Truck Law

A Transportation Law Blog from TransportationAttorneys.NET

Federal Relief Package Offers Unemployment For Owner-Operators

by gspencermynko

Out-of-work owner-operators are eligible for benefits!

“Unemployment For Independent Contractors”. Yep, these are strange times indeed. So, you ask, how can my Owner-Operator friends collect Federal unemployment benefits.

Allow Me To Introduce You To The Federal CARES Act – Unemployment Benefits for Independent Contractors.

The CARES program provides unemployment assistance provides expanded unemployment assistance to individuals not eligible for unemployment insurance benefits: specifically independent contractors, including the ubiquitous “Owner-Operator”. In an unprecedented change, independent contractors and those self-employed will be able to draw unemployment pay should they lose work as social distancing and shelter-at-home requirements related to the COVID-19 coronavirus outbreak erode the U.S. economy. Under the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act, both leased and independent Owner Operators will be entitled to “pandemic unemployment assistance” if they are able and willing to work or telework (I think this would encompass freight brokers as well) for pay, but can’t because of reasons related to the COVID-19 pandemic. You heard me right: owner-operators will be able to file for unemployment pay from the federal government.

Unemployment assistance will be available to self-employed individuals under Section 2102 of the CARES Act if the Applicants provide self-certification that they are (1) partially or fully unemployed, OR (2) unable and unavailable to work because of one of the following circumstances:

  • is diagnosed with COVID-19 or experienced symptoms or is seeking a diagnosis,
  • has a member of his or her household that has been diagnosed with the illness,
  • is providing care to a family member with COVID-19,
  • has primary caregiving responsibility to a child that is unable to attend school due to COVID-19,
  • cannot reach his or her place of work because of a quarantine or advice of a health care provider to self-quarantine,
  • has become a breadwinner after the head of household has died from COVID-19,
    has had to quit his or her work as a result of Coronavirus, or
  • has a work location that is closed as a direct result of a COVID-19 public health emergency.

This pay could be necessary for many owner-operators: Nearly 50% of Owner-Operators have experienced a substantial decrease in their work load. The exception is for those hauling food, particularly reefer loads. ICs could receive over $600 a week from the federal Pandemic Unemployment Assistance (PUA) program. In addition to the $600 a week offered through the end of July, self-employed individuals and independent contractors would also receive from the federal government 50% of what their state offers as unemployment pay. Of course, employee drivers who are eligible for state unemployment pay are not eligible for PUA program benefits.

Under the PUA program, self-employed and independent contractors are eligible if they quit their jobs because the virus outbreak, such as if they contract the COVID-19 or if they need to care for a relative who does. This further covers ICs who generally cannot go on “paid leave” from a job.

The Unemployment Assistance covers ICs who are “unemployed” and also “partially unemployed”.

Whether you are completely out of work or have experienced a substantial decline in your business, you are still eligible for PUA Program benefits. There are important exceptions: people receiving benefits under the Families First Coronavirus Response Act or state laws providing similar benefits to ICs.

For what period of time am I eligible for these benefits?

This financial assistance is available retroactively to January 27, 2020 through December 31, 2020 provided the individual’s unemployment, partial unemployment, or inability to work caused by COVID-19 continues, up to a maximum of 39 weeks including any weeks when the independent contractor received any other paid benefits under federal or state law.

The Families First Coronavirus Response Act (“FFCRA”)

The Families First Coronavirus Response Act, which covers independent contractors, also provides for paid sick and paid family leave to self-employed individuals. This program has been expanded and extended to pay sick time and family and medical leave to “eligible self-employed individuals” who “regularly [carry] on a trade or business . . . , and would be entitled to receive paid leave . . . if the individual were an employee of an employer (other than himself or herself).”

Independent contractors are eligible for up to 10 days of paid sick leave if they are unable to work because they are subject to a government quarantine or order of isolation due to COVID-19, have been advised by their doctor to self-Quarantine, or are experiencing symptoms of COVID-19 and are seeking medical attention. Such eligible independent contractors are entitled to up to $511 per day up to a maximum of $5110, or 100% of their average daily self-employment income for the taxable year, which ever is less. Further assistance is available if the independent contractor has to care for another individual in isolation or to care for a child whose school has been closed or whose care provider is unavailable due to COVID-19 up to a maximum of $2000 for 10 days paid sick leave or 67% of the average daily self-employment income for the taxable year.

Paid family leave is also available to ICs unable to work because they have to care for a family member who is under government order or under advice by their doctor to isolate, or to care for a child who school has been closed or whose Child care provider is unavailable because of COVID-19. This benefit entitles the recipient to the lesser of $200 per day or 67% of their average daily self-employment income for a maximum of 50 days.

Notably, the FFCRA goes into effect today, April 1, 2020. No foolin’.

So, you ask, how do I get this money?

Look, the government isn’t going to send unemployment fairies out to your homes with bags of money. So, let’s figure out what you need to do; but first a statement from Senator Dianne Feinstein:

“The $2 trillion coronavirus stimulus signed into law last week includes new unemployment benefits for self-employed, part-time and gig workers who in the past haven’t been eligible for such benefits. These workers were made eligible because the economic damage caused by the coronavirus isn’t discriminating between different types of workers and so neither should federal benefits.
“In California, more than 2 million workers are self-employed and 3.4 million work a part-time job. The state is also home to millions of so-called ‘gig workers,’ independent contractors who work through online platforms such as Uber and Lyft. These non-traditional workers comprise as much as one- quarter of all workers in the state.
“I encourage all Californians who have lost their jobs because of the pandemic to apply for unemployment benefits if needed. Even if you weren’t eligible in the past, you may be now.”

Well, ain’t that special.

How do I file for unemployment insurance?

Californians can apply for unemployment benefits through the California Employment Development Department. The best way to begin the process is by going online and clicking HERE. Claims can be filed online Sunday 5 a.m. to 8:30 p.m., Monday 4 a.m. to 10 p.m., Tuesday through Friday 2 a.m. to 10 p.m. and Saturday 2 am to 8 p.m.

But you say, what if I’m not eligible for traditional Unemployment Insurance?

Fear not, Noble O-O! The CARES Act temporarily expands unemployment insurance to cover individuals who are not traditionally covered, including the self-employed, gig-workers, independent contractors, and workers with irregular work histories. It also expands the list of allowable criteria for claiming unemployment compensation to include many reasons related to the COVID-19 public health emergency. Contact the unemployment office in the state where you worked to determine your eligibility.

Got it?

Good – now go n’ get you some.

This is a Medical and Legal Article about COVID-19 – the disease caused by the Novel Corona Virus of 2019.

by gspencermynko

As some of you may know, in addition to being a transportation lawyer, I am also a Medical Doctor, working for an urgent care and occupational medical group. As you can imagine, I routinely see patients with upper respiratory and pulmonary symptoms: People complaining of cough, fever, chest pain, shortness of breath; some who have chronic illnesses such as diabetes, lung disease, kidney disease, compromised immunity; and those who are elderly. In other words, people who may have COVID-19. I will share some basic information from the CDC regarding the Corona virus, what you should do to protect yourself, and when to go to your doctor, an emergency room or urgent care. While this is out of the ordinary for my articles, this is an extraordinary time and I want to share my experience as someone who is on the front line dealing with this.

Secondly, I will discuss the recent FMCSA order suspending certain safety rules in response to the COVID-19 outbreak.

What are the Signs and Symptoms of COVID-19?

COVID-19 ranges from mild disease with non-specific signs and symptoms of acute respiratory illness (like a common cold or mild case of the flu), to severe pneumonia with respiratory failure and shock (people who end up in an ICU on a ventilator). Frighteningly, there are people infected with COVID-19 who have NO symptoms and feel perfectly normal – scary because these individuals may pass off the illness to unsuspecting people. Needless to say, it makes diagnosing the illness a challenge and testing for COVID-19 is extremely limited.

Who is at risk for COVID-19?

Patients at greatest risk of infection are persons who have had prolonged, unprotected close contact with a patient with symptomatic, confirmed COVID-19 and those who live in or have recently been to areas with sustained transmission.

