California bill won’t create ‘doomsday’ scenario, OOIDA says

Some trucking groups claim California’s recent bill to change the way workers are classified will be the death of the owner-operator model in the state. Leaders of the Owner-Operator Independent Drivers Association say that isn’t the case.

The state senate on Sept. 11, approved Assembly Bill 5, which codifies the California Supreme Court’s decision in the controversial Dynamex case. The bill, which isn’t exclusive to trucking, now awaits the signature of Gov. Gavin Newsom.

“There have been people predicting doom on the horizon pretty much the entire time I’ve been involved in trucking, which is a really long time now,” OOIDA President and CEO Todd Spencer told Land Line Now’s Mark Reddig on Monday, Sept. 16. “Realistically, that’s just not the case. It just means that business will be done in a different way.”

How it started

In 2018, the California Supreme Court’s Dynamex decision established the ABC test, which considers all workers to be employees unless the hiring business demonstrates that all of the factors are established:

A. That the worker is free from the control and direction of the hirer in connection with the performance of the work, both under the contract for the performance of the work and in fact.

B. That the worker performs work that is outside the usual course of the hiring entity’s business.

C. That the worker is customarily engaged in an independently established trade, occupation, or business of the same nature as that involved in the work performed.

Spencer said that in the past it was not uncommon for owner-operators leased to a carrier to be employees of that carrier.

“It was common. Before deregulation, that’s how it worked,” Spencer said. “And while it’s not common today, I do know these relationships exist.

“Will things be done a little differently if (the California bill) is actually implemented? Sure, but it just simply means that some things will change. There will always be owner-operator truckers, simply because they will generally always be the most efficient way to move goods from point A to point B. And there will always be niches for them. The ‘doomsdayers’ can have their day, but that won’t be how it will end up.”

 ‘Rigged’

The California bill was introduced by Assemblywoman Lorena Gonzalez, D-San Diego. In trucking, specifically, California motor carriers have been accused of misclassifying drivers for years. The issue entered the spotlight in 2017 when USA Today published a four-part investigative report titled “Rigged” about how truck drivers are treated on the California ports. The series included claims that truckers were bringing home as little as 67 cents per week in bad lease-purchase agreements and that trucking companies were forcing drivers to work against their will – up to 20 hours a day – by threatening to take their trucks and keep the money paid toward buying them.

“We used to have members who worked the ports in L.A. and Long Beach, but we’ve had none for a long, long time simply because carriers who worked those areas were the best – or the worst depending on your perspective – at basically fleecing truckers,” Spencer said. “They were creating relationships where the only real beneficiary would be the carrier.

“Things have a way of reaching out and grabbing a lot of us if you let these injustices go on too long, and that happened in California. We are going to have defenders of the status quo saying ‘Oh my God, this terrible.’ But this is kind of a natural blowback from policies that have been going on way too long that are really nothing more than injustices. We’re going to start moving in the other direction. We’ll see how this stuff shakes out.”

Court battle looms

Mike Matousek, OOIDA’s manager of government affairs, said many industries are likely to take this issue to court.

“We’ve heard the fear mongering, and a lot of people are trying to predict what’s next in trucking,” Matousek said. “What we generally know is that there are going to be some sort of changes and those changes don’t have to be bad. These changes could be very good for owner-operators, for employee drivers, and for all drivers for that matter.

“It will be interesting to see how carriers in California will react to this. There will be some sort of change, but I think it’s way too early to say that it will be the end of the owner-operator model as we know it in California. This will play out in the courts for years to come. We will be following it, and we will have the opportunity to weigh in at court if we want to, and we certainly reserve that right.”

OOIDA also addressed the issue in a letter to its California members.

“In trucking, the concern is that it might be difficult for many owner-operators and motor carriers to comply with (the B prong) requirement,” OOIDA wrote. “At this time, we think that’s a premature assumption. However, should this new law negatively impact legitimate independent owner-operators, rest assured OOIDA will challenge it in every way possible.”

Gov. Newsom hadn’t signed the bill as of Sept. 17, but he previously pledged his support.