it’s not an ideal solution. It involves converting owner-operators to true independents by setting them up with their own authority as one-truck motor carriers. Then, fleets are using their brokerage operations, whether previously existing or newly formed, to broker loads to those single-truck carriers.