California Truckers Protested AB 5 Last Month

Earlier this year, the state of California set into motion a new piece of legislation aimed at redefining independent contractors, a rising professional landscape in a state where freight, trucking, and the gig economy are growing. Known as the “gig worker bill,” this puts truck drivers in a bad spot because under a new worker classification test (ABC Test), a worker is presumed to be an employee, putting the burden on the company that hires them out.

This has upset everything from commercial truck insurance policies, such as truck liability, to Uber drivers to the future status of trucking commodities across the state. More specifically, it’s caused truck drivers to speak out in protest due to its limiting of independent contractors.

In fact, truck drivers took to the streets in November, protesting the new legislation and how it’s affected their hauls from Oakland to Los Angeles to the ports of San Francisco and Long Beach. Truck horns and chants could be heard at all these locations last month, as dozens of truck owner-operators gathered together to protect the gig-work law, which could take away their independent contractor status and, in turn, hurt their potential to be their own boss and earn higher wages.

Set to take effect on January 1, 2020, the AB5 bill creates more challenges for classifying someone as a contractor unless they are free from a company’s control and have their own independent enterprise doing the same kind of work. Protests were coordinated throughout the state by many trucking professionals who feel they are being mistreated by the state. The effort has no affiliation with a specific association, but has picked up steam throughout the state.

Currently, there are more than 70,000 drivers who choose to work as independent operators in the state because of the freedom given to them through the work-model that has been in place for decades. These workers are campaigning for an amendment to the AB5 bill, allowing them to work as independent contractors and set their own hours and earn more compensation.

The state is currently in a shortfall of employee drivers and barring the use of independent operators can only hurt the situation, some say. Some companies are considering separating their brokerage operations from their trucking business. This would make carriers responsible for handling operations with owner-operators through the broker.

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.

Federal Independent Contractor Model Up for Further Debate in Congress

With the air of the recently passed AB5 hanging over California like a smog, and with executives from ride-sharing tech giants Uber and Lyft failing to appear at a Congressional hearing over lax safety oversight, lawmakers are turning their focus to independent contractor classification in the country.

Debates in Congress have been spurred on by regulations out west in California where legislation was passed by the State Assembly in May and the state Senate in September, outlining a way to determine the work status of independent contractors, such as truck drivers or ride-sharing drivers.

The hearing, which was overseen by the Highways and Transit subcommittee of the House Transportation and Infrastructure (T&I) Committee in October, honed in on the need for driver background checks for transportation network companies. This has all happened in the wake of homicides and assaults committed by people posing as ride-sharing drivers.

“It’s hard to imagine that Uber and Lyft didn’t actually show up here today – it’s really disrespectful to the committee and a bad play on their part,” said Thomas Suozzi (D-New York).

The Democrat from New York and his Republican colleague from New Jersey, Chris Smith, threw their support of laws requiring enhanced vehicle identification to make it more difficult to impersonate an actual ride-sharing driver.

Beyond addressing public safety issues surrounding independent contractors, whether in ride-sharing or trucking, Congressional members also debated the topic of worker classification, a big issue coming out of California, as mentioned above. The law will go into effect on January 1, 2020, and will lower the threshold in California for classifying a worker as an employee. This is projected to have major cost implications for everyone from ride-sharing companies to freight companies who hire truck drivers on a daily basis.

Certain Congressional members have shown support for the AB5 legislation, detailing its goal of identifying the difference between independent and permanent employees. This will surely have freight companies rethink the way they hire employees and classify them in their truck insurance options. This issue is gaining attention for its effects on Uber and Lyft in a state where ride-sharing arguably got its start or at least its growth.

The debate around whether or not to elevate stricter tests on independent contractor status outside of California, using the state as a jumping-off point, was also brought up with Republicans on the Hill shooting it down and Democrats wanting to push it along.

“I don’t necessarily think that this committee should blindly follow the state of California,” said Pete Stauber (R-Minnesota). My state is much different than the state of California. It’s much more rural, and I think we have to have a broader look at this issue the transportation network companies, and how we can serve not only urban but rural communities.”

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.

