This year has been one of many challenges in trucking, but thanks to the fast-acting California Trucking Association (CTA) back in December and January, the fallout from California Assembly Bill 5 (CA AB5) is not one of them. For now, independent truckers are exempt from the legislation that is challenging the gig economy across California.
The Ongoing CA AB5 Court Battles
CA AB5, also known as the “gig economy law,” which went into effect on January 1st, forced the reclassification of freelancers and independent contractors across several industries. While the bill’s purpose was to ensure employment benefits from California’s estimated 400,000 rideshare workers, more than 1.5 million freelancers and contractors — including 70,000 owner-operators — got caught in the crossfire.
Pushback started before the bill became law across several industries. In late December, the CTA filed a preliminary restraining order protecting the status of owner-operators in California. That order was upheld in January, but the fight didn’t stop there. The CTA’s case is set for oral arguments to be heard in early September. The results of that case could fundamentally shift what it means to be an owner-operator or independent trucker, and it could significantly impact how drivers are hired in the the state.
Several other states are also keeping a close eye on the CTA’s challenge of CA AB5, pushing both against and for gig economy laws. The Oklahoma Trucking Association recently expressed their support for the CTA and contributed $5000 toward their legal fight. New Jersey moved forward to enacted similar legislation that reclassifies gig workers despite the challenges in California. And the federal government has even weighed in, with the 7th and 9th Circuit Courts of Appeals sided with the transportation industry, exempting drivers from gig economy laws. However, those courts still struggle when determining just who qualifies as a commercial driver.
Gig Worker Laws and the COVID-19 Response
According to a Harvard Business Review article, the biggest threat to the American economy in the wake of COVID-19 is unemployment, not employee classification. Over 48 million people have filed for unemployment this year and 11.1% of the nation faces lingering unemployment. Many workers are reaching for whatever they can to make money, including gig work.
The federal CARES act, enacted on July 31st, allows freelancers and independent contractors to file for unemployment, and there is talk about extending long-term employment benefits to freelancers. Rideshare services, including Uber and Lyft, are floating ideas for salvaging the California market, including franchise opportunities and contractor benefit programs.
Yet, even with some members of the state legislature fighting to overturn CA AB5 and most of the rest of the country embracing the gig economy, California has held fast to the law. The state’s commitment to keeping the law in places has many owner-operators and independent truckers leaving the state in search of “trucker friendly” markets.
Flexibility is the Solution to CA AB5
Much like the rideshare industry, California-based commercial trucking companies are seeking creative, flexible options to keep moving forward through both COVID-19 and CA AB5. This one-two punch has challenged the way the industry works and threatened the future for carriers who depend upon the flexibility provided by independent trucking companies.
We can’t predict the outcome of the September CTA hearing, but we can offer California-based carriers a CA AB5-proofed, flexible alternative to staffing. F|Staff is the marketplace technology solution for driver leasing that connects carriers and drivers in real time. With F|Staff, your driver is always classified as an employee–they work for us! We do all the screening, background-checking, drug and alcohol testing, and interviewing, so you know you’re getting a highly qualified, professional commercial driver to move your truck. And our drivers are covered–they’re protected with unemployment benefits and can qualify for benefits, including medical, dental, PTO, and more.
Stay Tuned for More about CA AB5
We’re keeping a close eye on the evolving situation around gig workers in California, and we’ll update you on the results of the September hearing as soon as we get the report. Until then, consider giving F|Staff a try. No matter what happens, we’re here to help keep the trucking industry moving forward.