I found myself a 3rd party to lease a truck from, I am located in Southern California, I'm in the process of getting my own authority but the insurance is a killer! I am Not interested in driving clear across the country for an orientation. I am experienced in reefer and van. I need something ASAP....Please help!....I know "Chinatown" can work some magic and point me in the right direction and I am praying for it!
I am looking for a good company to lease on to..."Chinatown" need your help!
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I lived in CA and bought my new used truck one month before AB5 was announced. My current carrier gave me 3 options. Option#1 Get my CDL out of California to any other state. #2 stay in California and cannot take any loads originated from CA. I can deliver to CA but have to Deadhead out. #3 End my lease with my carrier.
Having your own authority does not mean you can avoid AB5. According to many law firm's interpretations, AB5 does not differentiate between leased on or own authority. You are still a contractor and therefore not legal.
I am left with 2 choice, return the truck and file for bankruptcy or move out of state. I just moved a week ago.
I just went through this with California ab5 because I had contractors from California. They are now all employees with the same latitudes given to them as they had as contractors.
Here is what I have learned, I will pass it onto you guys and you can ask your lawyers about it, so don’t take this as legal advice but just pointing you guys in the right direction.
As an independent owner, not one affiliated with a fleet but single truck, the law has stated that you are not covered by ab5 if you are an employee.
The leasing to a carrier can be done only as a company entity, much like what fedex did back in 2010 forcing a large number independent contractors to form a Corp to cover FedEx butt.
This shifts the burden now on those companies, not the carrier being leased to.
In order for you as an independent owner and as a driver to operate based in California you now have to be an employee of your company.
Ab5 is about the relationship between an independent contractor and a company, not about the relationship of a company and a carrier. It was created to address allege abuse that the courts said were created by the misuse of the 1099 form of employment. My opinion and those of many lawyers, it was improperly done but nevertheless created and impacts only a small amount of people in California.
Two other things to add, leasing and authority.
Both are covered under ab5 only if the leasee is not an employee. Ab5 as it amended California labor code was clear it wasn’t to impact leases of contracting services, or other services if there are employees doing the work again assuming that the lease is between a company and either a company or an individual. It gets complicated because the fact that California loves to create all the exemptions for special people and it is full of them - trucking isn’t specific, but construction transportation is.
Authorities are treated the same way. You as an independent owner who has their own authority has to have that authority owned by a company and you are an employee of that company.
Again this is being posted to guide you all in the right direction. I had to deal with this first hand to ensure those who drive for me are taken care of.
" In order for you as an independent owner and as a driver to operate based in California you now have to be an employee of your company. "
All owner operators are employee of their own company regardless of llc, corp, sole proprietary etc... We pay employment tax, social security tax, etc on our income.
But i guess the FedEx model is the tried and true model of leasing independent contractors. They only lease on Corps, LLC and drivers for these subcontracted companies must have W2, workers comp, and taxes with held.Last edited: Dec 31, 2019
Speed_Drums Thanks this.
This is the rub
fedex changed the way they formed their relationship between the contractors and fedex. The contractor can still hire sub-contractors but the contractor is the person named directly on the contract. Fedex changed this to insulate themselves from other issues.Lonesome Thanks this.
Someone who is leased onto a motor carrier. He is not the owner of the motor carrier. He typically signs a contract with the motor carrier. Another name for these drivers is owner operators. Some of them own a truck, some are buying a truck, and others are renting/leasing a truck.
Independent owner operator:
Someone who is both an owner operator and the owner of the motor carrier. He can either label himself as an owner operator or an employee. As the owner of the motor carrier, he can hire employees and bring in independent contractors to his company.
In the case of CA, an independent owner operator can continue to do business, but he will probably have to label himself as an employee. This will just mean extra paperwork as he would be forced to separate himself from the company. So no more sole proprietorships where both the finances of the company and the owner are combined. Maybe there’s a section in the CA law where independent owner operators are exempt, meaning, that there’s only one person in the company; no employees.
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