Iowa governor signs law to protect class of owner-operators

August-September 2020

Keith Goble

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A new rule in place in Iowa is intended to protect the trucking industry’s independent contractor classification for individuals who own their own truck.

The new law signed by Gov. Kim Reynolds defines vehicle owners. Specifically, the change automatically classifies owner-operators as independent contractors who perform services while operating the vehicle.

The Iowa Department of Workforce Development reported that under the old rule there were 894 individuals identified as owner-operators who were classified as employees and not independent contractors.

California’s AB5

Supporters said the drive to change Iowa law was spurred by California’s passage of a worker classification overhaul.

California’s AB5 codifies the state Supreme Court’s establishment of the ABC test, which makes it more difficult for a worker to be considered an independent contractor. In effect since Jan. 1, the law was intended to apply to a variety of industries, including trucking.

The California Trucking Association is challenging the rule in court. In May, OOIDA filed an amicus brief with the U.S. Court of Appeals for the Ninth Circuit in support of the California Trucking Association’s case. Oral arguments are set to begin in September.

Iowa’s SF2296

Iowa state Rep. Gary Worthan, R-Storm Lake, has a family trucking business. He served as the House sponsor of the bill that is now law.

During House floor discussion, Worthan described who SF2296 would cover.

“It will include anyone who owns their own truck … It will also include those who are in a purchase agreement, or a lease-to-purchase agreement, of a truck,” Worthan said.

Critics said the rule change is too broad in its protections.

Rep. Bruce Hunter, D-Des Moines, said there are trucking operations that willfully misclassify employees as independent contractors to avoid responsibility for worker’s compensation and unemployment coverage.

Worthan said characterization of the legislation as exploiting workers shows a complete lack of understanding of the free enterprise system.

“All it does is clear up the definition of an owner-operator in the transportation industry.” LL

Keith Goble

Keith Goble has been covering trucking-related laws since 2000. His daily web reports, radio news and “OOIDA’s State Watch” in Land Line Magazine are the industry’s premier sources for information regarding state legislative affairs.