California AB-5 bill complicates truck cargo on the west coast

A controversial law in California that reclassifies independent contractors according to a three-prong test has caused some contractors to protest because to maintain business, they have to be hired on by companies. The test hinges on the second prong, a rule that marks the difference between contractors and employees.

SEC. 5. Section 621 of the Unemployment Insurance Code is amended to read:

621. “Employee” means all of the following:

  • (a) Any officer of a corporation.
  • (b) Any individual providing labor or services for remuneration has the status of an employee rather than an independent contractor unless the hiring entity demonstrates all of the following conditions:
    • (1) The individual is free from the control and direction of the hiring entity in connection with the performance of the work, both under the contract for the performance of the work and in fact.
    • (2) The individual performs work that is outside the usual course of the hiring entity’s business. 
    • (3) The individual is customarily engaged in an independently established trade, occupation, or business of the same nature as that involved in the work performed.

Under this point, if a clear example of the difference was provided by Everee.

“For example, if a company provides pool cleaning to the market, they cannot hire a worker to perform pool cleaning and classify them as an independent contractor. However, a hotel or hospitality company may hire a pool cleaner as an independent contractor to service pools on property it owns and provides to its customers.”

Some detractors have accused the law of being a pipeline into the Teamsters Union as independent contractors are prohibited from entering into employment unions and collective bargaining agreements.

Supporters have pushed back hard on this, with the law’s author, Lorena Gonzalez has championed the issue. “Truck owners: don’t believe the lie. You can be employees, get good wages & benefits & keep your trucks. A truck is like any other equipment you use at work: an employer can provide it, or can reimburse you for using your own. Companies saying otherwise do not care about you,” she tweeted.

For cargo, there will be hiccups but it’s hard to tell if delays are just business as usual for the supply chain or an actual swell from the change in trucker status but rest assured we are far from finished with the logistics issues that arose in the pandemic. We at Nelson understand that many issues that start on the West Coast have blown over to the East Coast ports that we call home, therefore we’ll be watching this situation carefully to understand how it could morph as it unfolds.