AB5 & DrayNow
Lawmakers in the California State Assembly recently passed a bill redefining the relationship between employers and independent contractors, called AB5. This bill is far-reaching across multiple industries; it would re-classify contractors to ensure they have benefits such as minimum wage and access to employer-provided healthcare.
Though this bill is often discussed in the context of ‘gig-economy’ contractors such as Uber and Lyft drivers, the implications for trucking has been in the works for years. The trucking industry really first began to see the employer-owner operator relationship, commonly referred to as “Classification”, in the mid 2000s, as trucking companies started to charge owner-operators for insurance and other fees. The federal government began to place limits on the amount of fees drivers could be charged, and how those owner operators could be treated.
Greg Feary, a partner at trucking law firm Scopelitis, Garvin, Light, Hanson & Feary, P.C was quoted saying about AB5, “I think it will ripple through the industry and cause some changes for sure … For the most part, the ABC test would be used under this statute for courts or other adjudicators in the government to determine whether an owner-operator providing truck driving services to a motor carrier is an independent contractor.”
AB5 is broader in that it seeks to redefine the relationship between two trucking companies; the independent owner operator as one “company” and the other being large carriers that use Independent O/Os to move freight. Though these carriers are technically ‘independent’, often the larger carrier in this model dictates how these owner-operators can operate their business. AB5 contests that these carriers endure forced dispatch, freight favoritism, limits on who else they can haul for, and more. Yet they do not have the protections of being an employee. And potentially these independent business owners, Independent O/Os may no longer be allowed to contract with other trucking companies.
One of the founding principles of DrayNow is to cultivate an unbiased Intermodal Marketplace – those who need Intermodal freight moved (brokers, 3PLs, IMCs, etc.) and Carriers that are Independent O/Os. Any qualified independent owner-operator can haul with DrayNow, and freely choose freight. There are carriers who fill their week from our Marketplace, and others who choose periodic freight to fill utilization gaps in their schedule. We simply provide access to freight within the Intermodal Industry.
Mike Albert, DrayNow CEO says:
“The AB5 law is likely to impact every drayage carrier in California and other states as others adapt similar laws, at DrayNow we endeavor to demonstrate that DrayNow is in the business of arranging transportation of freight but not actually delivering the freight. The DrayNow Carriers are small MCs and authorized/licensed as such, therefore creating a critical separation and a carrier using DrayNow is in the business of delivering the freight. Further favoring our model is our relationship to freight is that of a ‘Broker’ and not a ‘Motor Carrier’ like a typical drayage carrier.”
At DrayNow we are a marketplace that enables and empowers owner-operators to find the freight they want to haul and make the experience as friction-free as possible. We look forward to further changes in the trucking industry that make trucking safer and more equitable for all.
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