Transporters, independent contractors oppose AB 5
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Trade organizations representing motor carriers and independent owner-operators say they are strongly opposed to a new California law that seeks to reclassify large numbers of independent contractors as company employees, according to new documents filed at the meeting. ‘a recent challenge to the law by an appeals court.
The law, widely known by its legislative designation, Assembly Bill 5, or AB 5, passes a new “ABC test” to determine whether a worker should be treated as an employee for the purposes of California labor laws. The problem is that the test “effectively prohibits motor carriers from using independent contract drivers,” according to the 2018 lawsuit filed by the California Trucking Association, which reached the 9th U.S. Court of Appeals.
“The law therefore makes illegal a key feature of the California trucking market,” CTA said in its appeal filed last month requesting a bench hearing, or full tribunal, before the 9th Circuit. CTA’s request for a new full court hearing came after a panel of three judges on April 28 rejected a preliminary injunction from a lower court that had halted enforcement.
The three-part ABC test states that a worker is considered an independent contractor to whom a salary order does not apply only if the hiring agency establishes:
- A: That the worker is free from the control and direction of the tenant in the performance of the work, both under the contract for the performance of that work and in fact.
- B: That the worker performs work that is outside the ordinary course of business of the hiring entity.
- VS : That the worker usually exercises an independently established trade, occupation or business similar to the work performed for the entity that hires him.
Earlier this month, three professional trucking organizations filed amicus curiae, or âfriend of the courtâ briefs in support of CTA’s appeal. They included the American Trucking Associations, the Owner-Operator Independent Drivers Association, and the Western States Trucking Association. Amicus files are filed by groups interested in the outcome of the dispute, but are not real litigants in a legal battle.
The three associations agreed that the independent contractor model is essential for the trucking industry, and also argued that the industry should be excluded by the federal government from the AB 5 law because it interferes with âtariffsâ. , routes or services âof carriers.
âThe independent owner-operator model has a number of efficiency-enhancing virtues for the trucking industry (and, by extension, the supply chain),â wrote ATA.
“And from an owner-operator perspective, the independent entrepreneur model offers an entrepreneurial alternative to driving as an employee of a road haulier – an opportunity to start an independent business starting with relatively investment. modest in a unit of power, âsaid ATA. “[Itâs] it is therefore not surprising that owner-operators represent a substantial portion of the driver population.
âAB 5 would eliminate a long-established business model in which hundreds of thousands of independent entrepreneurs have invested their blood, sweat and treasure to start their own businesses and be their own bosses,â OOIDA wrote. “Complying with AB 5 will force both California motor carriers and those across the country who now serve the California market to either choose to adopt a new business model – forcing them to end their contracts with owners.” -operators, to incur increased hiring costs. employed drivers and pay the costs of purchasing, maintaining, and insuring trucks for their use – or to stop hauling goods in California. “
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Calling AB 5 “an all-or-nothing law,” the Western States Trucking Association wrote that according to the ABC test, independent companies will “be deemed to be employees of each other, rather than the independent contractors that they really are.” .
âIn the modern on-demand economy, when a trucking company wins a contract for trucking services that exceeds its available supply of trucks and salaried drivers, it doesn’t have time to go out and buy more. new trucks and to hire and train new drivers, âWSTA wrote. Customers want – demand – that the cargo be delivered immediately. Indeed, one of the keys to winning tenders for trucking services is the ability of the trucking company to complete the job reliably and quickly.
âToday, many hauliers have been founded by people who first gained considerable experience and success as independent owner-operators,â OOIDA wrote. âThe independent owner-operator model is one of the few professional avenues for creating safe and financially stable hauliers.
At the time of writing, the 29 judges of the 9th Circuit had not decided to hear the case again.
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