Will AB5 Impact Independent Truckers?

Numerous rules and regulations impact the commercial trucking industry, requiring owner-operators to stay up to date on new practices. Many in the industry are wondering what is AB5 in California law. In short, the AB5 law refers to a set of regulations that owner-operators will now have to abide by after the California Trucking Association brought the case to the Supreme Court. Here are some ways AB5 will affect independent truckers and fleet owners.

What Is AB5?

Assembly Bill 5 was initially passed in 2019 but only went into effect recently after courts challenged the bill for a long time. Drivers will now have to answer three criteria on an “ABC test” to show that they are still independent contractors in California under these new regulations. The California Trucking Association argues that this new law will take thousands of owner-operators, who are independent truckers working under contract, off the road.

Impact on Owner-Operator Drivers

AB5 will potentially make it more difficult for independent truckers to operate because of the new regulations they must follow. These include:

• Showing that the company that hired them does not have direct control of their work performance

• Displaying that the work they do differs from the work the company’s regular employees perform

• Establishing that the nature of their work falls under the category of another independent occupation, business, or trade

The industry regards the second of these three regulations as the most difficult to meet. The trucking industry has yet to see how many owner-operators will be able to meet these standards to remain independent contractors.

AB5 may not be all bad news. Some benefits of AB5 for owner-operators could include higher pay and the shift of the burden of purchasing newer, lower-emission vehicles from the driver to the company. However, it would mean less independence for some owner-operators who prefer to work as independent contractors.

Although drivers might get higher pay in the end, there are still considerable expenses involved in switching from being an independent driver to a regular company employee. These expenses include acquiring insurance, obtaining licenses, and paying any fees the company might require.

Impact on Fleet Owners

The AB5 law will change the busine