Layoffs are Part of a Troubling Trend in Trucking

The trucking industry has been going through major reformation in recent years with the push to go more tech-savvy. Autonomous trucking operations are starting to take over the highways and byways in America with companies like Uber Freight and TuSimple planning more available freight deliveries in the coming months.

This push to go autonomous has some trucking companies and trucking professionals worried that the need for drivers will start to go away. But the entire trucking industry has started to see a major slowdown as a whole, adding to the doubts around truck driver job security.

In fact, according to the U.S. Bureau of Labor Statistics, the trucking industry saw more than 10,000 truckers lose jobs between July and September. The layoffs are a result of a major slowdown in manufacturing related to the US-China trade dispute that’s currently ongoing, marking a major indication of an entire economic recession in the U.S.

Long Time Coming?

Analysts have been showing concern around the slowdown in the economy for some time, pointing out the role that trucking is playing. Job growth overall has slowed down in recent months across a number of sectors with payrolls averaging about 161,000 per month compared to 223,000 the same timeframe last year. This has caused a stir among trucking companies who need to find ways to do everything from completing their current orders and budget for layoffs. Things like truck insurance and ordering new vehicles may have to be put on hold even though they may be pertinent to an everyday operation.

Trucking has historically been known for hiring and firing thousands of people at once, bringing in loads of people or cutting whole swaths at a moment’s notice. For instance, in the summer of 2018, the industry saw a boost of 37,000 jobs after loads of new trucks were ordered to keep up with the surge in everything from e-commerce to international trade. But with standstills at the U.S.-Mexico border for trucking freight and another standstill with China over trade tariffs, the trucking industry has been caught in the middle.

Recent layoffs also mirror an overall shift in the services offered through trucking, such as same-day or next-day delivery in the e-commerce space. There are still areas where the trucking industry is hiring regularly, such as courier and messaging service companies, which are seeing solid bumps in opportunity due to more activity on sites like Amazon and eBay.

National networks like UPS and FedEx, can provide the dedicated capacity to large-sized customers to make sure there are no gaps in freight service, but for smaller and mid-sized companies that lack scale, this trend could be dire in the long run, maybe even leading to the demise of a number of companies.

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.

Recent Bills Create Trouble for California Truckers

California Governor Gavin Newsom has been busy this year with deploying new state government bills surrounding truckers and other contract workers in the state. This fall, Newsom signed three bills into law that add more to the state’s hold on the trucking industry, adding more regulatory costs and compliance burdens on companies of all sizes, and possibly causing smaller companies to have to shudder.

Senate Bill 210, for example, creates a new emissions inspection program for commercial trucks. The law requires that a new Heavy Duty Vehicle Inspection and Maintenance Program for trucks and other heavy vehicles be implemented by the California Air Resources Board (CARB). CARB will also move forward with creating licensing standards for the inspection and repair shops throughout the state and oversee a new compliance certificate that truck drivers will have to keep with them in the vehicle. Additional fees will be put forth toward the new Truck Emissions Check Fund.

Clearing the Air

California air regulators have already put in motion that the trucking industry makes more efforts to be more energy-efficient and boast cleaner engines, cutting down on the smog. The Statewide Truck and Bus Rule set back in 2008 requires all heavy-duty trucks have new or retrofitted engines in order to operate on California roads. This major expense didn’t get a lot of legislative support, which is why the revised SB 210 bill was put in place to acknowledge the investments made by the trucking industry as a whole to upgrade the fleets on the road.

Trucking companies may now have to buy new equipment under another new bill, SB 44. The bill directs CARB to update its 2016 mobile source strategy to include a “comprehensive strategy for the deployment of medium-duty and heavy-duty vehicles.” The California senate wrote out an analysis of the bill, stating that CARB will be making its own new regulations to uphold and support more commercialization efforts of medium- and heavy-duty trucks that help to reduce greenhouse gases. A goal that has been speculated is that this will prompt manufacturers to produce more electric or hydrogen-based trucks.

Jeopardy on the Road

The bill that’s been getting the majority of the attention in the industry, however, is the recently passed AB 5, which will essentially end the practice of truckers working as independent contractors. Trucking firms will now have to hire drivers as employees instead of contract workers, making them responsible for everything from payroll taxes to workers’ compensation insurance, commercial truck insurance, and paid sick days, among other regular job perks.

