Popularly known as the gig worker’s bill, AB5 Law is the acronym for California’s Assembly Bill 5, which came into effect on the 1st of January 2020. Designed to protect the rights of contractual workers, this law targets delivery drivers working with companies such as Uber, DoorDash, GrubHub, and the like.
AB5 restrictions also apply to motor carriers in California and includes businesses that enlist the service of port and rail trucking companies. All such parties must maintain AB5 compliance.
Without a doubt, this law has had a tremendous impact on the transportation industry—especially the trucking industry and businesses that need such services. MDB Transportation can help you with compliance. But before exploring how, let’s understand the AB5 trucking update and how does AB5 affect truck drivers.
Understanding California’s AB5 Law
Under the AB5 law, employers who hire contractual workers must recognize them as employees and provide them with all consequential benefits of regular employment.
On the face of it, the law seems like a great way to safeguard gig economy workers and give them employment benefits.
But, does the AB5 trucking law really offer tangible truck driver benefits?
Fortunately, yes, it does.
We’re talking about minimum wage, health insurance, workplace retirement plans like 401(k), regular work breaks, and other perks. Employers are also required to submit Form W-2 to the federal government on behalf of their employees, which streamlines tax deductions for them.
While all of these are undoubtedly great for those who receive the benefits, some trucking companies can still choose to bypass the law by taking a test. In fact, any transportation company can take the ABC test to label certain workers as contractual hires, not employees.
To qualify, the worker must be:
Free from the control of the company and any supervising authority when they’re performing their duties
Doing work that does not match the employer’s usual business or line of work
Working as an independent contractor on custom terms and conditions
To date, the AB5 is one of the strictest labor laws to be implemented in the transportation industry. And it could have negative ramifications if leveraged incorrectly.
Perhaps this is why, ever since its introduction, this law has been very polarizing.
What Is AB5 Law Debate?
Although the AB5 law attempts to level the playing field for gig workers, it complicates matters for the state’s trucking industry.
Most fleet owners and operators hire independent contractors to drive their trucks. Because of these new California trucking regulations, trucking companies must comply with the changes in the transportation industry.
This is a nearly impossible proposition because a trucking company that hires drivers does so because they need to do a job that matches its usual course of business. To maintain AB5 compliance, the industry must rethink its hiring blueprint.
A closer look will reveal that this law has made hiring expensive for trucking companies. It has also placed quite a few restrictions on truck drivers who want to prefer to continue as gig workers. In most cases, they also perform other jobs when not driving trucks.
This is especially true of owner-operator trucking businesses, many of whom prefer working as contractual employees.
Currently, these complications are a matter of serious contention.
Because California trucking laws give them employee status, drivers are bound to follow the rules and regulations enforced by the trucking company. While truck driver benefits are undeniable, it also takes away work flexibility and bites into the freedom of choice for many.
One cannot ignore the unscrupulous tactics that some trucking companies may take because they have been forced into a tight spot. From wage theft to long work hours, there are many ways to take advantage of this new law.
Between its promised pros and inevitable cons, the law has garnered lukewarm responses from California’s trucking industry. In fact, the California Trucking Association (CTA) even went so far as to file an injunction against the law.
The injunction was later overturned by the Supreme Court, and the AB5 law for truckers remains in hot debate.
Given that California hauls one-third of the US’s containerized goods, the AB5 law, and related debates have the potential to affect the state’s trucking industry.
Thankfully, the ramifications of this new law can be easily avoided if trucking companies tread the correct path. They need to step up to the occasion and assure truck drivers of employee benefits on honest terms. Instead of considering the California owner-operator law as an obligation, they must accept it as a fair policy that safeguards the interests of the lifelines of the industry: the truck drivers.
What will happen with companies not in compliance with AB5?
They can incur fines of up to $25,000 per employee—that’s quite the price to pay.
This law will show which trucking companies are willing to go the extra mile for their employees and which are indifferent.
At MDB Transportation, we operate using our own equipment and employees. As an asset-based company, our day-to-day operations are streamlined per AB5 rules. If you are looking to hire a trucking company that is sustainable and lawful, we are your safest bet.
Why Should You Choose MDB Transportation for AB5 Compliance?
MDB Transportation strives to give its employees the best. We follow sustainable practices in the trucking industry and pride ourselves on being a people-first trucking company that prioritizes employee welfare.
We provide highly competitive pay to our employees, ensuring they enjoy ample financial freedom and stability. MDB Transportation employees also enjoy many benefits, like Medicaid, CHIP, life insurance, vacations, and sick days.
We do our best to provide all our truck drivers with a great work environment and a flexible schedule so that they can enjoy work-life balance.
So, the introduction of the AB5 Law does not ruffle our feathers. We have already been providing many perks to our workers, similar to the employee benefits under the AB5 trucking law.
If you work with us, you do not have to worry about AB5 compliance because we will ensure that for you. We’re a sustainable business that delivers the best to our customers and employees. Whether you’re an experienced trucker or new to the job, you’re equally welcome to our team.
If you’re an independent truck driver looking for reliable work opportunities, please contact us today!