Through the Looking Glass: How California's AB5 Legislation Turned the Owner-Operator Model Upside Down Throughout the United States and Beyond

The strongest challenge to the application of the "ABC" test to determine whether drivers are employees or independent contractors was recently denied by the United States Supreme Court, leaving California's AB5 legislation in place and now applicable to motor carriers and drivers in California. Effectively, the "ABC" test prevents owner-operators from maintaining their independence and forces motor carriers to use employee drivers. Motor carriers throughout California and the 20+ states using the "ABC" test are scrambling to reorganize such that they avoid enforcement actions while retaining the operational and financial benefits of independent contractors. Brokers too are busy shoring up their contracts and business relationships to ensure they fall within the business-to-business exemptions. This panel will explain the "ABC" test and its implications, analyze the popular "work-arounds" for both motor carriers and brokers, and provide guidance for assisting motor carriers to implement the necessary changes. Because the newly applicable law applies to all California resident drivers and any foreign or domestic company with operations in California, which could create contractual or tort liability for companies wholly unconnected to California, all attorneys representing motor carriers and brokers, no matter where they are located, will benefit from this program.