Smaller companies are already starting to see the squeeze the bill is having on the industry, with some having to close up shop or lay off the majority of their drivers due to the new fees. The cost of trucking is built into the price of everything that is trucked throughout the state.

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.

FMCSA Proposes New Rule to Increase Service Hours Flexibility for Drivers

In August, the Federal Motor Carrier Safety Administration (FMCSA) published a long-awaited proposal for changes to hours of service rules that would help add more flexibility for truck drivers on the road.

These hours of service rules, first adopted in 1937, specify the permitted operating hours of commercial truck drivers and have gone through multiple revisions. The newer mandate requiring electronic logging of hours that took effect in December 2017 featured some of the shortcomings in how these rules are applied in the everyday driving habits of truckers.

The FMCSA, through an advanced notice period of proposed rulemaking, asked for comments from the public on how to help add flexibility in realistic ways to the industry. Based on those responses, the regulatory body came up with a new rule to increase service hours flexibility.

What to Know

The FMCSA came up with five components to the rule change, helping to keep safety in the spotlight. Trucking companies can face claims from truck drivers if they feel overworked, leading to accidents or injuries on the road. Commercial trucking companies can take out commercial truck insurance plans to make sure they are covered in the event of a professional claim, especially with something like workers’ compensation insurance.

And while protecting against claims is a must for trucking companies, it’s good to know what changes were made to the hours of service. They include the following:

  • Changing the 30-minute break requirement to require a break after eight hours of uninterrupted driving time, not on-duty time, and allowing the break to be satisfied by a driver using on-duty/not driving status, rather than off-duty status. If a driver has to take a break to add fuel to their truck or use the restroom or grab a quick bite, that can count as their required break.
  • Allow drivers to split their required 10 hours off-duty into two period. This can include one period of at least seven consecutive hours in the sleeper berth and the other period of not less than two consecutive hours, either off-duty or in the sleeper berth. This would allow for a 7/3 or 8/2 split. Neither period would count against the driver’s 14-hour driving window.
  • Allow one off-duty break of at least 30 minutes, but no more than three hours, that would pause a truck driver’s 14-hour on-duty window, provided the driver takes 10 consecutive hours off-duty at the end of the work shift. This would alot drivers to take up to a three-hour break to bypass rush hour, without affecting their on-duty time.
  • Modify the adverse driving conditions exception, adding two hours to the maximum window during which driving is allowed. The current rule allows for that extra time but it still has to be within the maximum 14-hour workday. The proposal would allow that workday to be lengthened to as much as 16 hours in instances where things like extreme weather or major traffic congestion become a factor.
  • Change the short-haul exception available to certain commercial drivers by extending the drivers’ maximum on-duty period from 12 to 14 hours and lengthening the distance limit within which the driver may operate the wheel from 100 air miles to 150 air miles.

The FMCSA expressed, through a press release, that the proposed rule wouldn’t increase driving time and instead would continue to prevent trucking professionals from driving more than eight consecutive hours without at least a 30-minute change in duty status. What’s more, the FMCSA says the proposed changes are estimated to provide $274 million in savings for the economy in the United States as well as American consumers.

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.

Intentional Pairing: An Operations Change That Could Lead to Lowered Trucking Costs

Trucking companies have been operating with drop-and-hook operations for some time hoping to maximize efficiency. But while many trucking companies stick with this method, there’s little focus when it comes to matching tractors. In a new report from the North American Council for Freight Efficiency (NACFE), it’s pointed out that a change in operations to allow for more intentional pairing as it’s known could lower overall trucking costs and have more room for needful assets such as hiring and truck insurance.

But while it’s projected to help with efficiency and cut costs, some leaders in the industry argue against pairing, saying that while it’s a good idea, it’s not really feasible. Even with a net improvement of five to 10 percent, as stated by the NACFE, the case to change things up may not be compelling enough.

Studying The Road

In the study, titled “The Feasibility of Intentional Pairing,” the NACFE portrays pairing as a dream for engineers, allowing for the design of an integrated tractor-trailer combination to be operated in a cost-cutting way. The report, which spans 86 pages, outlines everything needed to change for a complete overhaul of how things get done on the road through pairing. Through a survey of 50 fleets, including big names in the industry like Werner, UPS, and PepsiCo, NACFE found that the majority of fleets operate in drop-and-hook with the focus on keeping the trailer in motion as much as possible.

