Some California Truckers Exit State Before AB5 Labor Law Takes Effect

After 43 years in California, truck drivers Brian Gray and his wife, Karol, packed up their belongings and headed to Oklahoma in early December after news that the new sweeping labor law, AB5, was set to take effect on Jan. 1.

"I once made a good living in California, but it's all gone," Brian Gray told FreightWaves. "I am tired of being persecuted in California for being a truck driver."

With AB5, which seeks to limit the use of independent contractors, scheduled to become law, Gray said he headed to Pottawatomie County, Oklahoma, to scout out some land and find a "business-friendly" state to house his flatbed company that hauls construction equipment.

"We bought a piece of ground in Oklahoma, but we hate to leave California," he said. "I was always known as the ‘go-to guy' in California and my mom and dad, brothers, nieces, everybody, still lives here, but I can't afford to wait and see what happens in January and possibly lose everything."

California-based owner-operators said they are being advised to move out of the state, get their own authority, which can be costly, or transition to positions as company drivers, in some cases, as the Employee and Independent Contractors law, AB5, goes into effect.

The state law determines whether a worker is an employee or contractor. It stems from the California Supreme Court's decision against Dynamex Operations West Inc., a package and document delivery company. The court found that Dynamex misclassified its delivery drivers as independent contractors rather than employees and that all California-based companies that use independent contractors must use the "ABC test," a three-pronged test to determine whether a worker is an employee.
Trucking companies must prove a worker is free from the control and direction of the hirer in connection with the performance of the work; the worker performs work that is outside the usual course of the hiring entity's business; and the worker is customarily engaged in an independently established trade, occupation or business of the same nature as the work performed for the hiring entity.

Just days before the Jan. 1 deadline, the California Trucking Association, which has filed legal challenges against AB5, said it is receiving "daily calls from owner-operators being told they can no longer operate in California."

"We know AB5's impacts are already being felt," Chris Shimoda, vice president of government affairs for CTA, told FreightWaves on Dec. 30.

The CTA filed a motion for a temporary restraining order against the implementation of AB5 on Dec. 24, and a hearing is scheduled for Jan. 6. Shimoda said a second hearing is set for Jan. 13 on a preliminary injunction motion the organization filed in early December to block AB5.

Some California-based truckers are unsure what advice to follow ahead of the AB5 implementation, as some mega-carriers cut ties with independent California drivers in mid-November.

"Unless the court grants the temporary restraining order and, ultimately, a preliminary injunction, AB5 is the enforceable law of the land and independent truckers will continue to be driven from California," Shimoda said. 

Just one day before AB5 is set to take effect, Jeff Fink and his wife, Elyse, of Victorville, California, have narrowed their relocation search to three cities in Tennessee.

The Finks, team drivers for Long Haul Trucking of Albertville, Minnesota, said they don't want to leave the carrier they are leased to, so they have no choice but to find a more trucker-friendly state to reside.

"We were called into the office three weeks ago and asked what we were going to do," Jeff Fink told FreightWaves. "As of Jan. 1, I was told the company can't dispatch me with loads leaving California if we still want to work for the company."

Prior to the news that the state was enacting AB5, the Finks bought a 2020 Peterbilt Model 579 UltraLoft to comply with stringent California Air Resources Board (CARB) requirements.

"This new law is going to be a financial hardship for us if things don't work out," Fink said."We made a large investment to comply with CARB and work in the state."

The Finks' mother-in-law currently lives in an assisted living facility about 110 miles from their home. Selling their place and moving to Tennessee, where they can also park their truck, was not a move they were ready to make ahead of AB5.

"My wife could drive down anytime she wanted to see her mom about 110 miles away, but that's not going to be the case now as we are looking to move across the country to maintain our livelihood," Fink said. "We spent the holiday weekend getting out house ready to sell."

Once the owner of a four-truck fleet, Jimmy Nevarez, the owner of Angus Transportation Inc., based in Chino, California, is struggling to hang on to one owner-operator as the AB5 deadline looms.

"I have already lost half of my fleet, so this is devastating," Nevarez told FreightWaves. 

He said he can't pick up and move like some other California-based truckers because of his wife and daughters, 7 and 5, who love their schools and friends.

"I can't just uproot my family, so I am looking for alternatives to keep my business running," he said. "If I am forced to deadhead out of California to find loads, it will turn my business on its head."

Less than two weeks before AB5 was slated to take effect, the Western States Trucking Association (WSTA) refiled its lawsuit challenging provisions in AB5 that specifically address construction trucking companies.

"A lot of truckers are sitting back to see what happens, but they need to figure out a solution soon as there is a lot of misinformation out there," Joe Rajkovacz, head of government affairs for WSTA, told FreightWaves.

The WSTA lawsuit focuses on the state's Labor Code section 2750.3, subdivision (f)(8), which does not utilize the ABC test.

"Given the unpredictability of the judicial system, a judge could rule narrowly in the CTA case in a manner that does not provide adequate relief for construction trucking companies," WSTA stated in its complaint.

For motor carriers providing construction trucking services, AB5 provides no test whatsoever; rather, it mandates that workers are employees rather than independent contractors, according to the WSTA's complaint, filed in U.S. District Court for the Central District of California.

According to court documents, AB5 "runs afoul of federal law which prohibits states from enacting or enforcing any law or regulation related to the price, route or service of a motor carrier."

WSTA was the first trucking organization to challenge the original Dynamex decision back in 2018.

"These are interesting times for California-based truckers," Rajkovacz said. "The state of California is trying to superimpose its will on the federal government, so it will be interesting to see how this plays out."

Image by Maxx Girr from Pixabay