Many involved in freelancing, such as those involved in independent trucking, writing, taxi driving, or home delivery wonder how the enactment of AB-5 will change how they work. Will it infringe on the individual’s liberties and freedoms?

When AB-5 takes effect 1 January 2020, it could change the way those California residents who perform independent trucking and others get compensated. It could change your status from an independent worker to an employee after a certain number of tasks within the same industry as your primary service.

Will corporations and trucking fleets find it more challenging to attract and contract indies to do the same things they have become accustomed to without paying unemployment, health insurance, and other benefits that independent truckers and other service providers always took care of on their own?

Will AB-5 mean the end of independent trucking in California? Can Uber, Lyft, and other independent operators survive under this intense governmental regulation?

The “ABC Test” Application

The three areas under scrutiny by the court are:

• Is the person providing the service controlled or directed by the entity?
• Does the person perform a service that is outside the ordinary course of the hiring entities business?
• Does the person typically provide this trade, occupation, business, or service?

The burden is on the hiring entity to answer these questions, employ the driver, or hire more employees. The primary sticking point is B when the independent trucker provides the service for a trucking company. Much like a writer performing a writing service for a business that usually provides a writing service, so is a driver who drives for a company that typically hires drivers as employees. Therefore, it will be problematic to offer driving services to companies that generally hire drivers.

Critical Answers to AB-5 as These Apply to Independent Trucking

The ruling by CA courts makes it very difficult to remain an independent trucker and work for trucking companies in CA. Although it could benefit some truckers, it will severely hamper their independent status.

Some drivers might have to look at other options. Establishing a Limited Liability Corporation (LLC) could help. It might be feasible for some to establish residency in another state to continue to maintain an independent status or work more independent trucking jobs only in other states, while others might like some of the benefits of being an employee. However, this will likely not be an attraction for many independent trucking contractors.

Drivers and others who fall under AB-5 might wish to consult with a business lawyer to determine their best course of action.

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References:

The 2019 CA Commercial Driver Handbook.pdf

The Fstaff.com article, CA AB5 And Independent Truckers