There are a lot of drivers out there that make a living as independent contractors leased onto a larger entity.  I did this myself for many years prior to getting my own authority and it was a good way to learn what it takes to own a truck.  I owned my own truck, filed my business as a corporation and then leased onto a larger carrier to take advantage of their reputation and larger freight volumes.  I learned first-hand about things like maintenance requirements and downtime, with the bonus of having the big company I was with help steer my ship through the sea of freight.  It was a win/win scenario for the years I did it as a leased-on owner-op, with the exception of a few management changes within those companies that helped lead me to where I am today being my own independent small carrier.  I learned a large amount of what I know today from operating as a contractor this way! 

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A ruling earlier this year for California based carriers though, puts in jeopardy this ability to be classified as an independent contractor leased to a larger outfit and is being challenged for a second time at this current moment.  Gone soon might be the advantages of being able to learn with the support of a bigger entity behind you, at least for any companies based in the state of California.  Their own new “ABC Test” that serves as a pass/fail system to determine independent contractor status for owner operators, gives a very rigid guideline that pretty much eliminates the contractor status of even the most legitimate owner-operator contractors I know operating out there.  

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A lot of people out there want to put the blame where it is not justly due, on carriers that offer lease deals.  Although there are always going to be some carriers out there that take advantage of this type of scenario with super high payments and hidden fees, blame should be placed where blame is due.  The true causes out there that have led up to this in my opinion, which should really be the focus of decision for misclassification, are ill-prepared drivers turned owner-operators needing to place blame for their own failure and carriers that pay 1099 to employees that should truly be W-2 wage earners.

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Most of the court cases leading up to the major decision here in CA and the new ABC Test, were from owner operators who failed at succeeding, then came back post-failure to put the blame back on the carriers they were contracted to.  Having lived the scenario of operating under an agreement for someone else, if I had not prepared properly for major breakdowns and the true costs of being an owner operator, I may not have succeeded either. So I can see where someone might have a sore spot with unpaid rest breaks after the dust has settled, where they might not have had such a problem while operating, then feeling they were due restitution when the sunset came on their venture into trucking as a business contractor.

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The biggest cause in my eyes for all of this though, is something I see all too often in the posts for hiring new drivers.  Many companies have no shame advertising a great rate per mile for what they offer to pay, then adding that drivers will be “paid 1099”.  I’ll informed drivers often wander into these “Golden Gigs” that pay seemingly double what all other driving jobs pay as a W-2 employee, so they can be quite appealing to many.  It usually isn’t until tax day each year, following their first year on that new job, that they figure out the job really was too good to be true!  Without any truck payment, lease payment, or business expenses to claim, they have to cough up a large sum of what they made that year for having to pay both the employer and employee share of their tax liability.  In doing this the carriers evade their responsibilities for hiring employees, such as workman’s compensation and employee taxes, while the driver takes the brunt of the blow and is left to either find a better W-2 job or “suck it up” and stay while trying to plan better the following year. With no truck of their own, no authority and no true business expenses, this to me is the true definition of misclassification and from what I see daily, the most abused form of hiring that has truly led to decisions like this here in California.

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With a second challenge being recently introduced to the court decision and their ABC Test, we will see what becomes of this almost unreachable and unrealistic guideline for the trucking companies here.  This industry is not like other industries that utilize contractors, but it is being held to standards designed for them that don’t apply to trucking owner-operators classified as contractors.  Perhaps blame can be set upon those that have truly abused the rules for years and continue to due so currently without any backlash to their operations.  It is only then that true owner-ops and lease-ops can flourish as contractors and compete in the freight marketplace fairly alongside each other.  If not, we may just see a mass exodus of carriers moving from here to other states!

 

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Misdirected Misclassification

November 03, 2018

About Jimmy Nevarez

Jimmy Nevarez is the President of Angus Transportation, Inc, which is currently an independent contractor in Southern California. Jimmy has been in the trucking industry for 11 years.

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