Truck owners protest against AB 5, a California “gig economy” law

 

Nov. 4 was a Monday, but a crowd of independent truck owners decided to ditch work that day. Instead, they gathered in front of State Assemblyman Ash Kalra’s office in San Jose, many of them holding signs that read “AB 5 ruins lives.”

The demonstrators showed up as part of three days of grassroots protests against Assembly Bill 5, a California law that simplifies the criteria for workers to qualify as employees. The protests took place in front of multiple assembly offices in the Bay Area, including San Jose and San Francisco.

“He is our assemblyman. He voted for AB 5,” John Dominguez, a truck owner-operator at the San Jose protest, said of Kalra. “We’re hoping to get his attention, for him to do something.”

The California Trucking Association – and two individual owner-operators – also filed a lawsuit on Nov. 12, arguing the law illegally curbs their ability to provide services and violates federal law and the Constitution. According to its press release, AB 5 threatens the livelihoods of more than 70,000 independent truckers in California.

AB 5, which goes into effect Jan. 1, states that a worker is an independent contractor only if the worker is free from control by the employer, performs work that’s not central to the employer, and has an independent business of the same nature. The law codifies a previous California Supreme Court decision and intends to guarantee basic rights that workers wrongly classified as independent contractors deserve.

But for those known as truck “owner-operators” – who invest in their own vehicles and work as independent contractors to other trucking firms – the law means they can’t work for those companies unless they’re hired as employees, as owner-operators perform work that is central to trucking firms.

In the current system, firms ­­– often contractors of construction sites or agricultural producers – give work to trucking companies, who then dispatch their own employee drivers and the independent owner-operators. This intermediary role that trucking companies play earned them the title “brokers.”

Working as independent contractors is useful for owner-operators, as bulk of their work is seasonal or temporary. In fact, the number of owner-operators working on a site varies day-by-day. Many of the owner-operators haul construction materials or transport agricultural products. Some also work at fire debris cleanup sites or are called in for dam repair jobs.

“As a trucker, you need to have freedom to work for whoever you want to work for because of the ebb and flow of work,” Debbie Ferrari, who works at MAG Trucking, a trucking company that hires both employee and contract drivers, said. “They deserve a choice, that’s all.”

Impact on owner-operators and trucking companies

In order to comply with the new law, trucking companies will either have to hire owner-operators as employees or not work with them. But the owner-operators at the San Jose protest said they liked the current system.

“We love being independent contractors,” Ernesto Lopez Jr., an owner-operator who came out to the San Jose protest, said. “Companies need the trucks; a job needs to get done. But they’re telling us that we can’t do the work we do how we’ve done it forever.”

“We’re all concerned about the law and what we’re going to do, because a lot of the brokers who give us work, they’re going out of business,” Lopez Jr. also said.

While the law prohibits any role of an intermediary trucking firm, it does allow owner-operators in the construction industry to work as independent contractors of the general contractors – but only for work performed before Jan 1., 2022. This means truck owners would have to individually seek out for contractors of various construction sites, which is burdensome.

“Now instead of driving my truck, I’ve got to run around for 16 hours a day trying to churn my business, make contacts, find shipments –  basically become a broker myself,” Kyle Kindred, an owner-operator at the San Jose protest, said. “Then I don’t actually have time to drive the truck and deliver loads, so it doesn’t make sense to me to have a business in California.”

Many truck owners recently upgraded their vehicles in order to comply with truck regulations mandated by the state. The California Air Resources Board, the government agency that enforces laws against air pollution and climate change, requires heavy truck owners to replace their engines to 2010 or newer ones by certain date – at the latest by 2023 – depending on how old their engines initially were.

“A lot of the guys out here, including myself, we’re in debt,” Lopez Jr. said. He said that even if he were hired as an employee, the wage will not be enough to repay the mortgage on his vehicle.

“We owe hundreds of thousands of dollars on these new trucks,” Lopez Jr. said.

The law also jeopardizes trucking companies that rely heavily on owner-operators. The projects MAG Trucking work on are often for the state or counties, such as hauling for highways, creeks and airports. Without the trucking companies hiring independent truck owners, it may be difficult to complete such projects.

The flipside: Misclassified contract truck drivers who should actually be employees

While there are legitimate owner-operators, there are many contract truckers who actually meet the legal standards for being an employee but are classified as independent contractors, because employers do not want to pay for employee rights and benefits.

You quickly find out you’re misclassified, Juan Islas, who works as a contractor driver at XPO Logistics, said through a translator. Islas said while he can’t get benefits such as health insurance, his employer controls where he is dispatched and at what rate. Just this year, he saw a co-worker die early, and he was told that the co-worker could have lived longer if he had access to healthcare.

“We really need to see a change in this industry,” Islas said. “As truckers, we’re very pleased to see the state is taking action against misclassification.”

Islas also said he hoped there would be resources dedicated to cracking down on large corporations that continues to break the law.

The modern-day trucking industry heavily depends on contractors, which also led to many cases of exploitation of contractors. These misclassified contract truckers earn low wages and must pay business expenses in order to maintain their vehicles, but they are excluded from employee benefits such as overtime pay, sick leave and workers compensation, according to a report from the UC Berkeley Labor Center.

“Workers have been demonstrating for over a decade at trucking companies and filing petitions in every level of government,” Sam Appel, the co-author of the report and the California Policy Organizer at BlueGreen Alliance, an alliance between labor unions and environmental organizations, said.

Certain segments of the trucking industry are especially riddled with misclassification, the report shows. These segments are local delivery trucks, port trucks, and long-haul trucks.

“AB 5 represents a huge victory for these drivers, many of whom have been fighting to be reclassified for years,” Rebecca Smith, who works at the National Employment Law Project, said in an email. A report she co-authored estimates that 16,400 out of 25,000 port drivers in California are misclassified.

While trucking companies and owner-operators who were at the protest acknowledge there are misclassified truckers, they said they wish to be considered separately. They hoped the assembly members would notice their concerns and propose amendments in the bill where they are exempt.

“It’s going to be a sad Christmas for all of us,” Lopez Jr. said. “Hopefully there’s a change.”