California Assembly Bill 5 (AB5) was signed into law by Governor Gavin Newsome on September 18, 2019, and its impact could potentially alter the long-standing tradition of hiring owner-operators. AB5 specifically expands the Supreme Courts ABC Test in Dynamex Operations West, Inc. v Superior Court of Los Angeles. The ABC Test is required to determine whether a worker is an employee or independent contractor. A worker is classified as an employee unless the trucking company/employer can establish all three of the following:
A. That the worker is free from the hiring entity’s control and direction in connection with performance of the work, both under the contract for the performance of the work and in actually, performing the work;
B. That the worker performs work that is outside the usual course of the hiring entity’s business; and
C. That the worker is customarily engaged in an independently established trade, occupation, or business of the same nature as the work performed.
Within the industry, letter B tends to be the main disruptor, trying to prove the hiring of an owner-operator is outside of the hiring entities usual course of business. There are tons of questions that need answers. We are here to help you transition through the process and discuss possible solutions.
For more information, you can click the links below to view the Assembly Bill (AB) 5 document and the Roadmap for AB 5 document.
A Roadmap for AB 5: California’s New Law on Worker Classification