California Truckers vs. AB5: A profession’s fight for independence
LOS ANGELES — If any profession represents the independent spirit, grit, and ingenuity that helped forge America, it is that of the Trucker. Truckers are the American Dream personified, and are representative of the family business and passing down a legacy. But today, California truckers are engaged in a pitched battle against the state’s AB5 law, a piece of legislation that threatens to do away with their way of life.
One NorCal trucker* explained how this works.
“My dad was in the trucking business. He grew up in dairy, and I subbed under him for 15 years, then I started my own thing. We doubled in size via a network of other truckers.
“It’s all I’ve ever known, and I’m good at it. It’s good getting out there and to be a part of that. To say 10 years from now, that I did that. There’s also good money in it.”
So it is no surprise that Big Labor’s AB5 law has targeted this profession for a takeover. As the saying goes, Follow the money.
Focusing in on this issue, Kirk, another Southern California trucker offered an insider’s insight on the current game.
“Unions have been after trucking forever. I have been an Owner-Operator since I was 24 years old. So after 28 years in business AB5 is saying I can’t do this anymore?”
How Trucking Works
Much like the translator and interpreter professions, the trucking industry is all about expertise, equipment and growing your networks. NorCal Trucker bluntly stated, “We’re all pretty much specialized. So if you can’t work among each other, you’re kind of screwed.”
Kirk is in Construction Trucking, but he says that all trucking works the same.
“First of all, Trucking companies have other Trucking companies as Customers. Most of my customers are Trucking companies that have multiple customers, and if they have more work than they can handle, they contact me and see if I can do the job,” he said.
Like the agencies that professional translators and interpreters work through to find work, those other trucking customers can also be trucking brokers. They usually have vehicles and equipment of their own, and they contract these vehicles out as well. Kirk explains.
“One of my best customers is a truck broker, but they do not have the type of truck and trailers that I have. So I get all the work that comes in, that my truck can provide service to fit their needs.
“So when my Customers hire me for a job THEY bill the Contractor and then pay me. This is true with all trucking unless you are one of the few that works directly with the contractors.”
Trucking is a complicated business.
Often, larger contractors would rather use a single broker or a single trucking company to supply them with all their trucking needs. It simplifies the process, as Kirk explains.
“They make one phone call and get 1 or 50 trucks, the Broker/Trucking company may not have 50 trucks, so they call Owner-Operators like myself. The contractor pays the Broker/Trucking company with one check, and some Brokers charge 5% for the service of giving you work and collecting the money. There is a lot of paperwork, fees, licenses, permits, etc. that need to be kept up with as well.”
One of the hallmarks of the construction trucking industry is that they do a good job of policing themselves. Brokers and trucking companies monitor the owner-operators to make sure all the Ts are crossed and the Is are dotted. Safety and Compliance constitute a huge part of the truckers’ ability to land contracts and gain repeat business according to Kirk.
“It’s obvious to see that brokers and trucking companies provide a valuable service to contractors. Contractors do NOT want this burden. So now you have a glimpse of how trucking works, this explains how devastating AB5 is to trucking.”
AB5 kills the Independent Contractor model
As explained in Veena Dubal and AB5: Big Labor’s Excuse to Grab Power, this writer explained that the law’s intent is to destroy the Independent Contractor model completely. Just like taxi and Uber/Lyft drivers, and just like translators and interpreters, this model is the engine that fuels the Trucking industry. This model also fuels entrepreneurialism and upward mobility—probably the only model where this does exist.
NorCal Trucker describes, “All businesses start off as a small, independent person. It (AB5) eliminates the entrepreneur from starting out. Most of us start off with one truck and subbed out, and we built our business up. With AB5, if you’re a journalist, or a hairdresser or a trucker, that’s gone. It’s just frickin’ wrong. My niece is a hairdresser, and she’s freaking out about it.”
AB5’s destruction of the Trucking industry’s ability to contract amongst themselves will also destroy growing minority businesses. NorCal Trucker explains how this works:
“A certain percentage of all these jobs have to go to one of those types of business. But under AB5, I can’t team up with them. If I can’t work with other fleets, it ruins these minority-owned businesses.”
While he acknowledges that misclassification can exist, because of the Construction Trucking industry’s own monitoring, the incidences are few and far between.
