On October 25th, the California Trucking Association and two independent owner-operators filed a lawsuit against the state of California over an unfair test adopted by the California Supreme Court. The state uses this test, known as the “ABC Test,” to dictate if a truck driver is an employee or an independent contractor. This is necessary to determine if a worker is subject to wage orders, tax implications, and other legal issues.
What Is the ABC Test?
In April, the California Supreme Court adopted the ABC Test to determine if a worker is an employee or contractor within any industry. According to the test, a worker is an independent contractor if:
- The worker is free from the control and direction of the employer when the worker works.
- The worker conducts work that is outside the employer’s normal operations.
- The worker is also engaged in an independently established trade, business, or occupation that performs the same work as the work done for the employer.
This test assumes that all independent contractors are employees, which poses both significant issues and benefits for trucking industry employers and workers. The California Supreme Court decision that led to this development of this test determined that Dynamex Operations West, Inc., misclassified its employees as independent contractors since 2004.
A worker must satisfy all three prongs of the test to be an independent contractor. This test puts independent owner-operators at a severe disadvantage in finding work and supporting their businesses. These drivers follow trucking demand from carrier to carrier, operating multiple types of trucking hauls. Because they do not perform work outside of the employer’s normal operations, owner-operators cannot be contractors under the ABC Test.
Trucking Industry Reaction
Many truck drivers praise the ABC Test for protecting them from difficult work conditions that they liken to modern-day slavery. A major drivers’ strike in Los Angeles during summer 2017 shed light on the issues that drivers classified as independent contractors must endure, pressuring the state to instate protections for industry workers.
However, the California Trucking Association and two independent owner-operators disagree. The plaintiffs in the lawsuit include the following issues among their concerns with the ABC Test:
- Difficulty for transportation owner-operators to contract and perform trucking duties for licensed California motor carriers
- Conflict with the Federal Aviation Act of 1994, which prevents a state from implementing policies that affect a motor carrier’s routes, services, and prices
- Violations of the state’s public records laws
- Depriving businesses of due process
- Changing the relationship between thousands of trucking companies and truck drivers without considering the impact on small business owners
- Depriving the 70,000 independent owner-operator truck drivers in California of their business operations
Currently, the plaintiffs are awaiting the next steps in this case. The American Trucking Association supports this lawsuit and another one against California filed by the Western States Trucking Association in July. In contrast, port and freight workers are generally supportive of the ABC Test.
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