Nursery school—yes, that long ago—was when I first learned my ABCs. I think most will remember the little song that goes with it, and my entire class would sing it incessantly. To this day, that song can still get stuck in my head from time to time. Today’s preschools may no longer use this method to learn the ABCs, but for prospective truck drivers—particularly independent contractors—the ABCs of a sort likely are top of mind today more than ever.
I’m referring to the incorporation of the ABC test for determining whether a truck driver is an independent contractor or employee and the enactment of California’s Assembly Bill 5 (AB5) that seeks to eliminate any type of misclassification when it comes to this decades-old business practice. The ABC test and its highly controversial “B” prong leaves what has been an extremely successful business practice in a bit of jeopardy. Ever since the U.S. Supreme Court chose at the end of June not to hear the California Trucking Association’s AB5 appeal, our industry has been walking on eggshells to determine the proper way of going about the day-to-day business of delivering freight while waiting for enforcement of this California law to begin.
Obviously, the “B” prong, where the service is outside the company’s usual course of business or workplace, is what is raising serious questions for independent contractors who may have leased onto a carrier. How might their lives change, and what will their businesses look like when enforcement of AB5 begins? Questions abound, but there are few real answers.
See also: Industry solutions for AB5 compliance remain murky
The truckload segment of the industry has a storied history when it comes to independent contractors. Many large truckload carriers started out as independents, with the mentality to grow into one of the successful businesses that operate on our interstates today. Buy a truck, haul some freight, and grow. That mindset is one that has been called into question because of AB5 and will continue to be a barrier to this business practice, especially if laws like AB5 spread elsewhere in the U.S.
This is not beyond the realm of possibility, either. California often leads when it comes to regulations, especially the California Air Resources Board, which continually promulgates rules well ahead of the federal Environmental Protection Agency. While California is just one state, the effect of Sacramento’s rules basically makes them de facto national standards. When it comes to AB5, the Supreme Court declining to review the law brings fresh concern about the trend of California leading and everybody else following.
The assumption is states such as Washington and Oregon will carve out their own regulations, and the Northeast probably wouldn’t be far behind. And this is all taking place smack-dab in the middle of a supply chain crisis and what is certain to be another busy fall in terms of freight. Signs of backlogs are already being seen at California’s ports, which also have been hampered by recent protests against AB5. As holiday freight begins arriving at these ports, the problems will be magnified—and they won’t solve themselves, especially if the large number of independent contractors who service the ports decide that enough is enough and leave the industry altogether, creating an even larger problem by growing the driver shortage that has plagued this country since the start of the COVID-19 pandemic.
See also: With California law, trucking operations face uncertainty
All is not lost, however. Carriers are experimenting to address this issue and to ease freight movement across the country. Obviously, transitioning contractors and classifying them as employees is one step, and creating a two-check system has been a current practice, while others have stopped working with independent contractors based in California entirely. Enforcement of this issue certainly is coming into question as well. This will not be a roadside thing but rather lengthy litigation that is certain to play out with national implications—and a story that everyone will be watching.
We all can agree that AB5 and any related legislation centers around the same premise that has hurt our industry for years—that a few bad apples have misrepresented trucking and the business model that has proven itself time and again. Certainly, the egregious practices of irreputable carriers have placed this business model in a negative light. But peeling the onion on this very issue shows the success story of companies far and wide that have taken up this practice.
The American dream runs strong in this industry, and those who have threatened this principle have shown themselves to be misguided about what this industry is entirely about … opportunity.
David Heller is the senior vice president of safety and government affairs at the Truckload Carriers Association. Heller has worked for TCA since 2005, initially as director of safety, and most recently as the VP of government affairs.
