The California Trucking Association (CTA) is warning that 70,000 independent truck owner-operators are about to be taken off the roads of California..On June 30, the CTA issued a statement in response to the U.S. Supreme Court’s decision at its recent conference to deny cert in CTA v. Bonta, the Association’s case challenging California’s Assembly Bill 5 (AB 5) law..“Gasoline has been poured on the fire that is our ongoing supply chain crisis," the CTA stated..AB5 affects independent contractors throughout California, radically changing 30 years of worker classification and reclassifying millions of employees. It significantly reforms the future of independent workforces in California..“In addition to the direct impact on California’s 70,000 owner-operators who have seven days to cease long-standing independent businesses, the impact of taking tens of thousands of truck drivers off the road will have devastating repercussions on an already fragile supply chain, increasing costs and worsening runaway inflation," the CTA said..The new state law came into effect since Jan. 1, 2020, the AB5 codifies the “ABC” test, which determines whether a worker is an employee as opposed to an independent contractor..The test states for the hiring entity to classify a worker as an independent contractor, it must demonstrate that all the following conditions are satisfied: .The person is free from the control and direction of the hiring entity in the performance of the work.The person performs work that is outside the usual course of the hiring entity’s business.The person is customarily engaged in an independently established trade, occupation, or business of the same nature as that involved in the work performed..Essentially, if independent truck drivers were classified as employees under AB5, they would qualify to receive benefits, such as minimum wage, overtime compensation, paid rest periods, reimbursements, health insurance, and paid sick and family leave. But as independent contractors, these drivers do not receive any of these benefits..In order to be considered an independent contractor, a worker must satisfy all three parts of the test..Certain independent contractors, such as insurance agents, physicians, attorneys, accountants, engineers, and direct sellers were placed under a different test. With few exceptions, the relationship between independent truckers and their carriers, brokers and shippers will be governed by the “ABC” test.."The law does not differentiate leased owner-operators from those who operate under their own authority. All hiring entities will need to satisfy the 'ABC' test," the CTA said..Now, carriers, brokers and even shippers will have to demonstrate their business arrangements satisfy all three parts of the “ABC” test..“We are disappointed the court does not recognize the irrevocable damage eliminating independent truckers will have on interstate commerce and communities across the state. The legislature and Newsom Administration must immediately take action to avoid worsening the supply chain crisis and inflation.”
