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Should You Worry About a Nuclear Verdict?
It’s been some time since I’ve talked about California’s Assembly Bill 5 (AB 5) law. The law claims that companies are denying workers the right to employee benefits by misclassifying them as independent contractors.
As independent contractors, owner operators are normally responsible for their operating expenses including health insurance, vacation pay, etc. and California says that by “properly” classifying independents, these independents would not have to give up these benefits normally granted to employees.
Opponents of AB 5 point out that many, if not most, independent owner operators “choose” to work under this arrangement which has been a bedrock way of doing business for many decades if not longer.
Most owner operators don’t want or need these “protections” especially if they are “forced” to become employees while working in California.
Now, as trucking companies take on employees in this transformation, carriers are obligated to provide normal employee benefits as I mentioned above.
There’s a “test” used to determine if a motor carrier is required to take on independents as employees but it’s hard for carriers to wiggle out of it if they so desire.
So, ask yourself, am I going to get “nuked”? Let me explain …
By assuming employer responsibilities, motor carriers are exposing themselves to greater liability because AB 5’s declassification of truck drivers as independent contractors could leave trucking companies exposed to potential liability for on-the-job injuries sustained by the employees of their truck drivers.
In turn, this increased liability exposure could increase the potential of Nuclear Verdicts™ coming their way.
Nuclear verdicts are decisions against convicted carriers in an amount exceeding $10 million dollars – and they have been increasing. Imagine – one day carriers are cruising along free from any employee concerns; the next day they get slapped with a nuclear bomb seemingly out of nowhere.
This is not good.
And the fact that the test used to determine employee/independent status has made it impossible, for the most part, for a worker to qualify as an independent contractor is a double whammy.
Carriers and independents are moving out of California in droves and many others are avoiding the state.
Now, listen, if you are new to this industry, I would not lose any sleep over a potential nuclear bomb. BUT, when you get some bigger bucks in your coffers, you might want to take a hard look at potential liabilities. Take a hard look at any potential dealings within the state of California.
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