The benefits of pairing would be on a sliding scale according to the NACFE’s findings. Fleet annual net MPGs would improve and intentionally pairing by model type would provide the best opportunity for gains on the road.

The ability to pull this kind of move off is still questionable as many variables are involved and would require a whole new way to go about moving freight around. From time to pricing to asset location, it’s not a one-size-fits-all solution to an issue.

According to the NACFE, a growing number of GPS tracking systems and more data does present a new opportunity for a more efficient asset optimization in certain applications of freight, such as shipping beverages around. These commodities already operate in a certain manner as fleets pair weight-reduced tractors with weight-reduced trailers to maximize payload.

Altogether, NACFE, concluded that intentional pairing, while a great idea, and something to look forward to in the future, is not a full-fledged reality at this point. But the new technology does offer up opportunities through asset tracking and asset management. With data available around these entities, including driver information, tractor characteristics, asset status, locads, weather, and routes, better operational decisions can be made.

By combining this with the vehicle data, it could allow fleets to match trucks to certain shipping situations. Lightweight tractors could be paired up with lightweight trailers in order to maximize payload potential, even if it’s resulted in a shorter lifespan for those assets. Tractors with down-sped transmissions could be used for routes where technology can best be of benefit.

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.

FMCSA Update: California Yields to Preemption Determination

Following the Federal Motor Carrier Safety Administration’s determination in December of last year that federal law preempts California’s meal and rest break rules, many trucking companies are trying to determine how this is going to affect them with the California courts.  Los Angeles Superior Court became the first state court in California to apply the determination to armored truck driver claims for meal and break rules in the state; decided in favor of the Federal Rules.

Let’s take a closer look at what the preemption determination is and how trucking companies should proceed.

How to Proceed with This Ruling

 The recent court orders are good news for trucking businesses with drivers subject to federal rules, but these companies should still be concerned about the state objectives on enforcing the meal and break rules. Trucking companies can still be hit with claims from drivers, and their opportunistic attorneys when it comes to rest and meal breaks. Having a knowledgeable commercial truck insurance broker to consult with is an added avenue of defense.

Preemption Determination

The FMCSA decided in December of 2018 that federal transportation law preempts (takes priority over) California’s meal and rest break rules when a driver is subject to federal hours-of-service requirements. Essentially, what this means is that California’s laws were looked at as incompatible with the federal regulations, which is causing a burden on interstate commerce.

Applying the FMCSA’s Rules

In May of this year, a district court in California ruled on the issue and dismissed a claim made for truck drivers meal and rest breaks. The court made it known that it doesn’t have the authority to enforce the regulations around meal and rest breaks. Following that ruling, the Los Angeles Superior Court, as mentioned above, made its decision surrounding armored truck drivers’ meal and rest break claims, determining that federal rules governing the hours of service for both long- and short-haul drivers preempt (take priority over) the state rules in California.

The court ruled that it was “obligated to recognize the supremacy of federal law under the United States Constitution and the oath of judicial office”. The court also determined that it has no choice “but to respect and enforce the FMCSA Administration’s preemption determination without trying to second-guess its legal or policy correctness.”

This issue will be continually evolving. Keep an eye out for future blogs with updates on this ruling.

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.

Update: The NLRB Returns to its Independent Contractor Standard

On January 25, the National Labor Relations Board returned to its long-standing independent-contractor standard, which reaffirms the Board’s adherence to the traditional common-law test. The main rollout from this is that the Board described clearly the significance that entrepreneurial opportunity has in its determination of independent-contractor status.

The Obama-era standard decided whether workers are employees protected by federal labor law or independent contractors who are not, which in turn gave a boost to companies that prefer to use contract labor. This has the opportunity to disrupt everything from how companies hire workers to get their jobs done to how independent contractors look into commercial truck insurance. Read on to get more information on this ruling.

Independent Workforce

The legal test for employment status properly accounts for workers’ entrepreneurial opportunity for economic gain. This was limited severely back in 2014 due to a ruling that involved FedEx Corp. Members from the NLRB, appointed by the new administration in the White House, pointed this out in their case to return to the old standard.