If I am concerned about COVID-19, I ask patients these questions:

-Any travel to mainland China (or other high risk areas) in the past 14 days?
-Any contact with a person diagnosed with, suspected to have, in evaluation for COVID-19?
-Any fevers, dry coughs, or shortness of breath?

At the clinics I work at, patients with suspected or confirmed COVID-19 are asked to wear a surgical mask as soon as they are identified and are evaluated in a private room with the door closed.

Who is at risk for severe disease from COVID-19?

Basically, older adults and people of any age who have serious underlying medical conditions.

According to the Centers for Disease Control, those at high-risk for severe illness from COVID-19 include:

People aged 65 years and older
People who live in a nursing home or long-term care facility
Other high-risk conditions:
People with chronic lung disease or moderate to severe asthma
People who have heart disease with complications
People who are immunocompromised including cancer treatment
People of any age with severe obesity (body mass index (BMI)≥40) or certain                      underlying medical conditions, particularly if not well controlled, such as                    those with diabetes, renal (kidney) failure, or liver disease might also be at                   risk
People who are pregnant should be monitored since they are known to be at risk            with severe viral illness.

Many conditions can cause a person to be immunocompromised, including cancer treatment, bone marrow or organ transplantation, immune deficiencies, poorly controlled HIV or AIDS, and prolonged use of corticosteroids (like Prednisone) and other immune weakening medications. Ask yourself if you fall into any of these criteria.

How is COVID-19 treated?

Not all patients with COVID-19 will require medical supportive care. Treatment for hospitalized patients with COVID-19 is focused on supportive care of complications, including advanced organ support for respiratory failure, septic shock, and multi-organ failure. There are currently no antiviral drugs licensed by the U.S. Food and Drug Administration (FDA) to treat COVID-19.
Remember, the vast majority of patients require no specific medical treatment and will recover uneventfully. But don’t play Russian Roulette – take steps to protect yourself.

I work with patients to manage their underlying condition to the best of their ability, including ensuring that patients have sufficient medication and supplies. I encourage all patients, regardless of risk, to:
Take steps to protect yourself (see below)
See a doctor if you are sick with a fever, cough, or shortness of breath.
Follow CDC travel guidelines and the recommendations of your state and local health officials.

How COVID-19 Spreads.

The virus is thought to spread mainly from person-to-person.
Between people who are in close contact with one another (within about 6 feet).
Through respiratory droplets produced when an infected person coughs or sneezes.
These droplets can land in the mouths or noses of people who are nearby or possibly be inhaled into the lungs. It may be possible that a person can get COVID-19 by touching a surface or object that has the virus on it and then touching their own mouth, nose, or possibly their eyes, but this is not thought to be the main way the virus spreads. However, the virus that causes COVID-19 seems to be spreading easily and sustainably. It’s going to get worse before it gets better.

Protect Yourself And Others With These Simple Actions

Clean your hands often:

Wash your hands often with soap and water for at least 20 seconds especially after you have been in a public place, or after blowing your nose, coughing, or sneezing.
If soap and water are not readily available, use a hand sanitizer that contains at least 60% alcohol. Cover all surfaces of your hands and rub them together until they feel dry.
Avoid touching your eyes, nose, and mouth with unwashed hands

Avoid close contact

Avoid close contact with people who are sick
Put distance between yourself and other people if COVID-19 is spreading in your community.

Stay home if you’re sick

Stay home if you are sick, except to get medical care.

Cover coughs and sneezes

Cover your mouth and nose with a tissue when you cough or sneeze or use the inside of your elbow.
Throw used tissues in the trash.
Immediately wash your hands with soap and water for at least 20 seconds. If soap and water are not readily available, clean your hands with a hand sanitizer that contains at least 60% alcohol

Wear a facemask if you are sick

If you are sick: You should wear a facemask when you are around other people (e.g., sharing a room or vehicle) and before you enter a healthcare provider’s office. If you are not able to wear a facemask (for example, because it causes trouble breathing), then you should do your best to cover your coughs and sneezes, and people who are caring for you should wear a facemask if they enter your room.

If you are NOT sick: You do not need to wear a facemask unless you are caring for someone who is sick (and they are not able to wear a facemask). Facemasks may be in short supply and they should be saved for caregivers.

Clean and disinfect

Clean AND disinfect frequently touched surfaces daily. This includes tables, doorknobs, light switches, countertops, handles, desks, phones, keyboards, toilets, faucets, sinks and gas pumps! See https://www.cdc.gov/coronavirus/2019-ncov/prepare/prevention.html for more information

The FMCSA issued an Emergency Declaration for motor carriers and drivers providing direct assistance in support of relief efforts related to the COVID-19 outbreaks.

The FMCSA ruled that due to the COVID-19 outbreak, an emergency exists that warrants an emergency exemption from Parts 390 through 399 of the Federal Motor Carrier Safety Regulations, excluding Drug and Alcohol Testing.
Specifically, the Emergency Declaration provides relief for motor carriers providing direct assistance in support of emergency relief efforts related to the COVID-19 outbreaks, including transportation to meet immediate needs for:

(1) medical supplies and equipment related to the testing, diagnosis and treatment of COVID-19;

(2) supplies and equipment necessary for community safety, sanitation, and prevention of community transmission of COVID-19 such as masks, gloves, hand sanitizer, soap and disinfectants;

(3) food for emergency restocking of stores;

(4) equipment, supplies and persons necessary to establish and manage temporary housing, quarantine, and isolation facilities related to COVID-19;

(5) persons designated by Federal, State or local authorities for medical, isolation, or quarantine purposes; and

(6) persons necessary to provide other medical or emergency services, the supply of which may be affected by the COVID-19 response.

The Emergency Declaration of 03/19/2020 is explained here:
https://www.fmcsa.dot.gov/emergency/frequently-asked-questions-related-fmcsa-emergency-declaration-03192020. See the actual declaration here: https://www.fmcsa.dot.gov/sites/fmcsa.dot.gov/files/2020-03/FMCSA%20Emergency%20Declaration%203.13.20.pdf.

Arbitration Update! Federal Court Stops California From Banning Arbitration: Federal Judge Stops California From Enforcing AB 51

by gspencermynko

Federal Court Grants Preliminary Injunction on Enforcement of California Ban on Employment Arbitration Agreements.

California Assembly Bill (AB) 51, which bans mandatory arbitration agreements, was set to go into effect on January 1, 2020. However, the Chamber of Commerce of the United States filed a suit to stop AB 51 and succeeded in securing a Temporary Injunction against the State of California from enforcing the new law (this occurred in a very similar fashion as to how the CTA stopped the State from enforcing AB 5 against trucking companies).

The U.S. District Court for the Eastern District of California granted a request for a preliminary injunction to prohibit the State of California from enforcing Assembly Bill 51 (AB 51) as to arbitration agreements governed by the Federal Arbitration Act (FAA). Chamber of Commerce of the United States, et al. v. Becerra, et al., No. 2:19-cv-2456 (E.D. Cal. Jan. 31, 2020).

On January 31, 2020, the Court then granted the request for a preliminary injunction enjoining the State from enforcing AB 51. On February 7, 2020, the court issued its written order detailing its reasoning for granting the preliminary injunction. It ruled that the four factors required for a preliminary injunction were met:

The likelihood of the plaintiffs succeeding on the merits of the case;
The likelihood of irreparable harm to the plaintiffs absent a preliminary injunction;
The balance of the equities; and
Whether an injunction is in the public interest.

As such, the State of California is banned from enforcing AB 51, which essentially makes employment arbitration agreements unenforceable. Chalk up a victory for Employers.

However, enforcement of arbitration agreements in trucking under the Federal Arbitration Act (FAA) became more difficult under New Prime Inc. v. Oliveira, 139 S. Ct. 532 (2019).

FAA and Transportation Worker Exception.

Last year the United States Supreme Court ruled that a trucking company cannot compel arbitration in a wage dispute brought by an independent contractor truck driver. Generally, employers can insist upon arbitration agreements in contracts with independent contractors. However, The US Supreme Court has decided that an exception to the Federal Arbitration Act (FAA) applies to independent contractor truck drivers. Even though the plaintiff (an interstate truck driver) had signed an arbitration agreement agreeing he was an independent contractor, the Court held the FAA could not be used to compel arbitration. But the Court also stated that a transportation worker who signed an arbitration agreement could be compelled to arbitrate pursuant to a court’s inherent authority or state arbitration statutes

Who Actually Works In “Interstate Commerce”?

