California has passed a law targeted at the ‘gig economy’ which will make it harder for companies to classify their workers as independent contractors instead of employees. While ride-sharing services like Uber and Lyft are at the center of the battle, some owner-operators could end up being collateral damage.
California Governor Gavin Newsom signed Assembly Bill 5 (AB5) into law on September 18th. The law requires companies who use independent contractors in the state to prove that their workers shouldn’t instead be classified as employees. The companies will be put to a three-part test, known as the ABC test. According to a California Supreme Court ruling, in order to classify someone as an independent contractor, the employer must be able to show:
- That the worker is free from control and direction of the hiring entity
- That the worker performs work that is outside of the core business of the hiring entity
- That the worker engages in “an independently established trade, occupation or business.”
According to the Los Angeles Times, the court gave the example that a plumber hired by a store to repair a leak could be an independent contractor, while a seamstress working at home to make dresses for – and using materials and patterns provided by – a clothing company would need to be classified as an employee.
There will almost certainly be lawsuits filed over the law and it’s not yet certain which workers currently classified as independent contractors will be impacted. Still, when the law goes into effect January 1st, 2020, carriers who employ leased owner-operators working in California may be vulnerable to lawsuits.
While most carriers seem to be sitting tight, according to Overdrive, Swift and Werner are already ending agreements with leased owner-operators in California. Other leased drivers may make the decision to start driving under their own operating authority.
Source: truckinginfo, overdrive, latimes, gizmodo, cnet, cnet, overdrive, latimes, californiaemploymentlawreport
David says
You can not tell someone who pays there tax as contractors that they are employees it’s a matter of how much control if you claim no control who can argue that?
Ed says
It the 2nd one in the 3 question test that will be the problem. The owner operator is performing work with in the scope of the carriers core business. That will be a hard hurdle to clear.
Dan says
It is a shame that the foolish and shameful have ruined this state. With visiting California no longer a desire to many. When will the majority actually rise up and take back a once destined place to be? The cart is already pulling the horse and the people are still blind.
james says
Tell the truth and shame the devil…I totally agree.
Gary says
Already getting screwed. Got a message from the company I’m contracted out to call in on Monday to discuss this. Since I live in CA, they’ll most likely ask me to move out of the state or not renew my contract in December.
Trucker 309 says
More Nut Job thinking from California, killing the little man and small business! The US would be better off with out there state government regulations interfering with the way the rest of us do business. Maybe Washington DC could sell it back to Mexico…or build a wall around them! Lol They seem to be a huge drain on the rest of the nation. Think about all the stupid things that have come about in the trucking industry lately, CARB, DEF, Soot filters, abolishing older trucks, smoke laws, trailer skirts, all of it really has little to no impact on improving the environment. But somehow those who push for it get rich off it! While we the working class pay dearly for it. What’s next, no classic style trucks because they’re not aerodynamic enough? CA can go to hell!
Ed says
That seems to a new and growing business model. I they can’t sell enough of their product based on it’s merit, they petition govt to make it mandatory. A similar approach is often used to destroy competition. Level the playing field is the catchphrase for that.
Jaar says
Lease operators are stupid anyway. Paying a company to work for them? You will also find these drivers are the biggest liars ever too.
Carl Brady says
Seems all truck drivers are stupid if they go to California. That said I guess we’re going to see if they can move the freight without owner operators. I agree there will be law suits filed to test their authority to deny a targeted group access. I think they lose but who knows.
james says
A wise man speaks…
Luis Lee says
That remark is stupid. OWNER operators LEASED TO A COMPANY DO NOT PAY TO WORK! I’m not talking about people leasing equipment from a company but actual owners of the equipment leasing it to a company. big difference.
Ron Stewart says
It’s not just talking about someone that leases a truck from a company. It’s talking about anyone that leases a truck ON with a company.
CW says
What I find stupid is your comment. You loser, you like being told what to do and this why you are a company driver. You don’t have enough faith in yourself to step out on your own. I own my truck free and clear, pick and chooses what I pull. I receive 82% of the line haul and they, (my agents) get 18% in exchange for my running under their authority as well as finding top dollar loads.
Joe says
If you pay 18% to your broker you’re a F’ng moron
Jason Holmes says
18 is pretty good considering their authority
Gary says
Just think of all the owner operators running under Landstar‘s authority or Mercer‘s authority or Schneiders authority… They pay 25 to 35% off the top ….
Harris says
Green horn that’s about right now owner operators pay 10 to 12 percent to dispatchers so if you include using their authority then yes it will run about 18 to 20 percent you f…… Company man. Go back to working at Wal-Mart bagging groceries and leave trucking to the real truckers
Brad says
I agree. Being leased on I have 100% control on what I pull then a company loser and have to take what they give you. I’m leased out and love it
Andrey says
I own my truck and trailer not the company I lease on basically use there mc number and they help me find loads is that mean I need to get my own mc and LLC to still use them as dispatch or this law does not apply to me
Brad says
Who are you to judge what lease operators are
Tim says
Jaar yes I overheard a lease operator bragging at a bar, how much money he made. After a few more drinks, he bragged how easy he was able to get an advance every week.
