Employment Solutions, Industry Updates

AB5 Compliance – Comprehensive Resource Guide for Motor Carriers

January 20, 2021

This mega-thread is frequently updated with the last newsrulings and changes related to California Assembly Bill 5 (AB5). For more information on AB5 compliance and how this law impacts motor carriers, check out our blogs: 

UPDATE February 4, 2021 – House Democrats reintroduced the PRO Act

On February 4, 2021 the party put forward the Protecting the Right to Organize Act (PRO Act), a measure designed to promote union organizing and approved by Congress last year.

If adopted into law, the legislation would:

  • Mirror similar but highly controversial California bill, AB5, that likewise forced the reclassification of independent contractors
  • Make California’s ABC Test the measure for Independent Contractors a Federal Law
  • Allow the National Labor Relations Board to levy fines against employers who violate workers’ rights
  • Give employees more power to participate in strikes
  • Weaken so-called right to work laws

While it was passed by House, it still faces a simple majority by the U.S. Senate.

UPDATE January 15, 2021 – ABC Test now applies retroactively

On January 14, 2021, the California Supreme Court ruled that the ABC test can be used retroactively. In April 2018The Dynamex Court determined that anyone who performs work for a business is presumed to be an employee entitled to the protections afforded by the wage orders. According to this new ruling, the ABC provisions can now be used in litigation cases opened before the Dynamex decision was issued. 

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UPDATE November 20, 2020 – CA Appeals Court says ABC test is not preempted by federal law

On November 19, 2020 the California Court of Appeals reversed the earlier trial court decision in People v. Cal Cartage Transportation Express,. The court ruled that the ABC Test is not preempted by federal law. 

“The ABC test does not mandate the use of employees for any business or hiring entity,” the state appeals court said. “Instead, the ABC test is a worker-classification test that states a general and rebuttable presumption that a worker is an employee unless the hiring entity demonstrates certain conditions.” 

Note this case is separate from the federal litigation CTA v. Becerra. This is an ongoing case awaiting the 9th circuits decision to determine the pending injunction. 

UPDATE October 20, 2020 – U.S. Labor Department proposes a new way to classify drivers

The Fair Labor Standards Act has proposed a rule that will evaluate the current classification of Independent Contractors.  

Here’s what the new proposed rule would look like in determining the classification: 

  • Adopts an “economic reality” test to determine a worker’s status as an FLSA employee or an independent contractor. The test considers whether a worker is in business for himself or herself (independent contractor) or is economically dependent on a putative employer for work (employee); 
  • Identifies and explains two “core factors,” specifically the nature and degree of the worker’s control over the work, and the worker’s opportunity for profit or loss based on initiative and/or investment. These factors help determine if a worker is economically dependent on someone else’s business or is in business for himself or herself; 
  • Identifies three other factors that may serve as additional guideposts in the analysis: the amount of skill required for the work, the degree of permanence of the working relationship between the worker and the potential employer and whether the work is part of an integrated unit of production; and 
  • Advises that the actual practice is more relevant than what may be contractually or theoretically possible in determining whether a worker is an employee or an independent contractor 

Note this does not affect the AB5 ruling in California, but will provide further clarification on classification guidelines for Independent Contractors for both Federal and State. 

UPDATE August 10, 2020 – Uber and Lyft must classify drivers in California as employees under AB5

A California judge has granted the state’s request for a preliminary injunction blocking Uber and Lyft from classifying their drivers as independent contractors rather than employees. As Reuters reported, Uber and Lyft had been accused of violating Assembly Bill 5 (AB5), a new state law requiring companies to classify workers as employees if they controlled how workers did their jobs, or the work was part of their normal business. 

For now, trucking remains exempt from Bill AB5, which took effect January 1, 2020.  In early January, the court granted an injunction to halt enforcement of AB5 against motor carriers. On September 1, the Ninth Circuit will listen to oral arguments about whether or not the injunction should remain in effect. 

UPDATE January 16, 2020 – Motor carriers in California are no longer required to enforce AB5, at least temporarily

The preliminary injunction against AB5 was granted. This order will remain in effect until trial or appeal. The date for either of these options is still to be determined. 

On January 13, 2020, Federal District Court Judge Roger Benitez extended the injunction originally ordered on New Year’s Eve. With this temporary restraining order in place, motor carriers operating in California are not mandated by law to enforce the requirements of the ABC Test under AB5 for independent contractors. Timing of a final decision is still unclear, but according to transportation law firm Scopelitis, the TRO is anticipated to be extended for at least 14 days or until the order ruling on the preliminary injunction is filed. 

UPDATE September 18, 2019 – California Governor Gavin Newsom signed Bill AB5 into law

Under AB5, 2 million independent contractors, including truck drivers, may need to be reclassified as employees. The law will go into effect January 1, 2020. 

UPDATE July 10, 2019 – The California Senate Labor Committee passed Bill AB5

This decision expands a groundbreaking California Supreme Court decision last year known as Dynamex, where the CA Supreme Court adopted a new test for classifying workers that presumes workers are employees. Businesses need to prove that a given worker is not an employee but actually an independent contractor (IC). 

The Impact: In California, employers must follow IWC orders and are susceptible to claims for minimum wages, overtime, meal and rest breaks, and wage violations. Contractors do not have these obligations. 

Get AB5 Compliant with TransForce Group

By partnering with TransForce Group, we can help you get compliant with AB5 regulations quickly and eliminate the risk of misclassifying workers – so you can continue to keep your trucks moving without disruption to your customers. 

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