Report links owner-operators to low rates of compliance with California clean truck regulations

AB 5 grew out of a Supreme Court decision last year that basically stated workers must be considered employees rather than contractors unless they run their own business in a different sector.

Much of the debate over the bill has centered on classification of gig economy workers. Earlier this week, Uber, Lyft and DoorDash pledged $90 million to fight the legislation with a ballot measure that would provide an alternate classification for ride-sharing drivers.

But the Supreme Court decision and AB 5 have also sent shock waves through the trucking industry, which relies heavily on the independent contractor business model. Many truck drivers, called owner-operators, own their own equipment, then enter into contractual arrangements with carriers.

According to the UC Berkeley report, many truck drivers that meet the legal standard as employees are misclassified as independent contractors. That practice “undermines climate action by shifting the costs of emission reductions to the most economically vulnerable actors in the industry: contract truck drivers,” the authors write.

“While regulatory compliance costs for large trucking firms represent a small percent of total revenue, contract truck drivers face compliance expenses far in excess of their yearly income. Under the contractor business model, truck drivers least equipped financially to buy and maintain clean vehicles bear the financial burden of attaining the state’s climate goals in this sector.”

Not everyone agrees with the report’s basic thesis. “It’s a fallacy that owner-operators who are independent contractors are violating CARB [California Air Resources Board] regulations, but once they are classified they won’t,” said Greg Feary, a partner with the transportation law firm Scopelitis, Garvin, Light, Hanson & Feary.  

Feary said owner-operators who would be governed by AB 5 are already operating under the authority of big motor carriers who by law must ensure their entire fleet is compliant with emissions regulations.

As for owner-operators working under their own authority (that is, they do not contract with carriers), “AB 5 never touches them,” Feary said. Many owner-operators, he added, want the freedom to operate as independent businesses.

The debate over AB 5 comes as CARB is ramping up enforcement of the Truck and Bus rule, the state’s key law regulating heavy duty diesel emissions. About 50,000 heavy duty trucks are out of compliance with the state regulation.

Eighty-three percent of large firms that directly employ truck drivers are compliant with the Truck and Bus Rule, versus 61 percent of contractors, the Berkeley report states.

“With the correct policy levers in place,” the authors write, “California policymakers have an opportunity to support a trucking industry that complies with climate policy and that upholds employment and labor laws for California workers.”

Lawmakers are expected to vote on AB-5 before the legislative session ends in mid-September.