Ridesharing platforms Uber and Lyft this week began rolling out their plan for trying to convince California lawmakers to exempt them from the state’s new restrictive labor law, colloquially known as A.B. 5. The tech companies hope for relief from a legislative act that could spell disaster for their business model.
A.B. 5, just signed by Gov. Gavin Newsom last month, takes effect in little less than two months, on Jan. 1., and its effects aren’t isolated to Uber and Lyft. As reported in recent months by CCJ, the law could have steep implications for trucking, potentially spelling the end of the traditional owner-operator lessee model in the state. The law could bar trucking companies from contracting with owner-operators — a nationwide mainstay within the industry.
Trucking groups in the state, chiefly the California Trucking Association and the Western States Trucking Association, have said they intend to urge state lawmakers next year to consider options for legitimate owner-operators to continue working in the state, and for fleets to continue to contract with owner-operators.
While Uber and Lyft’s push for relief doesn’t impact truck fleets, their moves could lay the groundwork for trucking to make a case for an exemption from the law.
The companies have formed a coalition to try to fend off compliance with California’s law against using independent contractors. The companies say they’ll agree to meet certain conditions should the state award them a way out of A.B. 5.
Those conditions should sound familiar, as they’re very much similar to those that carriers already offer to owner-operators, such as paying above minimum wage, aiding in fuel and maintenance costs, and, in some cases, offering some health care benefits.
What’s more, the coalition of transportation tech companies also say they’d implement new mandatory training standards, stiffer background checks and zero-tolerance drug and alcohol policies — all conditions that are obviously already baked in to the trucking industry.
If successful, the model could provide trucking interests with a compelling case for requesting any exemptions awarded to the Uber and Lyft coalition, says attorney Greg Feary, partner at the nationwide transportation law firm Scopelitis, Garvin, Light, Hanson and Feary.
“That is a strategy you’ll probably see,” he says, the argument being “if it’s good for this segment, why wouldn’t it be good for heavy trucking?”
Legislation for the Uber and Lyft coalition’s exemption is already in the works, slated to be taken up when California legislators return to Sacramento for their 2020 session.
The companies “have already signaled an urgency within their segment of transportation,” says Feary.
The focus lawmakers have directed toward the tech transportation sector will likely turn to the traditional trucking sector as the threat to the movement of goods becomes even more apparent, Feary says.
“What does it mean around Christmas time?” Feary asks. “What does it mean for agricultural products that come out of California and on to tables across the country? That’s what these protests and picketing” are aimed toward, “orchestrated to identify the fact that a lot of people will be impacted by [A.B. 5’s effects], including the voters in California.”