The California legislature last week stamped approval on a sweeping legislative package that could dramatically alter the landscape for leased and independent owner-operators in the state, likely leaving such truckers who work in California with tough decisions about the future of their operation.
Leased owner-operators who live in California or operate frequently there could in time be forced to switch carriers. Or they may have to make a decision to transition to being either an employee of a carrier or an independent owner-operator with authority, should they wish to continue working in California.
“There will be a big decline in opportunities for owner-operators in California,” says Joe Rajkovacz, head of government affairs for the Western States Trucking Association. “You’re probably going to see an exit from the marketplace of motor carriers leasing owner-operators,” he says. He noted Swift and Werner have already pulled the plug on contracting with owner-operators in California.
Likewise, speaking earlier this month, California Trucking Association’s Chris Shimoda said the new law, California Assembly Bill 5, “could put legitimate owner-operators out of business.”
A.B. 5 codifies into state law the so-called ABC test for determining whether a worker is an employee or a contractor. The test was validated as appropriate in California last year by the state’s Supreme Court in the case of Dynamex vs. Superior Court.
Most difficult for trucking, the B-prong of the ABC test prevents employers from contracting with workers that perform the same work as the business itself. That effectively means carriers can no longer lease owner-operators and their equipment to haul freight under traditional independent contractor agreements.
California Gov. Gavin Newsom signed the bill Wednesday, and the law will take effect Jan. 1. Beyond trucking, A.B. 5 could impact millions of workers in the state, including drivers for ride-sharers Uber and Lyft, software coders, hair dressers, nurses, construction workers, dog walkers and even exotic dancers, among other workers.