“There are quite a few companies in the freight industry that should be looked into, but you can’t hold an entire industry accountable for such a small percentage.”
Big Labor and Politicians rigged the System
Trucker Gal is a Bay area Trucking Broker who has been in Construction Trucking for over 40 years. “I’ve been involved in anything related to construction, and I’ve been in it all my life,” she said.
“I’m going to be 60 this year. I was married to an Owner-Operator at age 21, and I ran his business. We built the business up to about a dozen trucks back in 1981, and we had some Owner-Operators, and some contractors.”
When Trucker Gal first got wind of AB5, she wanted to ensure the industry could not only gain protection, but she also wanted the industry to appear in the best light. “I’m trying to represent all the truckers who want to do it right and who care,” she said.
Trucker Gal further explains,
“With trucking, the problem is not all trucking is legitimate. When we pushed for our law—we met with the author (Assemblywoman Lorena Gonzalez), we’ve met with the unions—I’ve been to about 150 meetings with politicians and their staff. We were not trying to say no to AB5, we were proving what the difference is between legitimate trucking and what is not.
Despite Trucker Gal’s, the California Trucking Association’s, and other owner-operators’ and brokers’ efforts, they failed to get their message through, as Trucker Gal duly notes.
“The authors didn’t want to listen, the unions heard and acknowledged the difference, but they didn’t want to go along.”
“There isn’t enough sunshine being put on this situation—it was just crammed down our throats.”
According to the AB5 law, in order to gain recognition as an independent contractor, you must fulfill all three parts of the ABC test:
(A) The person 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) The person performs work that is outside the usual course of the hiring entity’s business.
(C) The person is customarily engaged in an independently established trade, occupation, or business of the same nature as that involved in the work performed.
As with other professions this writer has spotlighted, the Trucking industry would not be able to pass the “B” portion, and probably not even the “C”. The supposed “business-to-business” provision is fraught with chutes and ladders that can entrap an Owner-Operator or Broker who is a legitimate California corporation.
“AB5 will no longer let me have a Broker or a Trucking Company as a Customer, because the Customer is paying me and not the contractor,” Kirk explains. “This is also true with the AB5 Business to Business exemption , I still get paid from the Customer and not the Contractor. Even though I am an S-Corp meaning I am an Employee of a Corporation, and pay the same taxes: EDD,SSI, have the same protections of a W-2 employee, AB5 says I am MISCLASSIFIED and should be an Employee of my Customer! Crazy you say? Yes, it is.”
“I OWN over $250,000 worth of equipment and AB5 says I am not a small business.”
The California Truckers Association challenged the sleight-of-hand Big Labor and Lorena Gonzalez played against the trucking industry. In court, they charged that AB5 is unconstitutional. The lawsuit also alleges that California’s AB5 oversteps Federal Motor Carrier law.
The California Globe provides the following break down.
“U.S. District Judge Roger Benitez agreed with the trucking groups over their claims that AB5 is unconstitutional, temporarily exempting them from AB5. Specifically, the trucking groups argued that, because AB5 wouldn’t let most truckers set their own schedules, it would go against the interstate commerce clause of the Constitution. The FAAAA preemption, a 1994 provision of the clause which says that states are prohibited enforcing laws that give ‘a price, route or service of a motor carrier with respect to the transportation of property’, was cited in the judge’s ruling. Under that provision, Judge Benitez said that the truckers are likely to win their case later this year.”
The Brotherhood of Teamsters and California Attorney General Xavier Becerra attempted to overturn the preliminary injunction. But on March 30, the U.S. Ninth Circuit Court of Appeals denied them. This means that Judge Benitez’s District Court decision remains in place for the duration of the proceedings in the Ninth Circuit.
Between the COVID-19 pandemic and the other AB5 lawsuits, one would think California would seriously consider suspending the law in order to work out its many flaws. With over 5 million (and counting) Independent Contractors and Freelancers barred from working, putting them back to work would generate vital tax revenue for the state.
Tax revenue that is critical to California overcoming their new budget deficit. In The Hill,
“The California Department of Finance estimated the state would face a budget deficit of $54.3 billion in the coming year — a staggering number that adds up to more than a third of the state’s entire general fund from last year.”
Instead, Governor Gavin Newsom is doubling down. Using AB5 as the cudgel, Attorney General Becerra has mounted a new lawsuit against Uber and Lyft claiming they are misclassifying employees as Independent Contractors.