Following the decision in New Prime, courts have made inconsistent rulings as to who falls within the scope of the transportation worker exception, focusing on whether transportation workers are engaged in interstate commerce. These range from “obvious” examples: long-haul truck drivers whos transport goods across state lines are “engaged in interstate commerce”. But what about transportation workers who work within a single state, such as last-mile delivery drivers, couriers, food delivery drivers, drivers of ride-sharing services, and other gig-economy transportation service?

Courts have applied vague, multi-factor tests which result in inconsistent and contradictory results:

These decisions have a broad, inclusive definition of the Transportation Worker Exception:

Waithaka v. Amazon.com, Inc., LEXIS 140605 (D. Mass. Aug. 20, 2019) (last-mile delivery drivers were subject to the transportation worker exception, even though they did not cross state lines); See also Rittmann v. Amazon.com, Inc., 383 F. Supp. 3d 1196 (W.D. Wash. 2019)

Ward v. Express Messenger Sys., LEXIS 175674 (D. Colo. Jan. 28, 2019) (package delivery drivers were subject to the transportation worker exception, even though they did not cross state lines);

Muller v. Roy Miller Freight Lines, LLC, 34 Cal. App. 5th 1056 (2019) (a trucker was subject to the transportation worker exception even though he did not personally transport goods across state lines).

These decisions have a narrow, exclusive definition of the Transportation Worker Exception, where employees are required to arbitrate disputes:

Austin v. DoorDash, Inc., No. 1:17-cv-12498, 2019 U.S. Dist. LEXIS 169728 (D. Mass. Sep. 30, 2019) (food delivery drivers were not subject to the transportation worker exception);

Davis v. Cintas Corp., No. 2:18-cv-1200, 2019 U.S. Dist. LEXIS 87261 (W.D. Pa. May 23, 2019) (route sales drivers were not subject to the transportation worker exception);

Borgonia v. G2 Secure Staff, LLC, No. 19-cv-914, 2019 U.S. Dist. LEXIS 70224 (N.D. Cal. Apr. 25, 2019) (airport employees providing passenger assistance and security services were not subject to transportation exemption).

Using California Law to Compel Arbitration of Transportation Worker Disputes

Obviously, there is great risk that arbitration agreements with transportation workers will not be enforced under the FAA. However, is enforcement under California Law possible? While the FAA provides limited shelter, despite the fight over AB 51, is there third way to compel arbitration?

Arbitration agreements may still be an option for contracts with carriers that are not a one-man/one-truck driving operation. During the oral argument, several justices probed whether an owner-operator who did not personally perform services or who operated multiple trucks would be subject to the exemption. The court did not address these issues in its opinion, arguably leaving them open for future litigation. That said, a trucking company may be able to protect itself if it contracts with another company instead of an individual.

Speak To An Experienced Transportation Attorney About Arbitration and Class Action Waivers.

Trucking and Transportation companies need to evaluate their current arbitration agreements to maximize their chance at enforceability. Can arbitration be governed by state law in the event the FAA is determined to be inapplicable; Or are there provisions for arbitration rules outside of Federal and State law? It is important to draft the arbitration provision carefully so that it will satisfy state law requirements.
Trucking companies need to work with lawyers who keep tabs on changing laws and make certain that their arbitration agreements are state of the art.

Furthermore, in light of recent developments, class-action waivers should be separate from arbitration clauses. Finally, the arbitration provision should make it clear that a trucking companies customers and clients are covered under the arbitration agreement.

Drug Testing Clearinghouse and AB5 Update

by gspencermynko

Drug and Alcohol Clearinghouse

What All Trucking Companies Need To Know.

“The Clearinghouse, is a web-based system that will provide FMCSA and employers of commercial motor vehicle (CMV) drivers” the ability to “identify drivers who are prohibited from operating CMVs due to DOT drug and alcohol program violations.” The Clearinghouse also documents that drivers have been green-lighted to again drive a CMV on public roads. “Information maintained in the Clearinghouse will enable employers to identify drivers who commit a drug or alcohol program violation while working for one employer, but fail to subsequently inform another employer. Records of drug and alcohol program violations will remain in the Clearinghouse for five years, or until the driver has completed the return-to-duty process, whichever is later.” See https://www.transportation.gov/sites/dot.gov/files/docs/resources/individuals/privacy/345191/fmcsa-drug-and-alcohol-clearinghouse-2019-pia-1.pdf.

What Employers Need To Do.

1) Employers will conduct pre-employment inquiries on prospective employees and if drug and alcohol violations are identified, those employees will be prohibited from performing safety-sensitive functions, until successful completion of the return-to-duty (RTD) process. Safety-sensitive functions are defined in
49 CFR § 382.107 as the time from when a driver begins to work or is required to be in readiness to work until the time he/she is relieved from work and all responsibility for performing work. Safety-sensitive functions include the time a driver is driving a CMV on public roads.

2) Employers will query the Clearinghouse annually for each driver they currently employ, and if drug and alcohol violations are identified, those employees will be prohibited from performing safety-sensitive functions until successful completion of the RTD process;

What The State and Federal Govenments Do.

3) State Driver’s License Agencies (SDLAs) will query the Clearinghouse before issuing, renewing, transferring, or upgrading a CLP or CDL;

4) When requested by the National Transportation Safety Board (NTSB) as part of a crash investigation, FMCSA will provide NTSB information contained in the Clearinghouse concerning drivers who are involved in the crash under investigation.

Employers may designate assistants to query, and/or report, within the Clearinghouse. Assistants will receive an invitation from their employer to register for a Clearinghouse account once an account and permissions have been established for them. The Assistants will not be able to register for a Clearinghouse account unless they receive an invitation. Once an assistant receives an invitation, he or she may login to the Clearinghouse using login.gov on behalf of their employer.

When and What Must A Trucking Company Report To The Clearinghouse?

An alcohol confirmation test with a concentration of 0.04 or higher

Refusal to test (alcohol) as specified in 49 CFR 40.261

Refusal to test (drug) not requiring a determination by the MRO as specified in 49 CFR 40.191

Actual knowledge, as defined in 49 CFR 382.107, that a driver has used alcohol on duty, used alcohol within four hours of coming on duty, used alcohol prior to postaccident testing, or has used a controlled substance

Negative RTD test results (drug and alcohol testing, as applicable)

Completion of follow-up testing

Employers, including a driver who employs himself or herself, are required to report the following information to the Clearinghouse:

1. Reason for the test;
2. Driver’s name, date of birth, and CDL/CLP number and state of issuance;
3. Employer name, address, and USDOT number;
4. Date of the test;
5. Date of verified result;
6. Test category
7. Date the result was reported; and
8. Test result.

Notably, there are ways and reasons by which a CMV Driver may challenge the information in the Clearinghouse. As a Transportation Lawyer and Certified DOT Medical Examiner, I am in a unique position to comment and advise on the legal AND medical aspects of drug and alcohol testing of CDL Holders.

Recent Developments In The CTA’s Battle Against AB 5

The CTA issued an AB5 “Litigation Update” after the State and Teamsters’ failed to convince Judge Benitez to essentially overturn his injunction on the enforcement of AB5 and dismiss the CTA’s lawsuit.

I will simply quote from the CTA’s news release:

“…[T]he Court denied the Teamsters’ request for a stay of the preliminary injunction, which means the State is still prohibited from enforcing AB 5 as it relates to motor carriers.”

In denying the State’s motion to dismiss the CTA’s lawsuit, “the Court found that [the] CTA has standing and may pursue the FAAAA preemption claim.”

So basically the CTA’s lawsuit based on FAAAA preemption of AB 5 is still very much alive and well.

Federal and State Judges Rule California Cannot Enforce AB5!

by gspencermynko

Breaking News: Federal Judge Roger Benitez has gone a step further and GRANTED the CTA’s motion for an injunction that now blocks AB-5 enforcement against California trucking companies until the entry of Final Judgment. Furthermore, a State Judge also ruled that AB-5 is preempted by Federal law.

