At the beginning of 2020 there was a proposal that would require all motor carriers to convert their drivers from independent contractors to employees. This law was set to take effect on May 7th, 2020, however, it is now up for review and will most likely not pass.
In California, drivers would have to pass the ABC test to determine whether they were independent contractors or employees. The ABC test states that (a) the worker is free from the control and direction of the hiring entity in connection with the performance of the work, (b) that the worker performs work that is outside the usual course of hiring
entity’s business, (c) that the worker is customarily engaged in an independently established trade, occupation or business of the same nature as the work performed.
The reason for withdrawal of this legislation is that the Supreme Court is stating that there are many more factors that determine whether an employee is an independent contractor. Among the few a couple of them are the workers investment in equipment or materials required for his or her task and the workers
opportunity for profit or loss depending upon his or her managerial skill.
For Legacy, this wasn’t a huge controversy when it was first proposed because all of our drivers have bee
n brought on as employees, however, most companies are basing their compensation off of the independent contractor model. This means that the pay is lower because they aren’t factoring in employee expenses. This law would have been beneficial to us because compensation rates and base pay would increase to cover the costs of having employees.