Entrepreneurship is intertwined with the American Dream. In trucking, drivers may work as an independent contractor as a stepping stone on the path to running a full-fledged trucking company, or they may just prefer the independence of being an owner-operator.
But for some, being an independent contractor can become a nightmare. I’ve been reporting on this industry for nearly 30 years, and I’ve heard horror stories, especially about lease-purchase programs. Some such programs are legitimate ways to help truckers get into ownership of an expensive piece of iron. In others, however, the drivers seem to have more in common with indentured servants than with independent business owners.
Similar horror stories were documented by USA Today in a 2017 investigative report it called “Rigged,” claiming that port trucking companies in southern California “saddled drivers with debt and forced them to work around the clock.” Unfortunately, such reporting tends to paint the entire industry with the same brush, leading readers – and lawmakers – to believe all independent contractors are being treated the same as the most extreme examples uncovered by the reporter.
Horror stories like those, combined with lobbying from labor interests, have led to regulations and legislation in states such as California and New Jersey that could all but eliminate the use of independent contractors in trucking.
In California, Assembly Bill 5, scheduled to go into effect the first of this year, was so restrictive that a judge has issued a preliminary injunction prohibiting state officials from enforcing it against trucking, on the grounds it will be pre-empted by federal law. Across the country, New Jersey’s governor just signed several bills making it easier for state agencies to target companies using independent contractors.
Bills like California’s AB5 are like using a cannon to shoot a mosquito – sure, it might get rid of the mosquito, but it’s going to cause a lot of collateral damage.
Sources familiar with the legislative sausage-making that led to AB5’s passage last year told me that the California Trucking Association tried to work with those pushing for the law to address misclassification concerns in a more specific way.
The most commonly cited concern was the leasing model, where drivers buy or finance a truck through the same entity that hires them. Other issues included independent contractors having an intrastate motor carrier permit, the ability to negotiate rates and turn down jobs. But the forces pushing these restrictive independent contractor rules seem to prefer an overly broad approach instead of addressing specifics.
One thing these states have in common is that much of the debate centers around drayage drivers at the ports, who the Teamsters union has been wanting to organize for some time.
Historically, labor unions have done some pretty important things to protect workers in this country. We have them to thank for the fact that children aren’t being maimed in factories where the doors are locked from the outside, for paid holidays and paid sick leave.
But in their zeal to organize port truckers, they’re turning a blind eye to the fact that not all truck drivers want to be employees. In this era of driver shortages, it’s likely that any drivers who truly want to be employees could find a job at a company that uses employee drivers rather than owner-operators. Why not craft a law targeted at ending abusive lease-purchase programs that may be keeping these drivers from seeking employment elsewhere?
Instead of targeting the nightmare that some portion of truckers face in the independent contractor world, these laws are unfairly keeping legitimate owner-operator companies up at night.