• Advertise
  • Contact Us
  • About Us
  • Supplier Directory
  • SCB YouTube
  • Login
  • Subscribe
  • Logout
  • My Profile
  • LOGISTICS
    • Air Cargo
    • All Logistics
    • Express/Small Shipments
    • Facility Location Planning
    • Freight Forwarding/Customs Brokerage
    • Global Gateways
    • Global Logistics
    • Last Mile Delivery
    • Logistics Outsourcing
    • LTL/Truckload Services
    • Ocean Transportation
    • Rail & Intermodal
    • Reverse Logistics
    • Service Parts Management
    • Transportation & Distribution
  • TECHNOLOGY
    • All Technology
    • Artificial Intelligence
    • Cloud & On-Demand Systems
    • Data Management (Big Data/IoT/Blockchain)
    • ERP & Enterprise Systems
    • Forecasting & Demand Planning
    • Global Trade Management
    • Inventory Planning/ Optimization
    • Product Lifecycle Management
    • Sales & Operations Planning
    • SC Finance & Revenue Management
    • SC Planning & Optimization
    • Sourcing/Procurement/SRM
    • Supply Chain Visibility
    • Transportation Management
  • GENERAL SCM
    • Business Strategy Alignment
    • Education & Professional Development
    • Global Supply Chain Management
    • Global Trade & Economics
    • HR & Labor Management
    • Quality & Metrics
    • Regulation & Compliance
    • SC Security & Risk Mgmt
    • Supply Chains in Crisis
    • Sustainability & Corporate Social Responsibility
  • WAREHOUSING
    • All Warehouse Services
    • Conveyors & Sortation
    • Lift Trucks & AGVs
    • Order Fulfillment
    • Packaging
    • RFID, Barcode, Mobility & Voice
    • Robotics
    • Warehouse Management Systems
  • INDUSTRIES
    • Aerospace & Defense
    • Apparel
    • Automotive
    • Chemicals & Energy
    • Consumer Packaged Goods
    • E-Commerce/Omni-Channel
    • Food & Beverage
    • Healthcare
    • High-Tech/Electronics
    • Industrial Manufacturing
    • Pharmaceutical/Biotech
    • Retail
  • THINK TANK
  • WEBINARS
    • On-Demand Webinars
    • Upcoming Webinars
    • Webinar Library
  • PODCASTS
  • VIDEOS
  • WHITEPAPERS
Home » Blogs » Think Tank » Battle Over Independent Truckers’ Employment Status Wages On, Awaiting High Court Ruling

Think Tank
Think Tank RSS FeedRSS

Battle Over Independent Truckers’ Employment Status Wages On, Awaiting High Court Ruling

Heavy Goods Vehicle
A heavy goods vehicle drives down a highway. Photo: Bloomberg.
November 15, 2021
Robert J. Bowman, SupplyChainBrain

The recent debate over who is an independent contractor versus a direct employee has been fueled by major players in the gig economy like Uber and Lyft. But it’s promising to have a big impact on commercial truckers as well.

Legislation, regulations and ballot initiatives have been cropping up at the state and federal levels to grapple with what constitutes an actual employee — in other words, a worker with access to the full range of benefits and rights that the term implies. But the correct definition depends on which party is doing the defining. Employers looking to hold down labor costs want the freedom to deal with independent contractors while keeping them at a legal arm’s reach. Unions, meanwhile, want to limit the use of non-union freelance labor so as to bolster their ranks and assert greater bargaining leverage over employers. And gig workers who value their independence want regular jobs while dancing away from the clutches of a Form W-2-bound existence.

The issue has been especially hot in California, where a 2020 ballot initiative allowing Uber and Lyft to classify their app-based drivers as independent contractors was subsequently ruled unconstitutional by a state judge.

Currently California and a number of other states distinguish between employees and contractors through application of the ABC test, which deems a worker to be an employee unless the employer meets three conditions:

  • The worker is “free from the control and direction of the hiring entity” while performing the work at issue;
  • The work 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 that involved in the work performed.”

In April of this year, the Ninth Circuit Court of Appeals ruled that the three-pronged ABC test should apply to California’s trucking industry. Meanwhile, proponents of the test are seeking to make it a federal law with enactment of the Protecting the Right to Organize (PRO) Act of 2021, which was passed by the U.S. House of Representatives earlier this year.

The battle also continues in California, where Assembly Bill 5, the basis for applying the ABC test in that state, is being challenged in the U.S. Supreme Court by the California Trucking Association. CTA argues that AB5 will cause “irreparable damage” to the state’s 70,000 owner-operators if it’s extended to commercial truckers.

Passage of the PRO Act will make it “pretty hard for most companies, especially in the transportation industry, to pass the “B” prong of the ABC test,” says Wendy Greenland, chief executive officer of Openforce, a provider of technology for managing independent contractors. Could a contracting motor carrier ever really prove that the work it seeks to outsource is “outside the course” of its regular business?

In California, an injunction against AB5 remains in place for the moment, “but if the PRO Act passes, none of that matters,” says Greenland. “It will federalize the ABC test.”

If that happens, Greenland claims, transportation companies will be forced to adopt a W-2 hiring model, in the process raising their operating costs by as much as 35%, and causing many to go out of business.

