Overdrive Magazine

January 2020

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6 | Overdrive | January 2020 ere was plenty uncertainty to go around out West as 2020 approached. California-domiciled owner-opera- tors were mulling potential moves in light of the Jan. 1 implementation into law of state Assembly Bill 5, which imposes a tough-to-pass test on busi- nesses using self-employed indepen- dent contractors. For for-hire freight haulers, the A.B. 5 test essentially outlaws traditional owner-operator leasing arrangements for eets domi- ciled there, likewise those domiciled elsewhere that contract with Califor- nia-based owner-operators. Evidence of moves by owner-oper- ator-leasing stalwarts Landstar, Prime and others to preserve relationships with their contractors was not hard to nd in the nal months of 2019. Among those potentially a ected, the results of the poll on this page underscore the realities. More than a third of respondents either were un- sure of impacts or simply hadn't heard of the rule change. Another approxi- mate third were planning a move out of state to get around any change in their business arrangements. e rest were looking at various options. Very small shares of owner-opera- tors (2%) reported any move toward employee status, which cra ers of the law seem to favor by default. Overdrive Extra blog contributor Cli ord Petersen underscored the value he and many others place on the independence a orded by truck ownership in a leased arrangement with a carrier. As far back as 1993, when Petersen got his start, he "heard company drivers and media talking about the slow death of the owner-op- erator model in trucking," he wrote. " ere was apparently just no room for 'outlaw truckers' in the industry anymore. Nothing but uncouth, unwashed bums, drug addicts de ling what trucking could be." Such characterization of the few as a cudgel against the many that Petersen summarizes from that era will sound familiar to many of today's independents and leased operators. Such attributes weren't true for most then, they aren't now, and owner-op- erators remain a substantial part of the trucking picture nationwide. Petersen wondered aloud whether encroachments such as California's law, though, nally could signal the "death throes" for traditional leasing, especially if California's approach spreads across the country. "I choose to be self-employed because I like being in control of my own destination," he wrote. " e last thing I want, or need, is government stepping in and telling me just how I cannot do that. If I abide by the rules and stay safe in my operation and honest in my dealings, I do not need Big Brother dictating my destination." INDEPENDENT CONTRACTORS IN THE STATE OF CALIFORNIA It's not all fun and games in lease-purchasing. Some deals are struc- tured to make it di cult for the driver to ever take ownership of the truck, in the process allowing both company and operator to skirt taxes and other rules. And worse. An owner-operator commenting as Mike under Cli ord Petersen's blog noted his mother had been helping him search for a small leasing eet following his deactivation of his operating authority. "And she kept coming across these lease-to-drive deals. She asked what this was, as she was seeing that the driver has to pay the company to drive the truck. I explained it to her, and she became visibly upset that this is al- lowed to happen." She may be 75 years old, but "she is still sharp as a tack." How California's A.B. 5 contractor law is affecting leased owner-operator businesses Source: OverdriveOnline.com poll Other 16% What's A.B. 5? 16% My leasing fleet has notified me my contract may need changes 8% I'm pursuing getting my authority 4% I'm becoming a company driver or I'll be an employee under a two-check system 2% Too early to tell if there will be an effect 20% I'm moving my operation out of California 34% CONFUSION Results here refl ect responses of owner-operators who felt that California's new contractor law would impact their businesses in some way. Reader Danford Dickens quipped that "there needs to be another segment in the pie chart … the percentage of drivers that are fed up with bureaucratic B.S." PART OF WHAT A.B. 5 AND SIMILAR EFFORTS AIM TO STOP

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