UPDATE: Jan. 1. 2020 - A U.S. District Court judge in California granted a temporary restraining order that prohibits enforcement of AB5 for the trucking industry. On Jan. 13, 2020 the court will consider a motion for a preliminary injunction, which could delay enforcement for a longer period.
California's new AB5 law, which curtails the use of owner-operators "leasing on" with trucking companies, leaves those drivers with three main choices:
1. Become a company driver
2. Move out of California
3. Get their own DOT authority.
For a lot of California drivers, the third option looks like the best choice for maintaining their freedom with the least amount of disruption.
The experts at DAT Authority advise California drivers that there are extra steps and the authority process takes longer in California. Normally the process for securing DOT authority takes about 6 weeks. In California, the process can take 8 to 12 weeks. DAT offers a Carrier Startup Guide, which offers a summary of the steps required to get federal operating authority. In addition to these steps, California requires extra forms and fees.
If you want to avoid the hassle, DAT offers a service that will prepare all the paperwork for you. And, if you get your authority through DAT, you'll receive a 10% lifetime discount on DAT load boards. Visit the DAT Authority web page for more information.
What is the AB5 law?
Assembly Bill 5 (AB5) is a new law in California that limits the use of owner-operators who "lease on" with a trucking company and run under the DOT authority of that trucking company. AB5 states that workers must meet three criteria to be classified as independent contractors, commonly referred to as the "ABC test."
A. The worker must be free from control and direction of the hiring entity.
B. The work performed must be outside the usual course of the hiring entity's business.
C. The worker must be engaged in an independently established trade, occupation or business.
That second requirement is virtually impossible for a trucking company to meet because driving trucks is part of a trucking company's core business. The new law affects many other industries as well, most notably ride sharing companies like Uber and Lyft where drivers are considered independent contractors rather than employees of the company.
Need Advice on Trucking Authority?
If you're weighing your options for life after AB5 and curious about what it takes to get your own trucking authority in California, DAT Authority experts can help walk you through what is involved. Whether you decide to have our team help you with the paperwork, or do it on your own, they are ready to answer your questions.