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Would AB 5 prevent truckers from being independent contractors?

When Assembly Bill 5 was signed into law in September, it codified the California Supreme Court’s decision in Dynamex Operations West v. Superior Court of Los Angeles County. That decision made it much more difficult to classify workers as independent contractors rather than employees.

Under Dynamex, the court announced a new, three-part test for whether a worker is a contractor and presumes that most workers are employees. To support a classification as a contractor, an employer would have to demonstrate these three things:

  • That the worker is contractually and factually free from the control and direction of the hiring entity in regard to the performance of the work
  • That the work performed is outside the usual course of the hiring entity’s business
  • That the worker is customarily engaged in an independently established occupation of the same nature of the work being performed

While Dynamex only applied to certain situations, AB 5 would extend its reach to employees generally. AB 5 does exempt some occupations, such as physicians and real estate agents, but it does not exempt people working in the “gig economy.”

It also doesn’t exempt truckers, some of whom routinely work as independent contractors. The California Trucking Association has filed suit against the law, arguing that it violates federal standards for employee classification and interferes with truckers’ rights to work independently.

“Independent truckers are typically experienced drivers who have previously worked as employees and have, by choice, struck out on their own. We should not deprive them of that choice,” said a spokesperson for the association.

Law targets the ‘gig economy’

AB 5 may make it harder to work as an independent trucker, but its main target was companies who rely on independent contractors to perform work that seems core to their businesses. This includes “gig economy” companies like Lyft, Uber and Door Dash. Those three companies have initiated a ballot measure that would preserve their ability to classify their workers as contractors, and they have pledged a combined $90 million to support that effort.

Gig economy work is controversial because contractors are not entitled to many of the job protections guaranteed for employees. For example, they are not entitled to have their employer pay half of their payroll taxes or provide basics like unemployment, disability and workers’ compensation insurance.

In an ideal world, people could make whatever working arrangements best suited them personally. But many people can’t afford to live on what they make in the gig economy, even when they work full time or longer. SB 5 could ensure that these workers receive the work-based benefits required by law for employees.