OOIDA challenges AB5, New Jersey bills
November 22, 2019
Absent any answers from California and New Jersey lawmakers on the reach and impact of their worker classification legislation, OOIDA is challenging California’s Assembly Bill 5 as well as two New Jersey bills.
OOIDA is opposed to any legislation that will negatively impact legitimate owner-operators. The Association said both states have been unable to confirm that the legislation will protect legitimate small-business truckers leased on to a motor carrier.
“We have attempted to get answers, any answers from officials in California regarding their vision and enforcement on AB5. And New Jersey lawmakers are in the same boat. No one has any answers,” OOIDA President and CEO Todd Spencer said. “Absent any sort of direction or credible information, California should not allow AB5 to go into effect in January and New Jersey lawmakers need to rethink their bills.”
Supreme courts in both states have 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.
This past September, California Gov. Gavin Newsom signed into law AB5, which codifies the California Supreme Court’s decision. The law, which is set to go into effect Jan. 1, is not exclusive to the trucking industry.
Opponents in the trucking industry have said that the B factor of the test could spell the end of the leased owner-operator model in the state. Some owner-operators in California have already reported to OOIDA that their motor carriers have said they will either need to sell their trucks and become an employee or relocate to another state.
“Given that AB5 is already law, we are considering legal options to protect the rights of legitimate owner-operators,” Spencer said.
New Jersey bills
The two New Jersey bills were introduced earlier this month.
“It’s apparent with the confusion in California that no state needs to move forward on overly broad legislation targeting independent contractors until lawmakers can articulate what any changes to current law would be,” Spencer said.
OOIDA said the bills raise some serious constitutional questions as they relate to interstate commerce.
“Costly and lengthy litigation is likely a foregone conclusion absent significant changes in the state’s laws and regulations that deal with independent truckers,” OOIDA wrote.
OOIDA’s more than 160,000 members combine for millions of years and billions of miles of trucking experience, the Association wrote.
“Yet, we can’t figure out the full reach and impact of this legislation. We suspect you can’t either, and that alone is reason enough for us to oppose it.”
While the legislation may be intended to prevent employees who are legitimately being misclassified as independent contractors, OOIDA said the law should protect genuine owner-operators.
“Please know that we would make every resource we have available to New Jersey lawmakers and regulators to take a more targeted approach to address misclassification issues,” OOIDA wrote. “We don’t deny that some truckers are misclassified, but broadly condemning the entire independent trucking industry is irresponsible and inappropriate.”