Updated December 2021
After a difficult year, and despite the efforts of the California Trucking Association (CTA), the injunction that kept the trucking industry from being affected by the California AB5 law has been overturned. This news is a cause for concern for trucking companies and business owners who hire independent contractors to transport truck freight.
In late 2020, an official court ruling spared truck drivers and the trucking sector from being affected by Assembly Bill 5 in California. Now, the trucking industry is at odds and is worried about how they’ll be affected. Get details about how California AB5 will affect trucking, businesses, and workers below.
How AB5 Affects the Trucking Industry
The injunction brought on by the California Trucking Association essentially blocked the trucking sector from meeting the same fate as the gig economy. Truck drivers work as independent contractors; however, under AB5 any worker at a California company that does not meet a three-pronged test must be classified as an employee. Many independent contractors don’t meet the requirements. Employing workers is costly to trucking businesses as they must now regularly pay and provide benefits to these workers.
With the injunction overturned, the California trucking sector will face challenges because the law is retroactive. At a time when the supply chain is already stretched thin, shipments are delayed, and there’s a warehouse shortage, the trucking industry is on high alert.
Related Article: Trucking Industry Update: AB5 Injunction Stays In Place For Now
How AB5 Affects California Businesses
If you are a business owner in California who hires independent contractors or drivers to transport and deliver goods, you may be affected. AB5 is retroactive, meaning that failure to comply with the law in the time since the bill was enacted can lead to lawsuits and hefty fines. Most business owners have dealt with a turbulent environment over the last year, so lawsuits could mean the end of their business.
If you’re concerned about transporting your offerings without an independent driver, consider outsourcing your truck freight with a cost-effective logistics company, like Pyramid Logistics. Get help from a local Californian company to navigate through this difficult time.
Related: Final Mile Services
How AB5 Affects Independent Workers
If you’re an independent contractor working as a truck driver, you may find yourself weighing the pros and cons of this decision. For some, having a salary and benefits package can be a relief. This allows you to enjoy regular pay, health benefits, mandated breaks, and more, which are favorable to workers seeking stable work.
On the other hand, you may lose the flexibility to work your own hours. Similar to gig workers, you choose the jobs you want to work and may enjoy being your own boss. Becoming an employee would then be unfavorable in this situation.
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Located in Los Angeles, California, and Las Vegas, Nevada, we are equipped to handle a full range of services near our facilities and all over the nation. As the industry continues to go digital, Pyramid Logistics remains at the forefront of warehousing. If you’d like to learn more about partnering with us, click here.