Many freight companies, for instance, use independent contractors in part to avoid the expense and legal liability that comes with hiring full-time, permanent employees on their payroll. The ruling gives implications for a range of businesses, including ride-hailing companies (think Uber and Lyft), which rely on drivers who are independent contractors and not official employees of the company itself.

According to the U.S. Labor Department, nearly 7 percent of the American workforce counts as independent contractors (around 10.6 million workers), a number that is projected to rise in the coming years as the gig economy grows.

While the ruling has been debated for a number of years, this overturn was sparked by a case regarding a shuttle-van accident at the Dallas-Fort Worth Airport which ended in injuries caused by the driver. This prompted the NLRB to change its legal standard for employment status, stating that the franchisees aren’t employees under the National Labor Relations Act and therefore fall outside of the coverage that law provides.

Only employees are covered by the NLRB, which provides the right to unionize and engage in collective bargaining.

Entrepreneurial Opportunity

The NLRB set forth a legal outline that blends an analysis under the common law with an examination of what entrepreneurial opportunity is. The ruling from the NLRB uses a common-law test drawn from the 1958 version of the Restatement of Agency; this was a legal treatise that states 10 non-exhaustive factors to determine whether a worker is an independent contractor or employee. Those factors that are outlined include the level of control a business exercises over a worker as well as the method of payment and the amount of autonomy they are allowed in their role.

The board states that it can “evaluate the common-law factors through the prism of entrepreneurial opportunity when the specific factual circumstances of the case make such an evaluation appropriate.”

During the Obama-era ruling, the board at that time changed the traditional test for independent contractors by underplaying the importance of entrepreneurial opportunity. It also highlighted workers’ economic dependency on companies, but this was overruled in 2017 when the U.S. Court of Appeals for the District of Columbia Circuit pointed out the importance of considering entrepreneurial opportunity.

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.

Trucking News: What’s the Status on Owner-Operators in California?

Currently there are competing bills in California state legislature that are aiming to address an April 2018 ruling by the state’s Supreme Court that has threatened the traditional owner-operator model within the state. The bills are pointing to trucking groups wanting to upend years of law used to decide if a worker is an employee or an independent contractor.

Independent contractors make up a large portion of the transportation industry workforce in California. These independent contractors are mostly truck driver owner-operators and the major concern has to do with benefits truck drivers feel they are owed as well as being determined full-on employees.

The Ruling

On April 30 of 2018, the class action lawsuit produced an “ABC test,” or an assessment designed to strictly outline who can be classified as a contractor within the state. This will not only effect truck drivers, but virtually all who work in the growing gig economy (think delivery drivers, ride-sharing employees, etc.). The new standardized testing determines that a worker is an employee under the wage orders unless the hiring company establishes all three of these factors:

  • The worker is free from the control and direction of the hirer in connection with the performance of the work
  • The worker executes work outside the usual course of the hiring entity’s business
  • The worker is engaged in an independently established trade of the same nature as the work performed for the hiring entity

Essentially, the test assumes almost all workers are employees and eligible for the wide protections of California wage laws including overtime pay, meal breaks and minimum wage.

Another benefit workers are vying for are insurance options. From dental to medical, independent contractors are looking for the right coverage, especially given the dangerous nature of the trucking business. And while this is something that is still being volleyed back and forth by the court system in California, trucking companies can invest in commercial truck insurance to provide their own protection.

Having commercial truck insurance will help provide trucking companies with the protection needed to financially safeguarded against injuries drivers sustain on the job.

Gaining Opposition

The Western States Trucking Association has been looking at the idea of legality of the entire trucking industry in the state. The association pushed for a lawsuit filed earlier this past year against California over potential enforcement of the new ruling.

Western States has argued that the ruling violates federal law governing interstate transportation. The group is hoping for a long-term solution to the issue, to push the state legislature to act and correct the court’s decision to require testing.

The California Chamber of Commerce is also working to limit the effect of the ruling, especially since some of its members include trucking companies. The chamber has put together rallies at the state capital in Sacramento supporting workers’ right to choose to operate as independent contractors. Some motor carriers are considering changes to their operations after the ruling as well by turning over hiring to a brokerage firm for example.

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.