California Trucking companies got an extended reprieve from AB-5 and the ABC test, now that a Federal Judge granted a preliminary injunction restraining the state of California from enforcing AB-5 until the lawsuit is resolved. Note: The CTA may ultimately prevail in this landmark case and AB5 will be little more than a footnote in the annals of California Trucking history. U.S. District Judge Roger Benitez, who issued a temporary restraining order preventing state officials from enforcing the law against motor carriers, has now extended that ruling by granting a preliminary injunction. While not officially dead, AB5 (as far as trucking companies and their owner-operators are concerned) is the in the ICU on life support.

Let’s revel in Judge Benitez’s decision and its rationale.

Here are some noteworthy excerpts that make it clear the Judge “gets it”.

“For decades, the trucking industry has used an owner-operator model to provide the transportation of property in interstate commerce. That model generally involves a licensed motor carrier contracting with an independent contractor driver to transport the carrier-customer’s property…Motor carriers offer many types of trucking services, including conventional trucking, the transport of hazardous materials, refrigerated transportation, flatbed conveyance, intermodal container transport, long-haul shipping, movement of oversized loads, and more. Motor carriers meet the fluctuating demand for highly varied services by relying upon independent-contractor drivers”

Unlike California Democrats, Judge Benitez actually took the time to understand the industry:

“Individual owner-operators use a business model common in both California and across the country. They typically buy or lease their own trucks, a significant personal investment considering that the record reflects a single truck can cost in excess of $100,000… Then, the owner-operators typically work for themselves for some time to build up their experience and reputation in the industry. Once the owner-operator is ready to expand their business, they contract for or bid on jobs that require more than one truck, at which time, the owner-operator will subcontract with one or more other owner-operators to complete the job. Many individual owner-operators have invested in specialized equipment and have obtained the skills to operate that equipment efficiently”

He then nicely summarized the Borello test that has been relied on for decades:

“Whether certain laws and regulations in the California Labor Code apply to truck drivers, generally, depends on their status as employees or independent contractors. S.G. Borello & Sons, Inc. v. Dep’t of Indus. Relations, 48 Cal. 3d 341, 350 (1989). For nearly three decades, California courts have used a test, based on the Borello decision, to determine whether workers are correctly classified as employees or independent contractors. The Borello standard considers the “right to control work,” as well as many other factors, including (a) whether the worker is engaged in a distinct occupation or business, (b) the amount of supervision required, (c) the skill required, (d) whether the worker supplies the tools required, (e) the length of time for which services are to be performed, (f) the method of payment, (g) whether the work is part of the regular business of the principal, and (h) whether the parties believe they are creating an employer-employee relationship”

Here’s some good stuff that bodes well for CA trucking’s future:

Likelihood of Success on the Merits: “.To prevail on their motion for a preliminary injunction, [CTA] must establish, at a minimum, that there are “serious questions” on the merits of at least one of their challenges to AB-5’s ABC test… For the following reasons, Plaintiffs have done so with their FAAAA preemption challenge… the FAAAA likely preempts “an all or nothing” state law like AB-5 that categorically prevents motor carriers from exercising their freedom to choose between using independent contractors or employees.

AB-5 goes against Congress’ intent to deregulate the industry:

“By effectively prohibiting motor carriers from contracting with independent contractor drivers, AB-5 and its ABC test would transform California into its own patch in the very “patchwork” of state-specific laws Congress intended to prevent.”

These Words should be music to your ears:

“[T]here is little question that the State of California has encroached on Congress’ territory by eliminating motor carriers’ choice to use independent contractor drivers, a choice at the very heart of interstate trucking. In so doing, California disregards Congress’ intent to deregulate interstate trucking, instead adopting a law that produces the patchwork of state regulations Congress sought to prevent. With AB-5, California runs off the road and into the preemption ditch of the FAAAA. Accordingly, Plaintiffs’ motion for a preliminary injunction is GRANTED.

A State Court Judge Also Agrees That AB-5 is Preempted by Federal Law.

On January 8, 2020, Judge William Highberger of the Los Angeles Superior Court ruled that because the ABC test effectively prohibits motor carriers from using independent contractors to provide transportation services, the test has a significant, impermissible effect on motor carriers’ “prices, routes, and services,” and thus, is preempted by the Federal Aviation Administration Authorization Act of 1994 (“FAAAA”). The People of the State of California v. Cal Cartage Transportation Express, LLC, Case No. BC689320 (Los Angeles Superior Court January 8, 2020). The court reached the same conclusion (as Judge Benitez in the CTA case), finding the FAAAA preempts AB 5 as applied to owner-operators contracting with motor carriers. The ruling makes it clear that AB-5’s ABC test is preempted by the FAAAA, and restores the multi-factor Borello test as the standard to determine whether a truck driver is an independent contractor or employee. The Court ruled that the FAAAA preempted Prong B of AB-5’s ABC test because it effectively prohibits motor carriers from utilizing independent owner-operator truck drivers.

Judge Highberger stated that the “‘ABC Test’ set forth in Dynamex Operations-West v. Superior Court and the recently enacted AB-5 clearly run afoul of Congress’s 1994 determination in the FAAAA that a uniform rule endorsing use of non-employee independent contractors (commonly known in the trucking industry as ‘owner-operators’) should apply in all 50 states to increase competition and reduce the cost of trucking services.” The judge went on to state: “After careful consideration, the court agrees with defendants that the currently operative legal requirements for determination of employee versus independent contractor status are preempted as to certain motor carriers and their drivers by an act of Congress”.

Wow – Trucking is winning in the State courts as well.

Yet Another Sweet Order Better Than The Last One.

I really love this (and I’m sure you do too):

“It is further ORDERED:… Defendant Xavier Becerra, in his official capacity as the Attorney General of the State of California, Julia A. Su, in her official capacity as the Secretary of the California Labor and Workforce Development Agency, Andre Schoorl, in his official capacity as the Acting Director of the Department of Industrial Relations of the State of California, Lilia Garcia Brower, in her official capacity as the Labor Commissioner of the State of California, and Patrick Henning, in his official capacity as Director of the California Employment Development Department are temporarily enjoined from enforcing Assembly Bill 5’s ABC test, as set out in Cal. Labor Code § 2750.3(a)(1), as to any motor carrier operating in California, pending the entry of final judgment in this action”.

Trucking Industry – 3, State of California – 0. Thanks Judges.

Will Trucking Win The War?

While I really cannot understate the huge significance of winning this battle, the war rages on. And while the State and the Teamsters have been seriously injured, they – and their bastard child AB-5 – are not dead yet. Stock up on popcorn folks – this is going to get interesting.

YOUR EXECUTION HAS BEEN STAYED!

by gspencermynko

Breaking News: A federal judge granted trucking companies an injunction that temporarily blocks AB-5 enforcement against California trucking companies.

Trucking companies got a temporary reprieve from AB-5 and the horrible ABC test when a Federal Judge granted an injunction restraining the big, bad state of California and its minions and lackeys from enforcing AB-5. In the final hours of New Year’s Eve (the day before AB-5 went into effect), your new hero, U.S. District Judge Roger Benitez issued a temporary restraining order preventing state officials from enforcing the law against motor carriers. The CTA brought a motion asking for injunction – which are not commonly granted – and the judge agreed with the CTA’s position. Can I get a “Hallelujah” and “Amen” from my brothers and sisters?

How did the CTA win this huge battle?

The CTA argued that Federal Law – specifically the FAAAA – preempted state law (i.e. AB-5) regarding the use of independent contractors. In its motion, the CTA said this:

“Given the realities of trucking, it would be impracticable if not
impossible for CTA’s motor-carrier members to provide interstate trucking services by contracting with independent owner-operators and to simultaneously comply with California’s onerous requirements for employees. The direct and real consequence of Dynamex and AB-5, therefore, is that CTA’s motor-carrier members, if they wish to avoid significant civil and criminal penalties, must cease contracting with owner-operators to perform trucking services for customers in California and to shift to using employee drivers only when operating within the State.”

