Is the AB5 Bill Enforceable?

In September, California Gov. Gavin Newsom signed California Assembly Bill 5 (AB5) into law. Although AB 5 is meant to protect gig workers and independent contractors, including truck drivers, there has been disagreement about how this law should govern the trucking industry.

What Is the AB5 Bill?

The AB 5 bill changes the way employers are allowed to determine whether workers are classified as employees or independent contractors. This classification is important as different rights and privileges are afforded to each category, with employees being eligible for many more protections than independent contractors.

Under AB 5, it’s much harder for employers to classify workers as independent contractors. In order to do so, employers must use an AB 5 test to prove that the worker qualifies to be an independent contractor.

When Did AB 5 Go into Effect?

AB 5 was signed into law in September 2019 and went into effect on Jan. 1, 2020.

What Is the AB 5 Test?

The test to determine whether a worker is covered by the AB 5 bill is called the ABC test. The ABC test is made up of three parts, and in order for an employer to classify a worker as an independent contractor, all three must be accurate. Under AB 5, it is assumed that all workers are employees until they can be proven to qualify as an independent contractor.

The first part of the ABC test states that the worker is able to perform the duties of their job without the control or direction of the company. This may include the worker being able to set their own hours.

The second part of the test requires the worker to perform work that is outside the general course of the employer’s business. According to this part of the test, people who work for rideshare or food delivery services may not be classified as independent contractors, as their job duties are integral to the business model of the company they work for.

The final part of the ABC test requires the worker to be engaged in an independently established trade or business doing the same work they are performing for their employer.

In California, workers may only be classified as independent contractors if all three statements under the ABC test are true. However, there has been debate about whether AB 5 and the ABC test applies to long-haul truckers.

Is the AB 5 Bill Enforceable for the Trucking Industry?

According to a ruling in January, AB 5 does not apply to truckers. A U.S. District Judge issued a preliminary injunction prohibiting the state of California from enforcing AB 5 when it comes to the trucking industry until a lawsuit over the bill filed by the California Trucking Association can be heard. Oral arguments in the case are expected to be heard before the end of the year.

How Has the Trucking Industry Responded?

The trucking industry’s response to AB 5 has been mixed. Some truckers and trucking advocates claim that truckers are systemically underpaid and subject to wage theft by their employers. According to this group, many truckers classified as independent contractors are not paid for time spent waiting at warehouses and loading docks.

In 2018, truckers averaged wait times of more than two hours per job. Only 3% of truckers who reported waiting at job sites received pay for this time. According to Business Insider, it has been estimated that truckers lose $1.3 billion each year in wages due to unpaid waiting time.

Some truckers may be responsible for covering the costs of purchasing and maintaining their own trucks, even if they only drive for one company. Although these truckers may be classified as independent contractors, they may still be subject to the time schedules set by their employers.

Although many truckers see AB 5 as a law protecting them, others are not so sure. Some truckers prefer to be independent contractors, seeing themselves as small business owners running their own trucking company. For these truckers, the AB 5 bill may limit their options.

A misclassified employee is entitled to a number of benefits that, as an independent contractor, they would be denied. These include proper wages, overtime, breaks, and more. Misclassified employees working as independent contractors would be required to pay a number of expenses that their company should cover, such as insurance, Social Security taxes, Medicare taxes, purchase of a tax, operational/maintenance costs, and more.

Is The AB 5 Bill Enforceable In Other Industries?

AB 5 has become a hot button issue in other industries, as well. For instance, some employers and workers alike across industries worry that the new bill places more burdens on workers, though it ostensibly aims to offer more protections.

Around the country, more and more workers are contractors, leading to the development of what is known as the “gig” economy. Though this new economy offers workers fewer protections, it does allow more freedoms than they would have as employees. Critics of AB 5 in a range of industries worry that this bill would take away valuable freedoms.

Recently, a California judge determined that ride sharing apps Uber and Lyft had to re-classify drivers as employees, where they used to be considered contractors. The ridesharing companies have fought against this by protesting the lawsuit itself, which was filed by the state. The companies have also filed a separate claim arguing that the entire bill is unconstitutional. 

Proposition 22, passed in November, will allow Uber, Lyft, and similar gig economy companies to be exempt from AB 5. Uber and Lyft, among others, fought hard to prevent a judge from ruling on their drivers’ status before the proposition was voted on, but were unsuccessful. The judge made the decision to reclassify ride share drivers as employees nonetheless.

CNN quotes Lyft’s pledge to appeal the judge’s decision, in which the company stated that their opposition to the reclassification was in their drivers’ best interest. The company reportedly promised to “continue to fight for [drivers’] independence” despite the judge’s ruling.

Uber, Lyft, and other gig economy companies spent millions of dollars in support of Proposition 22. The proposition’s passage allows these kinds of companies to side-step AB 5, while providing some benefit concessions to their workers, but not the full benefits that an employee would be able to expect.

Should You File an AB 5 Lawsuit?

More and more truck drivers are turning to litigation, alleging they were misclassified as independent contractors rather than employees.

A significant settlement agreement was reached in one such lawsuit back in July, when transportation company J.B. Hunt agreed to bring an end to a Feb. 2019 trucker misclassification lawsuit. According to the lawsuit, J.B. Hunt failed to “reimburse… for necessary business expenses” under California labor law, and further failed to giver proper breaks and meet minimum required pay levels. The settlement agreement was estimated at about $6.5 million in total, averaging $20,000 for each of 312 drivers, and bringing an end to the suit without determining the drivers’ classification.

If you are a trucker and believe you have been misclassified by your employer as an independent contractor, or have been subject to wage theft or other violations, you may be eligible to speak with an experienced attorney about your legal options. Some truckers may be able to file an AB 5 or wage loss lawsuit against their employer and pursue compensation.

Filing a lawsuit can be a daunting prospect, but Top Class Actions has laid the groundwork for you by connecting you with an experienced attorney. Consulting an attorney can help you determine if you have a claim, navigate the complexities of litigation, and maximize your potential compensation.

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If you have worked as a contract truck driver and believe your carrier has failed to pay you minimum wage or overtime, or otherwise might not have honored a contract with you, you may qualify to file a truck driver lawsuit or class action lawsuit.

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