“For those trying to continue with a [Form] 1099 [self-employment] model,” she adds, “they’re going to have a target on their back.”

A handful of other states are proving equally aggressive in attempting to tighten the definition of employment. New Jersey, for one, “seems like it’s moving toward guilty until proven innocent with regard to the 1099 contractor model,” says Greenland. “We’re very concerned about what’s going on there.”

Greenland has “high hopes” that the Supreme Court will rule in employers’ favor. “We have reason to be positive about where this could go,” she says, even though the Court declined in October to consider a petition by Cal Cartage Transportation Express LLC, arguing that federal labor law pre-empts California from imposing AB5 criteria on truckers.

As the law stands today, Greenland cautions, the line between employee and independent contractor can be exceedingly thin. It’s vital that the hiring entity keep some distance between itself and outside drivers, she says, preferably through use of a third party that manages all of the latter’s affairs.

“If a driver gets invited to the company party or participates in the employee raffle — if you get them involved to make them feel a part of the company — you start to muddy the waters between W-2 and 1099,” Greenland says. Even an employer telling an independent driver “I hired you” can get into trouble in a court of law.

All of this is taking place at a time when the trucking industry is grappling with severe congestion at ports and inland terminals, and qualified drivers are becoming increasingly difficult to find. Greenland believes the current shortage will favor contract workers because they provide an extra measure of flexibility to an industry with limited options.

“There’s a lot riding on the Supreme Court decision,” she says. “If they say AB5 isn’t constitutional, that will resonate throughout the country.”

Logistics Last Mile Delivery LTL/Truckload Services HR & Labor Management Regulation & Compliance

RELATED CONTENT

RELATED VIDEOS

Subscribe to our Daily Newsletter!

Timely, incisive articles delivered directly to your inbox.

Popular Stories

  • A WOMAN STANDS WITH A TABLET COMPUTER IN A WAREHOUSE, SURROUNDED BY SYMBOLS FOR SHIPPING METHODS

    Five Tactics for Enabling Smart and Sustainable Supply Chains

    Data Management (Big Data/IoT/Blockchain)
  • On Demand Webinar_SAP.png

    Optimize your Logistics Pinch Points to Build a Risk Resilient & Sustainable Supply Chain

    Webinars
  • A MEXICAN FLAG FLIES IN A RISING SUN

    Mexico’s Future as U.S. Go-To Trade Partner Depends on Investment, Infrastructure

    Logistics
  • A DRAWING OF TWO PEOPLE ARE STANDING NEXT TO A SQUARE THAT READS "AI" WITH SEVERAL MECHANICAL BRANCHES COMING OFF OF THE SQUARE.

    Enabling AI in Procurement Transformation – The Case For Adoption in the Electric Utility Industry

    Technology
  • A WHITE TESLA VEHICLE SITS IN A PARKING LOT IN FRONT OF A BUILDING WITH THE TESLA LOGO ON IT.

    Podcast | Betting on Electric Vehicles: A Realistic Appraisal

    Sustainability & Corporate Social Responsibility

Digital Edition

Scb august 2023 lg

2023 100 Great Supply Chain Partners

VIEW THE LATEST ISSUE

Case Studies

  • JLL Finds Perfect Warehouse Location, Leading to $15M Grant for Startup

  • Robots Speed Fulfillment to Help Apparel Company Scale for Growth

  • New Revenue for Cloud-Based TMS that Embeds Orderful’s Modern EDI Platform

  • Convenience Store Client Maximizes Profit and Improves Customer Service

  • A Digitally Native Footwear Brand Finds Rapid Fulfillment

Visit Our Sponsors

Antuit Zebra Anvyl AutoStore
BEUMER Group Blue Ridge Global Brother
CHEP Cleo Coenterprise
Data Capture E2open Enveyo
Eva Air ForwardX Robotics Frayt
GAINSystems Generix Geodis
GEP Global Supply Chain Marketing Summit GreyOrange
Here Holman Logistics Infor
Inmar Kinaxis Lexis Nexis
Locus Robotics Logility LogistiVIEW
Lucas Systems MCA Connect MPO
Old Dominion OneRail Overhaul
PartnerLinQ (Visionet) Port of Virginia Ryder E-commerce by Whiplash
Saddle Creek Logistics SAP Shyft
Sourcemap SPS Commerce Tecsys
TGW Systems Thomson Reuters Veho
Verusen Walmart Workshop
  • More From SCB
    • Featured Content
    • Video Library
    • Think Tank Blog
    • SupplyChainBrain Podcast
    • Whitepapers
    • On-Demand Webinars
    • Upcoming Webinars
  • Digital Offerings
    • Digital Issue
    • Subscribe
    • Manage Your Subscription
    • Newsletters
  • Resources
    • Events Calendar
    • SCB's Great Supply Chain Partners
    • Supplier Directory
    • Case Study Showcase
    • Supply Chain Innovation Awards
    • 100 Great Partners Form
  • SCB Corporate
    • Advertise on SCB.COM
    • About Us
    • Privacy Policy
    • Contact Us
    • Data Sharing Opt-Out

All content copyright ©2023 Keller International Publishing Corp All rights reserved. No reproduction, transmission or display is permitted without the written permissions of Keller International Publishing Corp

Design, CMS, Hosting & Web Development :: ePublishing