Department of Labor Plans to Move Toward AB-5-Style Law
Readers who have been following trucking news for a while now are fully aware of California’s Assembly Bill 5: originally intended to curb “gig economy” jobs like DoorDash, it is now used to curb driving under the Authority of another carrier.
A similar rule has been entered into the Federal Register, and unless things change, the Biden Administration’s Department of Labor may be moving towards a nationwide misclassification regulation.
Details
The stated Final Rule in the Federal Register mentions a six-factor test to determine if a worker is an employee or an independent contractor:
- Opportunity for profit or loss depending on managerial skill.
- Investments by the worker and the potential employer.
- The degree of permanence of the work relationship.
- The nature and degree of control.
- The extent to which the work performed is an integral part of the potential employer’s business.
- Skill and initiative.
While one size does not fit all and classification is on a case-by-case basis, the Final Rule states that the most important one of all is the fifth point: whether or not the worker is doing the primary business operations of that which hired him or her. This means that a driver delivering plywood for a construction company would likely count as an independent contractor, but an owner-operator driving under the Authority of, say, Landstar, would likely be an employee.
As to be expected, industry members sounded off against the upcoming regulation.
“This rule denies independent contractors the freedom of choice, weakens our supply chain, and undermines the livelihoods of hundreds of thousands of truckers,” the ATA published on X.
This rule denies independent contractors the freedom of choice, weakens our supply chain and undermines the livelihoods of hundreds of thousands of truckers.
— American Trucking (@TRUCKINGdotORG) January 9, 2024
It's exactly why we opposed Julie Su's nomination before and why we'll continue to oppose it now. https://t.co/3PIasdJA1L
Conclusion
In another case of cosmic irony, companies such as Uber have expressed confidence that this new rule will not apply directly to them.
This rule does not materially change the law under which we operate and won’t impact the classification of the over 1 million Americans who turn to Uber to make money flexibly,” Uber said in a statement.
As with AB-5, it is extremely likely that this case will be charged in court. But the primary defense used against AB-5, the Federal Aviation Administration Authorization Act stating that individual states cannot monitor interstate commerce, does not apply when the regulation is on the federal level. The next handful of months are going to be a bumpy ride as the inevitable dispute makes its way through the system.
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