New independent contractor legislation in California and New Jersey could disrupt drayage operations as we know it.
Assembly Bill 5 is a bill that determines the employee status of companies that regularly hire independent contractors to do the bulk of their work. Largely, this bill is targeting companies like Uber and Lyft who base their core business model around the gig economy of independent contractors.
The California Trucking Association is hoping that an exemption will come their way to allow truck drivers to remain independent contractors. Since the spot market runs on auction and negotiating, it can get very tricky to justify employee status.
The bill would adopt “the ABC test” that will ask questions to determine if a worker is an independent contractor or an employee. Truck drivers get shaky when they have to answer B, which states the worker performs “work that is outside the usual course of the hiring entity’s business.”
What does this mean for drayage carriers?
For now, carriers should continue business as usual. Currently, Assembly Bill 5 passed in California but still requires governor approval.
Truckers could stick to a 3PL-carrier model of booking shipments. Because port truckers operate under the authority of a trucking company, they would have to obtain their own authority to continue working.
However, under the 3PL-carrier model, the 3PL acts as an intermediary and effectively satisfy the ABC test questions and allow truckers to continue working as independent contractors.
Freight by state could get tricky
Because California and New Jersey will have different laws for contractors than the rest of the country, carriers might select lanes that are much less of a hassle.
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