In Governor Newsom’s May 6 Coronavirus update, he affirmed that the 20 million set aside for enforcement of AB5 stands. He indicated it may even see an increase. So even if the judicial system rules in the Trucking industry’s favor, Big Labor’s stranglehold on state government continues to be an issue that keeps true representation of California citizens and professionals from occurring.
“The system is very rigged,” Trucker Gal said. “I was there from the very beginning. We never got a proper chance to testify, to make our case, to be listened to. We were squashed all along.
“The author and her supporters, any member inclined to try to help us, they basically threatened us. She is the head of every committee, the unions threatened to run candidates against these people.
“The system is so horribly corrupted and rigged. That’s the big takeaway–we never had a chance.”
The battle rages on.
While the California Trucking industry has a fighting chance with the current injunction and their lawsuit, millions of other Independent Contractors, Freelancers, and 1099 professionals cannot work. The COVID-19 pandemic only exacerbates this.
The incompetence and craven duplicity of the California Employment Development Department have hindered many Independent Contractors and the self-employed’s ability to receive the Pandemic Unemployment Assistance (PUA) that the Federal government established.
The California Assembly returned to Sacramento on Monday. Have they been working for the good of the citizens of California? No; they continue to focus on pushing garbage legislation that benefits Big Labor and their other special interests. Legislation like Assembly Bill 2990 which bans educational enrichment (out-of-class activities like the arts) except for favored vendors selected in Sacramento.
The bill also bars financial aid that would allow poor students to participate in this outside education. So much for standing up for the common man and doing it for the children.
The Legislature continues to work toward hindering citizen’s freedom rather than protecting it.
Asm. Lorena Gonzalez has made claims on Twitter that AB5 exemptions for musicians and writers will be voted on. Yet there is little indication of forward movement on this front. This writer notes that these claims are always put on the “Lorena S. Gonzalez” personal Twitter account rather than her “LorenaAD80” Twitter account.
On her personal account, Asm. Gonzalez can delete the tweets at any time, and pretend that she promised nothing. This reflects the warped sensibilities of the elected official who rammed this law through.
So, the battle to Repeal or fix AB5 rages on, because Big Labor and academics should not have the right to create bills that kill the citizen’s ability to work as they choose, and use elected officials as puppets to see those bills enshrined in law. Even though the Truckers obtained their injunction, they remain committed to fighting alongside all professionals affected by this evil law.
“The best way to fight for your rights is to get the word out to the general public,” Kirk said. “So many people do not know about AB5 to this day. I was on KUSI San Diego News talking about AB5, and friends would ask, ‘Hey what was that about?’ We must pay closer attention to what the State Assembly is doing, they make laws, without the People voting on it. We must Vote, pay attention to who has YOUR back!
“If you don’t your life may be turned upside down by some overreaching law, like AB5 has done to the Independent Contractor Business Model!”
Since this writer’s articles on Veena Dubal and her work in ensuring AB5’s passage were published, Veena has attempted to gaslight and distance herself from AB5.
Trucker Gal expressed much vitriol over this. She was there on the Assembly floor in 2019 when the AB5 bill was before the Legislature, and pointed directly to Veena’s involvement, including her and Asm. Gonzalez’s refusal to hear the Truckers’ arguments.
“She acted like a queen. It’s like she’s in charge. Why is this allowed? [Universities] are supposed to be a place of learning, but she has an agenda; how does this [AB5] fit into a university?” How is this appropriate? A lot of people should be confronting the people [at UC Hastings School of Law] who are over her.
“Why are ordinary people not allowed to be heard? Ordinary people who are prepared, with information; why are they not allowed to state their case?”
Trucker Gal reinforces Kirk’s call to pay attention and be vigilant.
“What needs to change is there needs to be some kind of committee of ordinary citizens that can be involved. If they are going to make laws, there ought to be a committee of ordinary citizens who need to okay these things, and need to be fully involved. So we can have some good honest debate, and really for the greater good, not all these games.”
NorCal Trucker sums up the law and its damage: “There’s nothing good about AB5. It just sucks.”
The Truckers interviewed for this article requested that they remain anonymous to protect their businesses and to protect the other Owner-Operators, Brokers, and Independent Truckers who contract with them.
— Headline image: Photo by Quintin Gellar from Pexels.