California AB 5 Legislation: Many Challenges, Troublesome Options

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SAN DIEGO — The excellent news for motor carriers topic to the California AB 5 legislation is that authorized specialists say state prosecutors haven’t taken carriers to court docket to implement the state’s controversial impartial contractor misclassification legislation.

Not but, that’s, in line with Gregory Feary, managing companion in Indianapolis-based Scopelitis, Garvin, Mild, Hanson & Feary. But when, and when, the court docket battles start, it probably would be the very giant, high-profile and really small carriers not doing issues proper that may have targets on their backs, Feary stated at an Oct. 23 session at American Trucking Associations’ Administration Convention & Exhibition.

“Unbiased contractor legislation is a query of information and legislation,” Feary stated. “It’s additionally a combined query of legislation and politics. Politics, even when it’s not in your face, it’s working proper beneath. All these judges who’re attempting to stability all of the elements have a political viewpoint.

“If the political viewpoint is now we have to cease the large unhealthy motor carriers from profiting from the little guys, you then’re going to see a number of these subjective elements weighing in favor of employment.”

The AB 5 legislation, which initially was as a result of take impact in January 2020, was stalled for a bit greater than two years as a result of a federal lawsuit filed by the California Trucking Affiliation, which argued that the legislation made it subsequent to unimaginable for motor carriers to make use of impartial contractors. The Supreme Court docket, nonetheless, earlier this 12 months declined to listen to the CTA problem to the AB 5 legislation that makes use of a so-called ABC take a look at designed to reclassify impartial contractors into motor provider workers.

The legislation was turned again July 1, and a federal district court docket preliminary injunction was lifted Aug. 29, Scopelitis companion Prasad Sharma stated.

The AB 5 session right here additionally included numerous complicated authorized methods that might, however hardly assure, motor carriers can efficiently struggle the results of the impartial contractor legislation. They vary from “strategic dispatch” by having impartial contractors spend extra time working in states apart from California, to paying impartial contractors properly to allow them to’t be portrayed in courtrooms as “downtrodden” workers.

“Quite a lot of these options are being developed throughout the context of a really dynamic California legislation. However we don’t know if any of those options will work,” Feary stated. “There isn’t any silver bullet.”

Scopelitis companion Shannon McClellan, stated that any prompt legislative fixes to the legislation that will favor truckers aren’t probably doable till subsequent 12 months when the state Legislature goes again into session.

“Actually, stakeholders are taking a look at their choices, they’re making ready legislative proposals, however there’s going to be no instant fixes,” McClellan stated. “Gov. [Gavin] Newsome stated in August, ‘Be ready for this as a result of we’re going to be implementing it.’ ”

“I believe everyone knows that California’s AB 5 is essentially flawed in some ways,” stated session panelist Glenn Fehribach, chief monetary officer for World Group, a container holding firm.

“Two methods it’s flawed is that it assumes impartial contractors don’t need to personal their very own companies, or be their very own boss. Additionally, it assumes that every one the impartial contractors will some how magically convert to workers. Everyone knows what occurs when you might have unhealthy assumptions.”

Fehribach referred to as the challenges posed by the AB 5 legislation and potential options are “so complicated that it’s laborious for individuals to get their heads round.”