The CTA went on to state:

“For decades, the trucking industry has heavily relied on the owneroperator
model-which involves the use by licensed motor carriers of independent
contractors who own and operate their own trucks-to provide the transportation of property in interstate commerce. A motor carrier’s ability to contract with independent contractors is necessary because the demand for, duration of, and volume of trucking services provided by individual motor carriers fluctuates significantly.”

The thrust of the CTA’s legal argument was summed up here:

“The ABC test and AB-5 “is expressly preempted by the FAAAA because the requirement that motor carriers treat all drivers as employees and the concomitant de facto prohibition on motor carriers contracting with independent owner-operators to perform trucking services in California directly impacts the services, routes, and prices offered by CTA’s motor-carrier members to their customers.”

Furthermore:

The FAAAA says “.[A] State… may not enact or enforce a law, regulation, or
other provision having the force and effect of law related to a price, route, or service of any motor carrier.” See 49 U.S.C. § 14501(c)(1)

The CTA went on in great detail in a 29 page motion, which is beyond the scope of this article, but notably concluded:

The ABC test, as construed in Dynamex and codified by AB-5, therefore, undermines the economic viability of independent owner-operators….The intent and impact of the Dynamex decision and now AB-5 is clear-motor carriers can no longer contract with independent owner-operators and must shift to using an employee-only business model.”

The Judge Agreed With The CTA

Judge Benitez discussed the CTA’s contention that AB5 was preempted by a 1994 federal statute that prohibits states from making laws that affect the price, route or service of freight-hauling motor carriers. Here are the highlights and excerpts of his decision and his reasoning:

“On December 24, 2019, [CTA] filed a motion for temporary restraining order, seeking to enjoin [California] from enforcing Assembly Bill 5 (“AB-5”) as to any motor carrier operating in California…Having considered the parties’ arguments set forth in [CTA]’s supporting papers, as well as the [State’s] opposition papers, the Court finds that (the) requested temporary restraining order is warranted.

“The Court finds that a temporary restraining order is warranted. At this early stage of the proceedings and within the brief amount of time available, [the CTA has] carried their burden for purposes of emergency relief to show (1) that they are likely to succeed on the merits, (2) likely to suffer irreparable harm in the absence of relief, (3) that the balance of equities tips in their favor, and (4) that their requested relief is in the public interest. See Winter v. Natural Resource Defense Council, 555 U.S. 7, 20 (2008).

“Specifically, [CTA has] shown that AB-5’s Prong B is likely preempted by the FAAAA because AB-5 effectively mandates that motor carriers treat owner-operators as employees, rather than as the independent contractors that they are. In other words, because contrary to Prong B, drivers perform work within “the usual course of the [motor carrier] hiring entity’s business,” drivers will never be considered independent contractors under California law. “

“[The CTA has] established that imminent, irreparable harm is likely because without significantly transforming their operations to treat independent contracting drivers as employees for all specified purposes under California laws and regulations, they face the risk of governmental enforcement actions, as well as criminal and civil penalties.”

Amen.

Why this is such a big deal and a major victory.

Even though this is merely a Preliminary Injunction, and the court could change its mind, here’s why the court will likely stick with its initial ruling. In his ruling, Benitez said the CTA “are likely to succeed on the merits.” This means that based on the limited arguments and evidence before him, the Judge decided that if the case goes to a full-blown trial, the CTA will likely win. That is an extremely strong statement coming from a Federal District Judge who tend to be highly regarded. Furthermore, it is very difficult to get a restraining order and injunction against a State from enforcing an enacted law. This is huge and it speaks volumes as to the strength of the CTA’s position. I was skeptical of the prospects of the CTA’s success in seeking an injunction, knowing how hard they are to win and how hesitant judges are to rule before a full and fair trial on the merits. Prior to this ruling, I was frequently asked about the CTA’s lawsuit, and I voiced my lack of optimism. Yet the judge saw through the absurdity of what the state Democrats – in their unbridled arrogance – tried to shove down the throats of trucking companies and their owner-operators. That said, my optimism on the future of the Owner-Operator business model has increased exponentially.

Here Is The Best Part of Judge Benitez’s Ruling.

I love this:

“It is further ORDERED: 1. Defendant Xavier Becerra, in his official capacity as the Attorney General of the State of California, Julia A. Su, in her official capacity as the Secretary of the California Labor and Workforce Development Agency, Andre Schoorl, in his official capacity as the Acting Director of the Department of Industrial Relations of the State of California, Lilia Garcia Brower, in her official capacity as the Labor Commissioner of the State of California, and Patrick Henning, in his official capacity as Director of the California Employment Development Department are temporarily enjoined from enforcing Assembly Bill 5 (“AB-5″) as to any motor carrier operating in California, pending this Court’s resolution of Plaintiffs’ motion for a preliminary injunction.”

It’s not everyday that someone succeeds in telling the the State of California to Fuck Off – the CTA did just that. #FUCADems, #FUTeamsterWhores, and best of all, #FULG.

Call To Discuss The Implications Of This Victory

While I cannot understate the significance of winning this battle, the war is far from over and the enemies of trucking companies and owner-operators will regroup, reload and marshal their forces in their efforts to preserve AB-5

New California Employment Laws For 2020

by gspencermynko

Now That All Of Your ICs will be Employees 1/1/20…

This article is particularly important, because it affects basically everyone: every trucking company who utilizes employee drivers will find this helpful. Also, every trucking company who utilizes independent contractors will find this helpful because come January 1, the ICs will all become employees too. So, in light of the fact that the use of independent contractors will be a crime punishable by execution come January 1, it behooves you to become familiar with these laws.

AB5: Expansion of the independent contractor ABC test

I’m taking time to mention this for those of you who have been living under a rock or spent the last six months in drug and alcohol rehab. Yes, AB5 makes the “ABC Test” the law of the land for essentially all practical purposes. Again, a truck driver may only be classified as an independent contractor if the hiring entity can show that the worker meets all of the following criteria (which, of course, is impossible):

A. The worker is free from the control and direction of the hiring entity, both under the contract for the performance of work and in fact;

B. The worker performs work that is outside of the usual course of the hiring entity’s business, and;

C. The worker is engaged in independently established trade, occupation, or business that is of the same nature as the work performed for the hiring entity.

Because the ABC test will now apply to the entire California Labor Code and California Unemployment Insurance Code, and no exemptions exist for Trucking, a trucking company classifying a truck driver as an independent contractor is essentially illegal without any exceptions.

Permitting employees to recover civil penalties for unpaid wages (A.B. 673)

I found this interesting and surprising that come January 1, 2020, California law will enable employees to recover civil penalties for unpaid wages, which used to be available only by an order from the Labor Commissioner. In a civil lawsuit, employees will now be able to recover $100 for each initial violation for failure to pay each employee, and $200 for each subsequent violation, and any willful or intentional violation, +25% of unpaid wages. These penalties will be recoverable either in a lawsuit or in a PAGA claim, but not under both for the same violation.

Obviously, you want to make sure all employees are paid all of their wages always on time.

Expanding the labor commissioners authority to pursue wage claims (SB 688).

Effective January 1, 2020, this new law expands the enforcement abilities of the Labor Commissioner. Currently, the Labor Commissioner can only issue citations for violations alleging unpaid minimum wages. This new law expands on that and will allow the Labor Commissioner to penalize violations of unpaid wages that are less than the contractually agreed upon wages, in excess of minimum-wage. In other words, if you pay your employees less than you promised to pay them, regardless of their agreed-upon wage, The Labor Commissioner will hammer you.

Minimum wage and minimum salary increases.

Effective January 1, 2020, California state minimum-wage will increase to $12 per hour for employers of 25 or fewer employees, and to $13 per hour for employers of 26 or more employees.

Also, the minimum salary permitted in California will automatically increase to $49,920 annually for employers of 25 or fewer employees and $54,080 annually for employers of 26 or more employees. This is based on the calculation of the minimum wage times 2080 hours.

However, be aware that some cities have local ordinances that increase the minimum wage beyond the state minimum wage. However, these local ordinances do not affect the state minimum salary requirement.

Obviously, make sure your employees are making at least minimum wage under state and local laws, unless they are exempt and therefore paid at least the applicable minimum salary under California law.

Harassment, discrimination, and retaliation.

