In The News
House endorses adopting California AB5 provisions at federal level
WASHINGTON — The U.S. House of Representatives has passed legislation similar to California’s AB5 law in that it requires employers to prove that independent contractors used in conducting business should not be classified as employees. The controversial California law, as applied to the trucking industry, is currently under an injunction imposed by a U.S. District Court judge that prohibits its enforcement. California-based carriers, the California Trucking Association (CTA) and owner-operators doing business in the state, as well as trucking organizations on national and state levels, have all publicly opposed AB5. The Trucker previously reported that industry leaders feared a law like AB5 would spread beyond California’s borders. With Congress considering the “Protecting the Right to Organize” (PRO) Act (HR 2474), those fears appear credible.
As widely discussed in trucking-industry circles, AB5 places the burden upon employers when classifying workers as employees or independent contractors. If a worker’s circumstances do not pass all components of a three-prong test, the individual is deemed an employee, a classification impacting company operations and the individual’s ability to choose working status. For this reason, many owner-operators who entered the business for its self-employment opportunities oppose AB5.
The federal PRO legislation incorporates the same tests imposed under AB5 and applies them nationwide. CTA contends that AB5 is prohibited under federal law, an argument with which the judge ruling in favor of the request for an injunction was noted as appearing to agree. With the injunction in place, the PRO Act could be considered a case of amending federal law for the purpose of allowing a state law to be enforceable.
The language in the federal act as included in Section 2(a)(2) defines an employee under the same terms as discussed in AB5. As with the California law, the sticking point relates to the (B) prong of the test. Under the (B) prong, a company cannot hire an independent contractor to perform tasks, inherent to the company’s business, which other employees already perform. A carrier in the business of moving freight and employing individuals who move freight could not hire an independent contractor to perform similar tasks.
Should PRO receive U.S. Senate approval, something political pundits doubt is possible, it would be passed to President Donald Trump to either sign into law or veto. Of the two, a veto seems most likely, as the administration has stated PRO “appears to cut and paste the core provisions of California’s controversial AB5, which severely restricts self-employment. AB5 is actively threatening the existence of both the franchise business sector and the gig economy in California. It would be a serious mistake for Congress to impose this flawed job-killing policy on the entire country.”
Truckers nationwide should remain in tune with further action on PRO. It may impact many careers.