Impact on Expediters of CA AB5?

ATeam

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Retired Expediter
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In 2013, California regulations were one of three factors that prompted us to leave expediting after 10 wonderful years on the road (CR-Unit). Now we read this breaking news that essentially makes it illegal to be an independent owner-operator in California. I'm curious to know what impact, if any, this will have on expediters in particular, and trucking overall. Your thoughts?

 

ATeam

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This is the most informative article I have seen on this so far. But it's written before the Supreme Court decision to not take up the case was known. I've found nothing online from any source that says what truckers and motor carriers will actually do now that the decision is known and AB5 is going to become the law in CA very soon.

 

LDB

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I hope it puts enough OO's and carriers out that it causes catastrophic shortages and shutdowns throughout the state, devastating in scope, and crushes the morons on the left who do this stupid stuff. And that those who remain able to operate there concentrate all their work and support to those on the right who've been against this stuff all along. It won't happen, but it's what the left deserves and I hope they receive their Armageddon soon.
 

ATeam

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I hope it puts enough OO's and carriers out that it causes catastrophic shortages and shutdowns throughout the state, devastating in scope, and crushes the morons on the left who do this stupid stuff. And that those who remain able to operate there concentrate all their work and support to those on the right who've been against this stuff all along. It won't happen, but it's what the left deserves and I hope they receive their Armageddon soon.
California is a strange state in a number of ways, especially when it comes to government regulation. Diane and I saw it when we were expediters. We see it in the gym business we're in now as we hear about the challenges our California counterparts face. I don't know why anyone would want to do business in California, but obviously, millions do.

Regarding your Armageddon hope, California will continue to have controversial developments, many of their own making, but they're feeling pretty good financially right now. They're sitting on a $97 billion state budget surplus, their largest surplus in history. A chunk of that is soon to be refunded to the taxpayers.

We could tell them they're stupid for passing the AB5 law that hugely disrupts independent truckers, but CA leaders would not be inclined to listen or care. I expect a bunch of owner/operators will move out of the state.

As far as the impact on expediting goes, I'm not sure how it will shake out. California was a major market for Diane and me as we drove a team CR-Unit. We got a LOT of high-paying, cross-country loads that originated in or delivered to California. It is not a market we would have happily given up. I see the rules allow independent owner-operators to deliver freight into the state but not haul freight out.

I'm wondering if some companies might get creative and create employment agencies where a driver will hire on as an employee with that company long enough to haul a load out beyond the state line, and that employee status then automatically falls to the ground and the driver becomes an owner/operator for the duration of the trip. Maybe a class of employee brokers will rise to help move the freight. The employee broker hires you as an employee to pick up the load, and you automatically resign when you cross the line.

Yes, this sounds crazy ... but it makes perfect sense when you realize it's California logic you're dealing with. Hi, my name is Phil. I'm with the FedEx Employment Agency and I'm here to help. Just fill out this employee paperwork so we can hire you to pick up the load. We'll pay you to haul it to the border. At the border, we have a special relationship with FedEx Custom Critical such that the load will be brokered to them and they will contract with you to take it from there. There will of course be an agency fee for this arrangement, charged to the shipper.
And the agency keeps a slice. But you'll be a legal employee, with health care benefits and a retirement plan (for the 4 hours it takes you to get out of the state and off our books).
 
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danthewolf00

Veteran Expediter
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Yea I can see a drop depot getting built at the Nevada/California border and having the freight shipped there by a employee with a daycab and the expedite carrier picks it up.
 

ATeam

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Yea I can see a drop depot getting built at the Nevada/California border and having the freight shipped there by a employee with a daycab and the expedite carrier picks it up.
Yep. Distinct possibility. Extra cost to the shipper. Highly problematic for security loads. Bad for the earth as more land and energy must be used to support the load.
 

coalminer

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Retired Expediter
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As far as expedite carriers go, as long as they dont have a location in CA then it probably has no effect on them. The ones who are based out of CA will just force all of their O/O to get their own DOT number and LLC and will still be able to take advantage of them like they do now. Never underestimate the power of greedy people.

If its not like this already, it probably will be like it is here in Florida, a carrier who is not registered in Florida cant take a load that both starts and finishes in the state.
 
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