Trucking Companies Move to Cut Ties With Independent California Drivers As Labor Law Looms

 

FreightWaves --- Starting January 1, 2020, the Employee and Independent Contractors law, AB5, goes into effect. AB5 is a state law determining whether a worker is an employee or contractor.

AB5 stems from the California Supreme Court’s decision against Dynamex Operations West Inc., a package and document delivery company. The court found that Dynamex misclassified its delivery drivers as independent contractors rather than employees and that all California-based companies that use independent contractors must use the “ABC test,” a three-pronged test to determine whether a worker is an employee.

Landstar System of Jacksonville, Florida, is one of the large carriers that recently sent out a letter or contacted its business capacity owners (BCOs) or leased owner-operators based in California, outlining their options regarding AB5.

According to the Landstar letter sent out November 4, its leased owner-operators can move out of state and provide the company with proof of a new driver’s license, get their own authority, or deliver a load into California, but they can’t pick up a load in the state.

Trucking companies must prove a worker is free from the control and direction of the hirer in connection with the performance of the work; the worker performs work that is outside the usual course of the hiring entity’s business; and the worker is customarily engaged in an independently established trade, occupation or business of the same nature as the work performed for the hiring entity.

AB5 is affecting carriers of all sizes, including Landstar, said Joe Rajkovacz, head of government affairs for the Western States Trucking Association (WSTA).