California Truckers may have lost the battle, but not the war. Once again, the small carrier in America, especially in California, needs to join an association to be able to stay abreast of all the rules and regulations, as they are constantly changing. This is not the 1960s like when I drove – times are changing, and you should, too. Last year, the Western States Trucking Association sued the Director of the California Department of Industrial Relations and the Attorney General of California over the ruling by the California Supreme Court adopting the ABC test to determine who qualifies as an employee for the purposes of California’s wage orders.
Western States’ Complaint made three primary claims. First, it contended that the ABC test adopted by Dynamex directly impacts the price, routes and services of its motor carrier members, and is therefore preempted by federal law in the form of the FAAAA. Second, Western States claimed that the ABC test “on its face discriminates against out-of-state and interstate trucking companies,” thereby violating the dormant Commerce Clause of the United States Constitution. Third and finally, Western States maintains that the ABC test is preempted in any event for the Federal Motor Carrier Safety Regulations as enacted at 49 C.F.R. 300-399. Western States’ lawsuit seeks both declaratory and injunctive relief prohibiting enforcement of the employment standard announced by Dynamex, a nationwide package and document delivery company.
For those of you that are not familiar with the Dynamex decision, Dynamex held that, for purposes of California wage orders, the burden should be placed on the hiring entity to establish that the worker was an independent contractor under the three-part ABC test. That test requires that each of the following factors be established: (A) that the worker 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; (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. The ABC rules take away the flexibility independent contractors’ value so highly that many say this decision will cause their income to take a hit or it will run them out of business altogether.
On March 28, 2019, the court rejected Western State’s arguments and basically said that California’s wage orders do not prohibit the use of such drivers; instead, they simply provide a framework for establishing whether a given individual should be deemed an employee or independent contractor. This basically means that driving under a motor carrier’s authority and owning multiple trucks is a thing of the past. This also means that the independent contractor must have an established business, with his or her own authority, insurance, etc. For the motor carrier, the best bet is to either change its business model to maybe being a broker, or to run some of his own trucks with employees.
This clearly shows that the current administration in California is trying to drive the little carrier right out of business simply because it is much easier to tax a larger motor carrier who pays more in highway fuel and road taxes, workers’ comp, etc. On the “bright” side, some other people in California are also affected by this new ruling. Architects, engineers, lawyers, doctors, insurance agents, direct sellers (Mary K, Amway, etc.), securities brokers, real estate agents, cab drivers, therapists, accountants, barbers, hair stylists and others who have advanced degrees, are licensed by the state or simply want to remain independent contractors, must adhere to these newly-established guidelines.
Apparently, the fight is not over. Recently, in early April, authored by Assemblywoman Lorena Gonzalez, D-San Diego, Assembly Bill 5 exempts certain industries and redefines what is an independent contractor, since California has nearly two million residents who choose to be independent contractors. And, according to the U.S. Bureau of Labor Statistics, a 2017 Department of Labor study found that 79.1% of independent contractors preferred their current situation, while only 8.8% said they would rather have a traditional work arrangement.
Further, to add to the California quagmire, the California Air Resources Board (CARB) just outlined a proposal of Advanced Clean Truck regulations that would divide truck segments into three classes and help provide clear zero-emission vehicle (ZEV) sale goals in California to meet climate-change targets. A recent workshop held by CARB proposed dividing trucks into three vehicle groups, with each needing to achieve a certain percentage of ZEV sales requirements. According to CARB, this includes: Class 2B-3 (8,501 to 14,000 lbs. GVWR); Class 4-8 Vocational (14,001 lbs. GVWR or greater); and Class 7-8 Tractor (26,001 lbs. GVWR or greater).
Class 2B-3, which excludes pickups until model-year 2027, would need to reach zero-emission vehicle sales of 3% by 2024 and 15% by 2030. For Class 4-8 Vocational, sales percentages would need to be 7% by 2024, but jumps to 50% by 2030. And, finally, Class 7-8 Tractors wouldn’t need to reach any goals until 2027 at 9% and later 15% in 2030.
This was proposed to help California achieve carbon neutrality by 2045 and maximize criteria emission reductions to meet air quality goals and protect communities, according to CARB. California aims to achieve 1990 greenhouse gas levels by 2020, and 40% below 1990 levels in 2030. The proposal said an increasing percentage of chassis/vehicle sales in California must be zero-emission from 2024-2030, and also proposed zero-emission powertrain certification be required starting in 2024. So, once again, it looks like you will have no choice but to buy new emission-free trucks in the future.
The NTA will gladly help our members so that they can comply with the new ABC test. We also will be introducing a new low-cost health insurance plan for our members ranging from about $140 per month for sole proprietors to just over $300 per month for a family. We also will have Accident Insurance for on-the-job and off-the-job coverage starting at $18 per month, as well as Critical Illness Insurance starting at just $16 per month. For more details, check out our website (www.ntassoc.com) or call NTA today at (562) 279-0557.