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What is the AB5 LAW and why it was passed

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A BRIEF OVERVIEW OF THE AB5 LAW

You’ve probably seen or heard the term “AB5” if you read any periodicals about transportation or trucking or if you live on the West Coast. The law once known as California Assembly Bill 5 is now more commonly referred to as the “gig worker bill” or just AB5. Here is a concise summary of how it happened, what it implies, and who is impacted.

A5 LAW TIMELINE: What is it?

1. Passed into law by the California Governor in September 2019 after being approved by the state’s Senate and House

2. The bill’s passage in 2020 was postponed by a preliminary injunction.

3. The injunction was nullified and AB5 was given the go-ahead to be implemented in June 2022 after the Supreme Court of the United States declined to consider the appeal.

Why Was The AB5 Law passed?

To determine whether a worker qualifies as an employee or retains independent contractor status is the fundamental purpose of the measure that was passed. To determine a worker’s classification, the bill employs a three-part test. A worker must meet the following requirements in order to be recognized as an independent contractor:

1. Be free from the hiring entity’s control and direction when carrying out the work, both in accordance with the agreement for the performance of the work and in actuality.

2. Do tasks that are not typically part of the hiring entity’s business.

3. Be routinely working in a trade, profession, or business of the same sort as the work being performed.

Who is Affected by the AB5 Law?

There are exceptions to every law, of course. Unfortunately, owner-operators, also known as independent contractor truck drivers, who number around 70,000 in the state of California, are not included in the exception list. Owner-operators who are used by trucking businesses to handle their operations run the danger of breaking the law.

Do I need to check that a Motor carrier has AB5 Compliance if I want a California-based Motor Carrier?

Like any carrier, whether headquartered in California or another state, they must abide by all federal and state laws. Some states have more rules than others; a good example is the CARB regulation in California. Similar to those rules, it is the carrier’s obligation to fully abide by them.

What are the possible Consequences of this Law to become a Law?

According to estimates, 70,000 truck drivers in the state of California may be affected. It is possible for businesses that use these independent truck drivers to make them employees. That might be improbable because these drivers prefer operating their own businesses to driving for a firm because of the advantages they experience. The likelihood that owner-operators will want to relocate outside of California is also a possibility. However, given the existing activity in and around California’s ports, this rule will add to the already-stressed supply chains in the United States by increasing strain on California’s capacity.

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