Download my FREE eBook. This is a MUST HAVE resource for anyone who is considering the freight broker industry (About 40 pgs, 19 Topics) Enter your email address and name for an immediate download.

introduction to freight brokering

Form Heading

Email Marketing by iContact

California’s Earthquake, Part 3 of 4

California’s Earthquake, Part 3 of 4

In Part 2 of this series, I mentioned that one of the big reasons why California legislators were pushing to eliminate independent contractors was for the “protections” independents would have as employees.

One can view topics on the internet, with phrases such as “Protecting Today’s Workers”, “Independent Contractor Misclassification, “It’s about corporations trying to oppress workers”, and so forth.

So the question remains: WHY do California authorities want to eliminate thousands of independent entities and place them all within the jurisdiction of a much smaller group of larger corporations?

Let’s read on:
California Assembly lady, Lorena Gonzalez, who introduced this AB5 legislation, has stated that her legislation “was designed to eliminate the ‘outdated’ model whereby motor carriers use independent owner-operators to deliver services to their customers …”

What does she mean by the term “outdated model?” The answer to this question should be explained.
Gonzalez goes on to say that the law takes aim at the income inequalities between freelancers and the company officers who use freelancers. Now, here she is probably speaking to Uber, Lyft, DoorDash drivers and other similar businesses.

Make no mistake! “Freelancers” is NOT the right way to describe owner operators. So this causes some confusion.

Proponents of the AB5 law such as the Economic Policy Institute state that companies misclassify workers, treating them as independent contractors rather than employees, which deprives federal and state governments of billions in tax revenues.

The law is intended to protect against the misclassification of workers, which the legislature notes “has been a significant factor in the erosion of the middle class …”

Worker misclassification, say the legislators, hurts law-abiding companies by promoting unfair competition from those companies that cut costs by misclassifying workers. The law makes it more difficult for companies to avoid paying their “fair share” of payroll benefits.

So, now we learn that outdated arrangements, income inequality, governments being deprived of tax revenues, reviving the middle class, avoiding unfair competition, and making sure companies pay their “fair share” of payroll benefits are more reasons why AB5 was enacted.

Attention is also pointed to “errant” companies that are not complicit with updating a business model, protecting workers, resolving income inequality, growing the middle class or bolstering government tax coffers. For example, …

Assembly Member Gonzalez continues by saying that California lawmakers are forced to ensure that companies provide worker benefits because the companies haven’t.

Gonzalez further states that “Big businesses shouldn’t be able to pass their costs onto taxpayers while depriving workers of … labor law protections …” While providing protections for California’s workers “ the AB5 legislation also guards the taxpayers from subsidizing unscrupulous corporations”.

Others backing the bill have said that companies intentionally “misclassify” workers in order to circumvent paying minimum wages, overtime and other workers’ payroll benefits such as social security and Medicare.

So, proponents say that AB5 helps to ensure that workers are “correctly classified” as employees for purposes of state wage and hour protections.

The bottom line is that backers of this bill go on and on and on and on, speaking of how AB5 is the solution for a whole host of problems – social, economic and otherwise – political too?

However, the bill does not offer workers one of the most important labor and employment rights: the right to join a union. Federal law preempts states from legislating private-sector workers’ union and collective bargaining rights. AB5 supporters believe that federal labor law reform must establish a similar test to the “ABC” test for workers to have meaningful access to union rights.

In the next Part, let’s talk a little bit more about two issues: One, California’s efforts to unionize workers and Two, the recent Protecting the Right to Organize (PRO) Act which recently passed in the U.S. House of Representatives.

Go here to read Part 4:

Part 4 – California’s Earthquake

If you have any questions, please call us at 888-526-ATEX (2839), Or

Click Here To Send Us an Email