Effective January 1, 2020, AB9 extends the deadline for an employee alleging unlawful discrimination, harassment, or retaliation in violation of the California Fair Employment and Housing Act (FEHA). Effective January 1, 2020, AB9 extends the deadline for an employee alleging unlawful discrimination, harassment, or retaliation in violation of the California fair employment and housing act (FEHA) to file a verified complaint with the California Department of Fair Employment and Housing (DFEH) from one year to three years.

Another important reason trucking companies need to keep good records in the event something like this comes back to haunt them years later.

Sexual harassment prevention training deadline (SB778).

This law extends the deadline for employers with five or more employees to provide two hours of sexual harassment prevention training to supervisors, and one hour of sexual harassment prevention training to employees from January 1, 2020, to January 1, 2021. Currently, the law requires employers of 50 or more employees to provide two hours of training to supervisors.

Obviously, make sure your supervisors and employees undergo the requisite training by January 1, 2021.

Arbitration Agreements and Separation/Settlement Agreements

Banning Mandatory Arbitration Agreements (AB 51): Effective January 1, 2020, this law prohibits California employers from requiring employees and applicants to sign arbitration agreements as a condition of employment, continued employment, or the receipt of any employment related benefit. It also states that employers may not retaliate against an employee who refuses to sign an arbitration agreement.
However, The United States Supreme Court has made it very clear that state laws prohibiting arbitration are preempted by the Federal Arbitration Act (FAA).

Unfortunately, the United States Supreme Court ruled earlier this year that the FAA does not apply to “any class of workers engaged in foreign or interstate commerce”, which obviously includes interstate truck drivers. This creates a huge problem for trucking companies relying on arbitration agreements, because even if we specify that the enforceability of the arbitration agreement is governed by federal law, the US Supreme Court has already excluded truck drivers operating in interstate commerce from mandatory arbitration.

For those companies relying on arbitration agreements, you now must get with your attorneys to discuss the use of arbitration agreements and whether they are even worthwhile having anymore.

Penalties for failing to pay arbitration costs (SB 707)

Effective January 1, 2020, employer who fails to pay the costs and fees for arbitration within 30 days of the deadline will default on the arbitration agreement and waive its right to compel arbitration. In such an event, the employee will be permitted to dismiss a claim from arbitration and proceed in Superior Court.

Also, the employer may be required to pay the employees attorneys’ fees and costs regarding the arbitration, and the statute of limitations will be extended back to when the arbitration was filed.

Finally, this bill also allows the court to sanction employers who breach an arbitration agreement. Assuming you can still require employees to arbitrate a claim, Make sure arbitration fees are paid on time!

“No rehire” provisions in employee settlements are void (AB 749)

I frequently draft employment settlement agreements for trucking companies. Under this new law, a settlement agreement may not prohibit or restrict an employee from obtaining employment with the employer or a related company. However, there is an important exception to this: “no rehire” provisions may still be included in severance or settlement agreements entered into in response to a demand letter or unfiled claim. However, do not interpret this as being required to rehire the employee at sometime in the future.

Lactation accommodation requirements (SB142)

Effective January 1, 2020, employers will be required to provide more lactation accommodations than previously required. Specifically, A lactation room must:

Be close to the employee’s work area;
Be shielded from view and free from intrusion; and
Have certain features, including electricity and resources necessary to operate a breast pump.
The room cannot be a bathroom.

Employers must create and implement a lactation accommodation policy and make it available to employees. The policy must include the following:

A statement about an employee’s right to request lactation accommodation;
The process by which the employee makes the request;
The employer’s obligation to respond to the request; and
A statement about an employee’s right to file a complaint with the Labor Commissioner for any violation.

Also, employers must include this policy in the employee handbook and make those policies available to employees. furthermore, they must distribute the policy to new employees upon hiring and whenever an employee makes an inquiry about or request parental leave.

Notably, failure to provide adequate lactation accommodation will be considered a violation of California rest break laws, requiring an employer to pay one hour of pay per day for each day on which a violation occurs.

Trucking companies with less than 50 employees may request an exemption if the requirements create “significant difficulty or expense when considered in relation to the size, financial resources, nature, or structure of the employers business”.

Remember, employers who do not currently have a lactation policy must now implement one, and your current lactation policy must be updated You may contact Transportation Attorneys to assist with drafting a compliant employee handbook and policies manual.

Expansion of paid family leave (SB 83)

Effective July 1, 2020, the maximum duration of paid family leave benefits an individual can receive from California state disability insurance program will increase from 6 to 8 weeks.

Reporting work injuries and illnesses (A.B. 1804)

Effective January 1, 2020, AB 1804 will require employers to report serious workplace injuries, illnesses, or death immediately by telephone or through an online platform to the California division of occupational safety and health (a.k.a. Cal OSHA).

Saving the best for last: Prohibiting discrimination based on protected hairstyles (SB 188)

Effective January 1, 2020, this law expands the definition of race under FEHA to prohibit racial discrimination and harassment based on a person’s natural hairstyle. Therefore, your dress codes and grooming policies cannot prohibit “natural hair, afros, braids, twists, and locks” – the Democrats decided that such people require an extra level of protection.

So, trucking companies should review their dress and grooming standards to ensure that none of the “protected hairstyles” are prohibited or discouraged. Too bad we couldn’t all just follow “Spencer’s law” on this, which so states: “I don’t give a shit what you do with your hair as long as I don’t have to wear it.”

Dynamex “ABC Test” Applies Retroactively – Or Maybe Not

by gspencermynko

California Appeals Court Rules Dynamex is Retroactive

As is already well known, The trucking world was turned upside down April 30, 2018 when the California Supreme Court handed down Dynamex Operations West, Inc. v. Superior Court. 4 Cal.5th 903 (2018) and gave California the gift of the “ABC Test”.

Unless you can borrow Doc Brown’s Delorean or the Star Trek transporter, you’ve got problems.

OK, I’ll concede that time travel doesn’t exist, but that hasn’t stopped some courts from going back in time and stating the law that was the law then is no longer the case, and that even though you were acting legally at the time, we have now decided that you were acting illegally and are now in trouble. I’ll expand on this more in a minute, but that is the gist of retroactively applying the “ABC Test” to conduct that was governed by the Borello Multi-factor test at the time the conduct occurred.

A Quick Refresher on the ABC Test.

In an astonishing move that took most people in the industry and their legal counsel by surprise, in 2018 the CA Supreme Court shit canned a long-standing multi factor test which had been applied to determine if a worker was an employee or an independent contractor. As most of my readers know, the California Supreme Court threw out the Borello factor test and declared the “ABC Test” as the new determinant of who is independent and who is an employee. An unsettled question was whether the ABC test applies retroactively, and would conduct which took place prior to the Dynamex decision still be determined by the old Borello standard.

On October 8, 2019, the California court of appeals handed down a ruling in Gonzales v. San Gabriel Transit, Inc. and stated that the ABC test is to be applied retroactively to pending litigation. So, if you are being sued for alleged wage and hour claims for conduct that occurred before the ABC test became law, you will no longer be able to claim that you were simply following the law. You are right if you think this is incredibly unfair. For years, I would advise clients on whether they were compliant with the law in their use of independent contractors based on my analysis using the Borello multi factor test. Now, the court comes along and says that that doesn’t matter, that really was never the law anyways, and you are now guilty of misconduct for conduct that was legal at the time. Yeah, how’s that for a kick in the nuts?

Now, to be fair to the court, the court made it clear that the ABC test applies to labor code claims which are “rooted in one or more wage orders, or predicated on conduct alleged in one or more wage orders.” As far as other labor code claims are concerned, the court stated that the Borello multi-factor test still applies.

As most of you know, under the “ABC test,” independent contractors are considered employees unless an employer established the following three factors:

A. That the worker is free from the control and direction of the hiring entity in connection with the performance of the work, both under the contract for the performance of the work and in fact, and

B. That the worker performs work that is outside the usual course of the hiring entity’s business, and

C. That the worker is customarily engaged in an independently established trade, occupation, or business of the same nature as the work performed.

And as most of you know, its the B prong that screws over trucking companies using Owner-Operators. Dynamex, however, did not address whether the ABC Test would apply retroactively to older claims or prospectively. That is why the Gonzales case could have far reaching impact.

