As they worked to wrap up this year’s session, California legislators on Sept. 11 sent Gov. Gavin Newsom a ground-breaking bill to correct widespread misclassification of workers as independent contractors, when they should be classified as employees.
Under Assembly Bill 5, “Worker Status: Employees and Independent Contractors,” which Newsom has said he will sign, workers in a broad range of occupations who have been wrongly classified as independent contractors will gain basic benefits they are currently denied, including Social Security, unemployment insurance, workers’ compensation, and overtime pay, as well as the right to organize.
The measure, introduced by Assemblymember Lorena Gonzalez, D-San Diego, and passed overwhelmingly by both legislative chambers, codifies into law the California Supreme Court’s “Dynamex” decision last year setting out three requirements for employers to prove workers really are “independent contractors:” 1) they are free from employer control, 2) they work outside the regular scope of the business, and 3) they are independently established in that trade. Gonzalez says it will open the door for reclassification of over a million California workers now misclassified as contractors.
As AB 5 moved through the Assembly and state Senate, Uber, Lyft, and other rideshare companies were a focus of attention as their workers rallied to urge the bill’s passage. Workers in many other occupations, among them food delivery drivers, janitors, housekeepers, health aides, and construction workers—many of whom are low-income people of color—have also frequently been misclassified.
And among at least one category of workers—short-haul and long-haul truck drivers—proper classification as employees may open the way to broader benefits in another urgent arena, the environment.
In a report, Truck Driver Misclassification: Climate, Labor, and Environmental Justice Impacts, released last month by the University of California, Berkeley’s Center for Labor Research and Education, authors Sam Appel and Carol Zabin describe the extreme economic pressures truck drivers misclassified as independent contractors face as they must pay for their vehicles, insure them, and maintain them to meet environmental requirements—all out of very low wages.
As a result, Appel and Zabin say, “this segment of the trucking industry has the lowest compliance rates with California’s current clean vehicle regulations,” with just 61% meeting the standards set by the state’s Truck and Bus Rule, compared with 83% compliance by large companies that employ their drivers. They point out that such “low road labor practices drive up toxic pollution emissions, which disproportionately affect health outcomes of low-income communities of color.”
The report traces the spread of industry misclassification of truck drivers back to passage of the 1980 federal Motor Carrier Act which deregulated the trucking industry, ending four decades of U.S. Interstate Commerce Commission regulation. “The competitive forces unleashed by deregulation changed the industry dramatically,” the authors say, “bankrupting thousands of companies and forcing remaining and new companies to adopt cost-saving business strategies.”
As a result, by the mid-1990s contracting with “independent” drivers was widespread across many parts of the commercial trucking industry. Many companies benefited by cutting payroll costs while still controlling transportation of loads, but at the same time, drivers’ working conditions deteriorated, with today’s long-haul truckers earning 40 percent less in wages than forty years ago, while hauling double the measurable output.
Appel and Zabin note that the decline in union bargaining power brought about by deregulation also contributed to wage stagnation, with union membership declining from 57% in 1980 to just over 10% in 1997—the date of the most recent study of unionized workers.
“All told,” they say, “illegally classifying employees as independent contractors allows trucking firms to evade labor and employment laws and offload as much as 30% of payroll, equipment, and benefits costs onto drivers.”
As they call for enforcing existing labor and employment law, the report’s authors cite AB 5’s role in expanding the California Supreme Court’s Dynamex decision to the state’s labor and unemployment insurance codes.
The truck drivers’ union, the International Brotherhood of Teamsters, has long advocated both for fair classification of truck drivers and other workers and for environmental justice for the communities most sharply affected by pollution related to transporting of goods.
In a February blog post, Doug Bloch, political director for the Northern California/Northern Nevada-based Teamsters Joint Council 7, pointed to the link between the two. With independent contractor drivers forced to pay for their trucks and all related expenses and barred from organizing to fight for a living wage, Bloch wrote, “Truck driving has literally become a sweatshop on wheels.”
At the same time, Bloch wrote, “Misclassification also undermines California’s climate goals because it shifts the responsibility of purchasing and maintaining cleaner trucks to very low-income truck drivers who do not have the means to do so. The only way to manage the transition to cleaner vehicles is to ensure that responsibility of owning, operating and maintaining fleets rests with trucking companies” who have the negotiating power to share costs with cargo owners.
Among those celebrating as AB 5 swept past its final legislative goal post on Sept. 11 was Art Pulaski, executive secretary-treasurer of the California Labor Federation.
Pulaski commended the legislature for solidifying California’s position “as the national leader on workplace rights, setting the standard for the rest of the country to follow.”
Saying the corrosive effect of misclassification “ripples through our entire economy, undermining our laws to protect and support working people,” Pulaski called AB 5’s passage a “historic victory” that “clears the way for the bill to become law, setting workers and their families on a path to a better future and ending abuses that are all too common.”
Thanking Gonzalez for her tireless work, Pulaski added, “We hope AB 5 sparks statehouses and Congress to follow California’s lead by protecting millions of workers from being cheated out of fundamental rights we all deserve.”
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