The California Trucking Association (CTA) filed a lawsuit (PDF) on Tuesday to challenge a new labor law in the state aimed at providing gig-economy workers, such as Uber drivers, with wage and benefit protections. The CTA, however, says the new law is a death knell for independent truckers and owner-operators in California.
— CA Trucking Assoc. (@Caltrux) September 3, 2019
Assembly Bill 5 (AB 5) was passed by the California Legislature and signed into law on Sept. 11, 2019, by Governor Gavin Newsom. Labor unions and many independent workers in the gig economy have celebrated the bill, as it reclassifies up to 1 million workers across California as company employees rather than independent contractors. The move makes Uber and Lyft drivers, for example, eligible for a raft of benefits and pay guarantees, as well as union membership. The bill seeks to codify ABC tests that define a worker’s status as an employee or an independent contractor.
The boon for Uber drivers has a dark side, however. Freelance workers in a whole range of fields may be passed over for competitors in neighboring states or further afield, while independent Californian truckers who have made massive investments in their own low-emission trucks may no longer be able to work as independent contractors, with many likely being forced to sell their trucks and seek work as employees.
In a statement, the CTA’s CEO Shawn Yadon said that “AB 5 threatens the livelihood of more than 70,000 independent truckers. The bill wrongfully restricts their ability to provide services as owner-operators and, therefore, runs afoul of federal law.”
“Independent truckers are typically experienced drivers who have previously worked as employees and have, by choice, struck out on their own. We should not deprive them of that choice. Some of the country’s most successful trucking companies were started by entrepreneurial independent truckers,” Yadon said. “We can protect workers from misclassification without infringing upon independent truckers’ right to make a living in California.”
For single parents like Quang Nguyen, being an #independent owner-operator provides more than a paycheck. It gives him the freedom to provide for his daughters w/o sacrificing quality time. Help protect the #independentcontractor model #CALeg pic.twitter.com/njJknrn5kv
— CA Trucking Assoc. (@Caltrux) April 1, 2019
San Diego’s Democratic Assemblywoman Lorena Gonzalez said that she expected companies involved to fight the legislation. “We expect big corporate interests—especially those who have misclassified their workers for years—to take this fight back to the place they know they can delay justice for workers: the courts.”
While her office maintains that this is the first lawsuit filed in an attempt to halt the new law, DoorDash, Lyft and Uber have threatened to spend big in order to fight the legislation, including the implementation of a ballot measure in 2020 if they fail to negotiate separate rules for their drivers. Uber has stated that the company will continue to regard drivers as independent contractors, and that it will defend its position in court if necessary.
For truck drivers, the legislation could force owner-operators to abandon investments of up to $150,000 in clean-air trucks.
The law would also affect freelance writers and software technicians, as well as workers in construction and healthcare. Ride-sharing programs have received the most press, however, as they typically pay their drivers per ride and without providing either paid leave or health insurance.
In a 2018 ruling regarding workers at delivery company Dynamex, the Supreme Court of California decided that a three-point or ‘ABC’ test must be used to classify workers. In order for a company to describe a worker as a ‘contractor,’ the worker should be free of the control of the company, carrying out work “outside the usual course of the hiring entity’s business,” and the work should be part of the worker’s independent profession.
In a study carried out by the Labor Center at the University of California, Berkeley, it was found that the ABC test will apply to almost two-thirds of workers currently active as independent contractors, which will include janitors, cleaners, truck and taxi drivers, retail and childcare workers.
Our new brief finds that the *vast majority* of independent contractors will be covered under the ABC test, codified by #AB5, CA’s law that strengthens criteria for worker classification. It’s the 1st-EVER analysis of which workers will & won’t be covered. https://t.co/w4vKMYd4a0 pic.twitter.com/GoK6lmnbmg
— Berkeley Labor Center (@UCBLaborCenter) November 12, 2019
Meanwhile, the study asserts that the ABC test will apply to a further 27 percent of workers, except when strict criteria are met.
The test would not apply to higher-paid positions such as real estate agents, doctors or lawyers.