The Implications Of the Gonzales Case.

Because of the Gonzales decision, trucking companies who relied on the Borello standard for classification of their independent contractors prior to the dynamics decision may have some liability exposure.

But hold your horses.

In another case at the United States Court of Appeals for the Ninth Circuit, Vasquez v. Jan-Pro Franchising International, Inc. initially ruled that the Dynamex ABC test applies retroactively. In Jan-Pro, the Ninth Circuit held that even though the California Supreme Court decided Dynamex after the trial court granted Jan-Pro’s motion for summary judgment, the Dynamex standard must be applied retroactively. However, the ninth circuit withdrew that decision and punted the matter of the retroactivity of Dynamex to the California supreme court for a formal opinion. As of the writing of this article, that issue is still pending, and if the California Supreme Court rules otherwise, the Gonzales decision may be short lived and overturned soon. But until it is, it is clear that California courts are leaning toward the retroactive application of Dynamex and the ABC Test.

However, The recently passed AB5 contains retroactive language, and states that the ABC test should be applied retroactively.

Are you still here?

When people come to my office wanting advice on how to start a trucking company in California, my first instinct is to Google “Psychiatrists” and politely, but firmly, tell them they are crazy. Despite this advice being adverse to my own interests, I regularly advise trucking companies to do what they do anywhere but California – and maybe Massachusetts as well which is a special cauldron of hell where Satan himself actually concocted the ABC Test. If you can do what you do outside of California, you can leave this bullshit behind.

While the politicians – and in California, what I really mean is the Democrat powerhouse – want you to think that AB5 was necessary to protect the poor, powerless and abused truck driver, the reality is that by eliminating independent contractors, the state can collect more taxes, and the unions can collect more dues, and the trial attorneys can squeeze you for huge legal fees. The ultimate irony is that the owner operators who went out, secured financing for their own rig, purchased a rig with the hope of using that investment to make money, are completely screwed and deprived of true entrepreneurial opportunity. Now, they are forced to be an employee in California and have to be asking themselves “Why in the hell did I buy this truck and trailer if I’m simply going to be another company driver?” Good question, and the answer is that the collection of taxes, union dues, and plaintiffs’ lawyer legal fees are simply much more important.

Most bonafide owner operators that I’ve come in contact with are happy with the status quo, and enjoy the freedom of being independent, being able to make more money than a company driver, and having more choices regarding their work. But the politicians would have you believe that all independent contractors are abused individuals who get stuck into some impossible lease purchase scheme, where the evil Trucking Co. takes advantage of them until they can’t any further and then throws their dying body to the side of the road, and then turns around to put another sucker in the truck. But this is nothing more than the tired script used by the politicians and their lackeys ,the unions and plaintiffs’ bar, to crush an entire business model that put food on the table and kept the lights on in houses across the state. AB5 has nothing to do with protecting the true, bonafide owner operator, but has everything to do with the Democrats protecting their interests and the interests of their biggest supporters, the unions and trial lawyers. Quite frankly, I hope Uber and Lyft are successful in their proposed 2020 referendum to overturn AB5. That should stop the pathological salivating and drooling of the welfare alchemists who fabricated the abomination known as AB5.

My Bitching Is Fun, But Not Really Helpful.

Venting provides relief, if only temporary, but AB5 is just over 2 months from becoming reality. Trust me, the State and Plaintiff’s lawyers are going rain down hell upon trucking companies that use ICs come January 1. And remember – because of how the Labor Code is written in California – Owners, Directors and Officers of trucking companies can be held personally liable for Labor Code violations – that’s right – and after they take everything you have, you will be left for dead on the side of the road. But take heart – then you’ll be eligible for MediCal benefits.

Requiem For The Independent Trucker

by gspencermynko

California democrats have effectively killed off the Independent Contractor business model in trucking. Come January 1, 2020, if you hire a bona-fide owner operator truck driver to haul a load under your authority, the state of California and plaintiff’s lawyers will be allowed to destroy your business, sue you back to the Stone Age, and, as an owner, director, or officer of a trucking company, take everything you own. Yeah, it’s that shitty.

California Democrats decide to take a bad idea and make it worse.

As I’m sure all of you know, in 2018 The California Supreme Court decided on their own to completely change independent contractor law by adopting the “ABC Test” to determine whether someone is an independent contractor. Apparently, they were so enamored with how the state of Massachusetts determines who is an independent contractor, they shit-canned decades of common law jurisprudence culminating in the “Borello” test, and committed some of the worst legislating from the bench in American history when they handed down the decision in Dynamex Operations v. Superior Court (2018) 4 Cal. 5th 903, and made the ABC test the law of the land.

The Democrat politicians in California went into unbridled orgiastic ecstasy and clearly felt that Dynamex wasn’t simply another court case, but something holy like The 10 Commandments God gave to Moses on top of Mount Sinai.

Unlike Moses, who probably had some humility and decided it wouldn’t be a good idea to fuck with God by changing the 10 Commandments, The Democrat politicians were undaunted and obviously believed they could improve on the divine edict as handed down in Dynamex and make it better than their Higher Power originally intended.

The Democrats have (another) orgy.

While the ABC test, as handed down by the Creator and relayed to humankind through His vessel The California Supreme Court, was a good start in the minds of the Democrats, they decided to broaden its reach after getting together and taking a bunch of ecstasy at a rave. Well, to be honest, I’m not sure the Democrats we’re high on ecstasy (or maybe LSD) when they created AB5 and proclaimed it “God’s law”, but until someone can give me a better explanation for their behavior, I am going to continue to float that theory.

Regardless of the status of their neurotransmitters and intoxicated brains, AB5 has been entered into the sacred text of California law in the book of Gavin. And while the Democrat politicians seem to be in a state of perpetual inebriation, owners and officers of trucking companies are headed for a shit storm that can only be described as the buzz-kill of the century. A word of advice to trucking company owners using ICs: don’t drink on New Year’s Eve, because do you really want to be hung over while attempting to come to grips with the fact that AB5 is now the law of the land? And if you plan on celebrating in Vegas, you may want to simply stay there and open a marijuana dispensary.

Let’s add a few more Commandments.

When the ABC test was handed down by God…. er, I mean the California Supreme Court…. it was limited to wage orders which, for practical purposes, limited the application of the test to such things as minimum wage, meal and rest breaks, and keeping accurate wage statements and time records, etc.
Despite the consecrated genius of its original form, the high priests of the Democrat Party expanded the ABC test to apply to the entire labor code and the entire unemployment insurance code. So regardless of what state agency is coming after you or what State sanctioned temple you are being held in to account for your sins, get prepared for some old testament justice meted out by Labor Board commissioners, tax auditors, plaintiff’s attorneys, and whoever else has been given the green-light to cut off your head.

So what do I do to keep myself out of the crucible of the Democrat Overlords?

Well, before I conclude that you’re fucked – which you are – allow me to elaborate on your shitty options which basically fall into two major categories: convert your independent contractors into employees by 1/1/20 (good luck with that); or continue to treat them as independent contractors (good luck with that).

The employee route:

OK, this is simple: convert all of your 1099 owner operators into employees for all purposes. Withhold taxes. Provide benefits. In addition to withholding, and on-boarding them as employees, be sure to comply with all of the requirements of the California labor code. So be sure to track all of the hours they work, pay at least minimum wage, make sure meal and rest breaks are provided, along with sick leave and family leave. Reimburse them for all expenses. Be sure to put up a California compliant poster in the break room. Make sure your wage statements are compliant and your time keeping records are meticulous.

Oh – yeah – one other little detail: get a work comp policy. I’m sure State Fund will be happy to sell you one at 25 to 30% of your payroll.

Then, after you have done all of that, you can bask in the gratitude and appreciation of your former independent contractors, who will be universally sympathetic to your plight and understanding in that you are simply trying to abide by the law.

But wait, isn’t there some exemption we can take advantage of?