Rodger Harding says
I own my truck and the same rules apply to me if you are leased to a company and you are based in California these rules apply whether you lease their truck or you own your truck
Robert L Dawson says
arguing and bickering over small little things we got bigger things in economy to worry about stuff like this don’t even make sense really so why do this this is the problem with United States they always quick to run and a defense of some other country and still not worried about what’s going on in are own country intention of fixing the serious problems always making up BS and always taking the resources and putting them in the wrong places Oh yeah they wanted the def system on the trucks and look what what’s going on with them not but problems
Les gvt says
Each person has their own reason for being leased on. Rather than having their own authority, bit the state of California is out of control and will end up destroying the rest of the country
Bugs says
Just another reason to stay out of California when will the FEDS wake up and stop this liberal nonsense
Aw says
They’ve already put one company out of business over this. Driver sued company In a class action “won”. Got 26k. Somehow the state of ca got 450k of course the lawyers got 350k. And the other drivers got between 3-10. Depending on time in that fleet …… we see who wins there meanwhile leaving a hundred or so other people out of a good paying job
J.C. Walker says
We can blame the politicians, but, they are put in office by the people. The people don’t realize what they are doing and they will end up cutting their own throats. Oh well, Que Sera Sera.
MrYowler says
We blame the politicians because the people can’t refuse to hire them. If every eligible voter who didn’t vote because they couldn’t find someone worth voting *for*, were counted as a vote to leave the office empty, we’d have lot less politicians – and likely, no President.
In any other job, if all of the candidates are unacceptable, the job stays vacant. Only in politics are we absolutely required to hire *someone*, no matter how terrible. Is it any wonder that this is where you find the terrible candidates?
Tom says
I sure wouldn’t like to be on any of the outbound lanes from California if the feds don’t step in. Seems to me that California might be able to get away with legislating what goes on with intrastate drivers, but if they can make a Nebraska and an Arizona company change their ways, they might be stepping on federal toes.
Rawdog says
If you’re a lease purchase driver you’re just a company driver with owner operator headaches, if you own your truck and your leased to a company you should really either wake up or learn enough about the business you’re in to run it yourself, if you’re giving more than 5-10% then you my friend are a complete fool
Mark Gillespie says
This is the most stupidest bill and one part of California it hurts is taxes so it hurts them the most is California itself for it loses CA business tax and why don’t we all just go on strike for California, they have been against truckers and make so terrible and they should be responsible for all the lease and buyers purchased that will not afford to be able to make there payments now., and California is only going to make more good people homeless since now they can’t work at home.
joe says
Thankfully I dont live in cali nor will I ever take a load there
Michael Blosser says
One main thing these articles fail to point out is that this law only applies if you live in or your truck is registered in California. I am neither so doesn’t apply. 😎
sonny Pruitt says
Blah blah blah every week for the past ten years TR has had an article on the demise of the owner operator and truck drivers in general and it hasn’t happened yet. I see them everywhere I look. They have to make news out of nothing or it would just be called TRUCKERS……everyone calm down and take your blood pressure medicine.
Jay says
I just want to know when all you brain-dead morons who think you’re “operators” are gonna wake up! Maybe you do own the truck yourself. If so, that makes you an “owner” but if the truck is leased to a carrier and their name and D.O.T. number is on YOUR truck THAT COMPANY is the “operator”, not you. You must have and be “operating” under your own authority number. Why do you think it’s called “operating authority” in the first place? Doesn’t matter what state you’re from or working in. Whoever has the number on the door IS the operator.
Samuel Gallezzo says
I hope all you dirty employers burn in hell. You free ride has com to an end.
Samuel Gallezzo says
I hope all you dirty employers burn in hell. Your free ride has come to an end.
Andrew H says
I still think we should have Laredo-grade warehouse complexes at the border of California, deliver the freight or drop trailer there and let their Prius trucks do the rest and leave the rest of the country alone.
Paul says
I live in Ca. and have been a true owner/operator since 1980. I own my truck and trailers, my own authority, and although I have one customer who I get the majority of work from,I also have other customers which seems to be a point that exempts you from this law. And I am not leased to anyone. We must remember this is not about running you out of business…what it is about is raising revenue for the state. As opposed as I am to ANY state regulation, I agree with the gist of this law. It was designed to get rid of the companies that own the truck, own the authority, and direct it’s every move. And pay the drivers with 1099’s. This is b.s.. they pay no payroll taxes, no workers comp, no unemployment taxes, and as a result, it is difficult to compete with these companies…I want them gone too. If this bill had been researched correctly, true owner operators would automatically be exempted…because they truly are independent contractors. But they didn’t. So here we are. I believe a couple lawsuits and it will go away. It interferes with interstate commerce and my right to work. So before we all get nuts, instead of screaming at each other, call your congress person and tell them how it affects you. Good luck!
trokerito says
seriously guys . if you are working under someone’s authority, with all due respect, you are screwing up for company drivers and for 100% independent O/O like myself.
wake up , educate yourself and if you don’t have a good credit , is ok. drive for someone else and when you are ready buy your equipment and work under you own authority. you can do it ! but if you can’t , please do something else and stop f..ing up for the rest of us, please.
ChromeGetsYouHome says
I hear what you’re saying but there are a hell of a lot of ICs who don’t get their truck through the carrier but do run under a carriers operating authority that this law will likely put out of business or force them to move. These are pretty bad choices to be forced into, IMO. I know of plenty of ICs running under someone else’s operating authority who NET over $100k per year because they run their business like a business. This won’t just change things for the guy who just got of of truck driving school, became a trainer at CR England in week 3 and has a truck he put $0 down on and the carrier guarantees the payment.
Mike says
Since everyone hates California stop taking loads there so I can take them.
Candy E says
Who gives the right for the Mayor of California to decide a law like this? What abt the Car haulers that are leasing trucks from the company and are owner operators? Let alone the companies that only have owner operators!! California is getting worse for people trying to make a decent living! If it’s not one thing it’s another!! This law is gonna cause many lawsuits causing more money out of hard working companies and possibly their owner operators.