New Bills in California to Challenge Independent Driver Model

A package of three bills introduced in the California state senate and assembly present a comprehensive approach to ending a pattern of alleged wage theft and denial of benefits that occurs when drayage companies are allowed to classify drivers as independent contractors, the legislators that sponsored the proposed regulations said Monday.

The bills would build upon previous legislative efforts to address driver classification issues, such as Assembly Bill 5 (AB 5), which was signed into law last year, and Assembly Bill 1402, (AB 1402), signed into law in 2018, both of which are under appeal. The classification issue has also been addressed by legislatures in New York and New Jersey. The US Ninth Circuit Court of Appeals last year prohibited enforcement of AB5 while it is under appeal.

According to a press release from the legislators, the three bills introduced Monday are:

  • SB 338, which publicly identifies trucking companies that have violated labor, employment, and health and safety laws, and puts their customers, often retailers, on notice that they will be held financially accountable if they do business with those motor carriers;

  • AB 794, which requires that the California Air Resources Board tie its clean-truck grants and incentives to workforce compliance standards to “ensure both that climate goals are reached and that the state does not subsidize companies that violate workers’ rights and cheat the state out of tax dollars”; and

  • SB 700, which helps misclassified drivers access critical unemployment insurance benefits and protect them from facing unfair liability by clarifying that trucking companies that misclassify drivers are responsible for payroll taxes.

California state Sen. Lena Gonzalez, Democrat, sponsor of SB 338, said at a press conference in Sacramento that for decades, drivers have been working long hours at the ports of Los Angeles and Long Beach without the wage and benefits protections that are afforded to employees because they are routinely misclassified as independent contractors.

“It’s not fair and we must fight it,” she said.

Driver classification legislation aims to address charges by drivers and their advocates, led by the Teamsters union, that trucking companies are illegally classifying drivers as independent contractors in order to avoid providing them with wages and benefits such as overtime pay, health insurance, and reimbursement for expenses that are afforded to direct employees.

Employers and their supporters, such as the California Trucking Association (CTA), argue that the drivers, who own their trucks, are correctly classified as independent contractors under the guidelines in federal law. They note that previous court decisions have determined that federal laws governing interstate commerce supersede state laws.

Employers also note that drayage drivers at US ports are overwhelmingly owner-operators, many of whom have the option to work for motor carriers that operate under the employee model but choose not to join unions.

Employers also cite a 2016 study by Southern California–based economist John Husing, sponsored by the CTA, which concluded that many owner-operator drivers earn more than employee drivers doing the same type of work.

Ron Herrera, director of the Teamsters Port Division, charged that the cost of overhead for purchasing and maintaining their trucks in some cases exceeds their earnings. “The Teamsters have been fighting this for decades,” he said.

In a statement Monday to Journal of Commerce, the CTA said the trucking association worked with the Teamsters three years ago to ensure that legally owed wage claims were paid, and that motor carriers are working to ensure the state’s environmental goals are met and supply chain fluidity is maintained in the face of near-record container volumes.

Source: Journal of Commerce