Well, you are probably thinking of the “Business to Business” exception. Here, let me quote it verbatim:

1) If a business entity formed as a sole proprietorship, partnership, limited liability company, limited liability partnership, or corporation (‘business service provider’) contracts to provide services to another such business (‘contracting business’), the determination of employee or independent contractor status of the business services provider shall be governed by Borello, if the contracting business demonstrates that all of the following criteria are satisfied:

a) The business service provider is free from the control and direction of the contracting business entity in connection with the performance of the work, both under the contract for the performance of the work and in fact.

b) The business service provider is providing services directly to the contracting business rather than to customers of the contracting business.

c) The contract with the business service provider is in writing.

d) If the work is performed in a jurisdiction that requires the business service provider to have a business license or business tax registration, the business service provider has the required business license or business tax registration.

e) The business service provider maintains a business location that is separate from the business or work location of the contracting business.

f) The business service provider is customarily engaged in an independently established business of the same nature as that involved in the work performed.

g) The business service provider actually contracts with other businesses to provide the same or similar services and maintains a clientele without restrictions from the hiring entity.

h) The business service provider advertises and holds itself out to the public as available to provide the same or similar services.

i) The business service provider provides its own tools, vehicles, and equipment to perform the services.

j) The business service provider can negotiate its own rates.

k) Consistent with the nature of the work, the business service provider can set its own hours and location of work.

l) The business service provider is not performing the type of work for which a license from the Contractors State License Board is required, pursuant to Chapter 9 (commencing with Section 7000) of Division 3 of the Business and Professions Code.

I have this picture in my mind of the California Democrats who created this abomination sitting at the edge of a minefield, drinking lemonade and eating petit fours, while watching trucking company owners try to navigate the minefield that is the “Business to Business Exception”. Of course, they sit back and laugh while watching the trucking company owners and executives get blown to smithereens and smugly deride them for being so stupid as to classify anybody as an independent contractor.

Shades of Gray.

While the picture I paint is sort of black and black, there are about 10 or 11 options trucking companies can consider as they confront this horrible new reality. You may consider it worth your while to sit down with me and discuss these options, however, I will be blunt: they all suck.

So, I prepare to bid farewell to the independent contractor/owner operator truck driver: it’s been nice knowing you. I hope one day you arise from the ashes.

Contact Transportationattorneys.net today for all of your Transportation matters.

FMCSA HOS Changes + Will ICs Survive Friday the 13th?

by gspencermynko

In this article I’m writing about two substantially important potential developments in Trucking and Transportation. Neither of these matters have been finalized yet, however, because of their great importance and future implications, all trucking companies need to keep these matters on their radar because they could profoundly affect their businesses. And finally, I want to comment on a potential escape hatch should doomsday arrive this Friday.

The FMCSA May change hours of service much-maligned rules that have been in place since 1937

I might as well start off this article with some good news: The FMCSA has proposed five changes to the hours – of – service rules. Back in the days before Big Brother and his ELD gizmo decided to catch a ride with every long-haul trucker in America, outlaw truckers utilized numerous creative ways flout HOS rules. As we all know, those days came to a crashing halt with ELD’s.
However, The ELD mandate resulted in numerous criticisms and real-world problems faced by the people in the driver’s seat. The bulk of these complaints related to safety and flexibility, such as being forced to park in unsafe places and recklessly trying to beat the clock. Apparently, the FMCSA has listened and has laid out a new proposal.

“This proposed rule seeks to enhance safety by giving America’s commercial drivers more flexibility while maintaining the safety limits on driving time,” said U.S. Transportation Secretary Elaine L. Chao.

“Based on the detailed public comments, FMCSA’s proposed rule on hours of service offers five key revisions to the existing HOS rules:

The Agency proposes to increase safety and flexibility for the 30 minute break rule by tying the break requirement to eight hours of driving time without an interruption for at least 30 minutes, and allowing the break to be satisfied by a driver using on duty, not driving status, rather than off duty.

The Agency proposes to modify the sleeper-berth exception to allow drivers to split their required 10 hours off duty into two periods: one period of at least seven consecutive hours in the sleeper berth and the other period of not less than two consecutive hours, either off duty or in the sleeper berth. Neither period would count against the driver’s 14-hour driving window.

The Agency proposes to allow one off-duty break of at least 30 minutes, but not more than three hours, that would pause a truck driver’s 14-hour driving window, provided the driver takes 10 consecutive hours off-duty at the end of the work shift.

The Agency proposes to modify the adverse driving conditions exception by extending by two hours the maximum window during which driving is permitted.

The Agency proposes a change to the short-haul exception available to certain commercial drivers by lengthening the drivers’ maximum on-duty period from 12 to 14 hours and extending the distance limit within which the driver may operate from 100 air miles to 150 air miles.”
The new rules “would not increase driving time and would continue to prevent CMV operators from driving for more than eight consecutive hours without at least a 30-minute change in duty status.”

See https://www.fmcsa.dot.gov/newsroom/federal-motor-carrier-safety-administration-publishes-hours-service-proposal-improve-safety.

People wishing to submit comments before the window soon closes can look here: https://www.federalregister.gov/documents/2019/08/22/2019-17810/hours-of-service-of-drivers.

The day of reckoning is upon us: Will the Dynamex ABC test become law this week and turn Owner-Operators and the trucking companies who use them into criminals?

After The California Supreme Court radically changed the definition of an independent contractor in Dynamex Operations West, Inc. v. Superior Court of Los Angeles, trucking companies were thrown into a state of turmoil, but our politicians were thrown into a state of ecstasy. Indeed, California democrat politicians felt the court’s decision was the greatest thing since sliced bread. As such, they quickly went to work to “codify” the extremely restrictive ABC test. Notably, The court’s decision only applied to Industrial Welfare Commission Wage Orders, and excluded claims brought under the Labor Code or Unemployment Insurance Code. Undaunted, California politicians felt they could make a “good” idea even “better” by making sure AB 5 will apply in any circumstance and criminalize the behavior of the majority of trucking companies and truck drivers in California.

While doctors, dentists, lawyers and other professionals were able to secure an exception to the “ABC Test” in AB 5, The trucking industry has not been successful in securing an exception. And it looks like they won’t. AB 5 cleared a committee last Friday in the state Senate and it is expected to pass both houses of the legislature before lawmakers adjourn Friday, September 13. Furthermore, governor Newsom has promised to sign the bill into law.

Unfortunately, this will likely drive owner-operators and the businesses who rely on them out of business or force them to operate illegally until they get caught.

“The light at the end of the tunnel is just the light of an oncoming train.” Robert Lowell.

On that pessimistic note, I urge my readers to take what I am about to say next with reluctant optimism. Is there language in AB 5 that owner-operators, and the trucking companies who rely on them, can exploit to exempt O-Os from the ABC test? Specifically, there is language in AB5 which states the holding in Dynamex will not apply to bona-fide business-to-business contracting relationships between sole proprietors, partnerships, LLCs, and corporations. In such cases, the old Borello or “common law” test will determine whether someone is an employee or independent contractor. However, this will only apply if certain criteria are satisfied, which include:

(A) The business service provider is free from the control and direction of the contracting business entity in connection with the performance of the work, both under the contract for the performance of the work and in fact.

(B) The business service provider is providing services directly to the contracting business rather than to customers of the contracting business.

(C) The contract with the business service provider is in writing.

(D) If the work is performed in a jurisdiction that requires the business service provider to have a business license or business tax registration, the business service provider has the required business license or business tax registration.

(E) The business service provider maintains a business location that is separate from the business or work location of the contracting business.

(F) The business service provider is customarily engaged in an independently established business of the same nature as that involved in the work performed.

(G) The business service provider actually contracts with other businesses to provide the same or similar services and maintains a clientele without restrictions from the hiring entity.

(H) The business service provider advertises and holds itself out to the public as available to provide the same or similar services.

(I) The business service provider provides its own tools, vehicles, and equipment to perform the services.

(J) The business service provider can negotiate its own rates.

(K) Consistent with the nature of the work, the business service provider can set its own hours and location of work.

(L) The business service provider is not performing the type of work for which a license from the Contractor’s State License Board is required.

Uhhh, OK – that’s about as clear as mud and will ensure years of costly litigation fighting over this. My opinion is that until the Feds or the US Supreme Court step in and preempt California law, the days of legal ICs in trucking will effectively come to an end this week. Stay in touch with Transportation Attorneys for future guidance.