In an effort to protect the rights of contract workers, California has passed some of the most restrictive legislation in the country, and it could fundamentally change how you do business. If you rely on owner/operators to move your freight, California Assembly Bill 5 (CA AB5) is about to impact your ability to secure drivers.
What is CA-AB-5, and How Does it Affect the Transportation Industry?
CA AB5, which goes into effect on January 1, 2020, clarifies the existing A-B-C test to determine if a worker is an employee, and thus eligible for mandatory benefits, including unemployment insurance, minimum wage, and other protections. Under CA AB5, any worker for hire is considered an employee unless they:
- Are free from the control and direction of the hiring entity in connection with the performance of the work,
- Perform work that is outside the usual course of the hiring entity’s business, and
- Are customarily engaged in an independently established trade, occupation, or business.
While many professions are exempted under provision C above, independent truckers are not explicitly defined in the bill as an established trade. That means you could be on the hook for an expensive set of benefits for — and management of — a much larger workforce than you were anticipating.
Can I Keep Hiring Owner/Operators?
The trucking industry has relied upon the flexibility and dependability of owner/operators for decades. For California based companies, that’s about to change. Ahead of the bill’s passing, the California Trucking Association stated that CA AB5 would “put tens of thousands of owner/operator truckers, who service agriculture, retail, and other industry sectors, out of business.”
Unfortunately, it’s hard to prove that independent truckers are free from your control or direction, or that they perform work that is outside your normal course of business. Hiring them to drive your freight in their trucks could be problematic for your business, resulting in steep fines and high administrative costs.
Why Aren’t Independent Truckers Classified as an Independent Trade?
At its roots, CA AB5 is in response to ride-share and gig-economy apps, including Uber, Lyft, and DoorDash, and their lack of basic worker protections. However, independent workers in several industries, including real estate, cosmetology, medicine, and more are exempt from the law. So, why not independent truckers?
While it’s true that the truckers you’ve relied upon for years aren’t part of the technology-driven gig economy, independent drivers have filed a significant number of wage theft and misclassification claims in the state of California. In response, the Teamster’s Union has expressed support for the bill’s passage.
In a September press release, Jim Hoffa, the Teamsters General President, stated, “Misclassification is an attempt to weaken the power of workers, including the thousands of truck drivers in California who deserve a living wage and full rights as employees. With this vote, the California Senate has taken a strong stand with workers who should earn a living wage and have the protections to which they are entitled.”
While the bill may seem problematic, in many ways, it can protect your company from such lawsuits as much as it protects worker’s rights.
How Can I Keep My Business Moving?
The good news is that there is a solution available right now, and it comes in the form of a marketplace app.
F|Staff provides a ready-made workforce of pre-screened, DOT verified, drug-tested, and, most importantly, W2-employed drivers who are ready to move your freight on a moment’s notice. Because F|Staff workers are on the F|Staff payroll, their unemployment insurance, benefits, and minimum wage protections are already in place. F|Staff is your instant workforce – all you need to do is add trucks – and security drivers through F|Staff keeps you compliant under the new law.
Additionally, since all of the vetting and pre-qualification process is done for you, F|Staff can be even faster and more effective than finding owner/operators to haul your freight. Transportation Supervisor for FirstFleet, Inc., Heidi Tahquechi says, “[F|Staff] is simple and easy to use, and I always get real-time responses for my driver requests. No more wondering if I will have the drivers I need to get our loads covered. This has been a long time coming to the industry.”
Getting started with F|Staff is easy. Just fill out a simple web form, and a representative will contact you to walk you through the onboarding process. From there, you can use the app to post every job you have for free. You only pay for the driver’s time after the job is complete, and you never have to send a paycheck to an F|Staff driver – all the employee management load is handled for you.
Get started with F|Staff today, and you’ll have a flexible, compliant driver solution ready to go before CA AB5 goes into effect.