AB-5 Update: Construction Truckers Covered

In the ongoing legal battle surrounding California’s controversial AB-5 decision, which reclassifies truck drivers among other things, regional transportation associations have been looking for some guidance. The state’s Attorney general, trucking companies, independent trucking contractors, and Uber and Lyft are all involved in the matter, as all are trying to find common ground when it comes to classifying employees and obtaining the right benefits and insurance coverage.

But in recent weeks, the Western States Trucking Association, a non-profit trucking association that helps protects the rights of trucking companies, scored a major win against the AB-5 California mandate by forcing the government to renounce the plain language involved in the bill, and instead agree to treat construction trucking like all other motor carriers. While this AB-5 Win may seem small, it’s a step in the right direction for everyone from truckers to the companies they work for in the state.

As a result of this decision, all members of the construction trucking industry, a major player in the state’s economy, are now fully protected by the injunction against the ABC testing, which reclassifies workers.

The Dynamex Decision

In 2018, the Supreme Court of Los Angeles set the foundation for AB-5, which spurred on legislation that reclassified trucking professionals as employees instead of independent contractors. AB-5 codified the Dynamex decision and applied a test to any industry that was not given an exception in the law. Some of the exceptions included wholesale exemptions, meaning they could still use the traditional test.

However, only construction trucking was singled out for an exception that was worse than the ABC test itself. Under the terms of AB-5, construction trucking was called out to mandate an employment relationship between trucking independent contractors. Any time a trucking company sought to subcontract some or all of the construction trucking work on a particular construction trucking job, whether by using independent truckers or other trucking companies, they would be deemed the employers for all trucks working on that job.

The order now targeting WSTA’s complaint highlights that in light of the state’s interpretation of the law, their trucking members have no threat of something hanging over their heads when it comes to prosecution under the challenged provisions. As a result, WSTA members and construction trucking drivers are subject to the ABC test like everyone in the industry and are protected from the enforcement of the test.

About Western Truck Insurance Services

Western Truck Insurance Services is a commercial truck insurance agency with roots dating back to 1954. We have evolved into a highly respected, professionally managed, truck and transportation insurance brokerage. The hallmark of our organization is our desire to provide unparalleled service. We go way beyond what you expect to receive from an insurance brokerage. Equipped with state of the art automation, Western Truck Insurance can provide you with lightning fast truck insurance quotes, customer service, Insurance certificates, and coverage changes. Contact us today at (800) 937-8785 to learn more.

Employee Classification: ABC Testing and 1099 Drivers

In the last 18 months, there’s been plenty of news coming out of California focusing on the gig economy and employee classification. A major sect that’s taken issue with the new regulations, such as the Dynamex and AB5 rulings, is the trucking industry, which sees a large number of its drivers operating as independent contractors. With the new laws taking hold of the industry, professionals are trying to figure out how to make sure their jobs, benefits, and commercial truck insurance stay intact.

The main issue is related to the state’s new ABC test and its relation to independent contractor and employee classification. Some businesses that use drivers who operate company equipment in the state could see changes to the way they pay those drivers, including truck drivers who haul tons of commodities throughout the state on a daily basis.

Why Designation is Important

The designation of proper employee classification is important because it helps determine the payment of social security and workers’ compensation benefits to drivers. Depending on which state you’re in, the ABC test may also apply to certain wages and work hour laws. Some states base the availability of unemployment insurance on this status alone. There are other states that use the test only in specific industries, so it’s important that trucking companies see where they stand on this issue.

Another reason why the ABC test is important is that contract positions are usually lower-paid service jobs. This puts an undue hardship on people in the service industry, including landscapers, home health care, janitorial services, maintenance, and some trucking operations.

Drivers who are forced to take the ABC test might take on new responsibilities in regards to workers’ compensation and unemployment insurance, and the companies they work for might see a disruption in how they go about buying and applying commercial truck insurance. What’s more, drivers who are reclassified as full-time employees instead of independent contractors will have a whole new set of tax rules to follow, since they will not be taking advantage of self-employment taxes, potentially taking away from drivers’ overall yearly wages.

Tax Filing

Some drivers aren’t filing as self-employed individuals. This could possibly open drivers and companies up to potential court actions or other enforcement of tax and labor laws under the new employee classification requirements. In this case, both the drivers and the companies they drive for would be taking issue with at least half of the self-employment tax and open up to penalties.

One goal of the ABC test is to tamp down on drivers who are going about self-employment tax in this way. But there are already tests in line to help keep everything above board. Enforcing more nuanced tests should help to enhance employee protections offered by workers’ compensation and unemployment insurance companies.

 A Word of Caution

He also cautions carriers 1099’ing company drivers: “Just take the taxing authorities out of it and consider this: all it would really take is for one guy to apply for unemployment” after being let go. “It will initiate an investigation of your business,” he says, in any state with even slightly aggressive due diligence personnel. “It will be a ton of bricks that comes out and lands on your business — you’ll lose everything you’ve built. All it really takes is one driver complaint, or a guy injured on the job” with a worker’s comp claim.

As he suggests for small fleet owners, the risk’s not worth it.

About Western Truck Insurance Services


Western Truck Insurance Services is a commercial truck insurance agency with roots dating back to 1954. We have evolved into a highly respected, professionally managed, truck and transportation insurance brokerage. The hallmark of our organization is our desire to provide unparalleled service. We go way beyond what you expect to receive from an insurance brokerage. Equipped with state of the art automation, Western Truck Insurance can provide you with lightning fast truck insurance quotes, customer service, Insurance certificates, and coverage changes.