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Owner Operators being told to move out of California

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Landstar, Prime among fleets telling owner-operators they’ll need to leave Calif. to continue as contractors

 

Prime, Inc. and Landstar System, two of the largest contractors of owner-operators in the country, have told their California-based owner-operators they can no longer contract with them unless they move out of state.

 

The fleets are overhauling their California operations to manage the requirements of the state’s Assembly Bill 5 — a restrictive legislative package that effectively makes it illegal for fleets to contract with owner-operators under their authority. Swift and Knight, part of the Swift-Knight conglomerate, reportedly cut ties with its California owner-operators earlier this year, offering those truckers the option to leave the state or sell their equipment to the fleets and become company drivers.

 

Prime which contracts with nearly 6,000 owner-operators, is offering its California-based owner-operators the option to leave California or transition to company driver if they wish to continue operating with the fleet after the state’s sweeping new labor law takes effect Jan. 1.

 

The fleet, No. 13 in the CCJ Top 250, said it will provide owner-operators with relocation packages if they wish to move and remain owner-operators. A Prime spokesperson did not elaborate on how many operators would be affected.

 

Landstar, No. 8 in the CCJ Top 250  and the country’s largest owner-operator fleet, confirmed to CCJ last week that it is calling its California-based owner-operators to discuss options, too, but the fleet would not elaborate on available options.

 

Landstar owner-operators familiar with the calls have said the choice is simple: Leave California or “they’re done at Landstar,” said one of the company’s owner-operators, who wished to speak anonymously.

 

Landstar declined to comment on that interpretation or whether drivers would be offered relocation packages.

 

Owner-operator Ivan Mikhov, based in Sacramento, is one such operator facing A.B. 5’s existential threat. He has four brothers also leased as individual one-truck businesses to the company, and all have been told that, in order keep their contracts into the new year, when the new contractor law goes into effect, they must either commit to only hauling loads that originate outside the state, or else relocate to another state and update their CDL from their current California licensing.

 

“We’re trying to decide” exactly what to do, Mikhov says. “We’ll probably move.”

 

RESOURCE LINK

 

OOIDA challenges AB5, New Jersey bills

Absent any answers from California and New Jersey lawmakers on the reach and impact of their worker classification legislation, OOIDA is challenging California’s Assembly Bill 5 as well as two New Jersey bills.

 

New Jersey lawmakers have introduced similar legislation – S4204 and A5936. OOIDA sent a letter to New Jersey leaders, saying the Association is opposed to the “overly broad legislation.”

 

OOIDA is opposed to any legislation that will negatively impact legitimate owner-operators. The Association said both states have been unable to confirm that the legislation will protect legitimate small-business truckers leased on to a motor carrier.

 

“We have attempted to get answers, any answers from officials in California regarding their vision and enforcement on AB5. And New Jersey lawmakers are in the same boat. No one has any answers,” OOIDA President and CEO Todd Spencer said. “Absent any sort of direction or credible information, California should not allow AB5 to go into effect in January and New Jersey lawmakers need to rethink their bills.”

 

RESOURCE LINK and the rest of the story.

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I typically don't waste my time on political statements, but, this is a tough, "load of crap", that makes for daily news. Yes, California IS a difficult and expensive state to live. I personally agree with that narrative suggesting large companies would survive in other low-tax states and not fall under California's increased taxation for everything. But, many of us Californian's, me included, simply can't pick up and move due to the political or financial climate that currently is crushing the state, i.e., property taxes, fuel costs, outrageous costs of vehicle registration, increasing labor laws, this bill, that tax, this regulation ... yada, yada, yada, not to include a double increase of wild-fire insurance, and, PG&E over-pricing homeowners for the means to power their homes. While I too would get out of here in a heartbeat, kids, grand-kids and parents make going anywhere impossible. Besides, I once lived in an environment where it snowed. Never again ... where we are is where we are.     R. 


Randall C. Resch

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I don't see this particular issue as just a California "thing". There has been a systematic attack on the smaller, independent business person for the better part of the last 10-15 years. This is just another nail in the coffin of true independence. Are some people misclassified and taken advantage of, sure. As with anything there are bad apples and folks that don't understand what they are signing up for.

 

As for this particular issue, this will make it nearly impossible to have contractors handle over flow work. It even has implications for auto clubs that have their own fleet and contractors, general contractors in the construction industry and even companies like car dealerships that have in-house detailers but also contract with detail services for overflow work. It is an attack on the "gig economy" that has collateral damages to include true independent contractors.

 

The article above references both the good and bad of the trucking issue, Landstar and Swift. While Swift has been known to take advantage of independent contractor status and coerce drivers into unfair lease/purchase agreements that are bad for the driver Landstar on the other hand has true independent owner operators that are being forced to chose between losing their business or moving out of state. This attacks Landstar's entire business model as a non-asset based trucking company (meaning 100% owner operator).

 

Several other states are considering nearly identical language to address the independent contractor test. Heck Randy, guys like you and I may even be affected -Randy more so than me given you are a California resident, because we provide contract training and writing services to organizations that also have in-house staff trainers or writers.

 

This has far reaching implications that will damage many legitimate contract relationships.

 

On a side note Randy, snow isn't all that bad! All kidding aside, I know how you feel about moving away, it isn't as simple as many make it sound. I would love to get out of Pennsylvania again but family obligations keeps Vicky and I here indefinitely.

One more note about the large companies surviving outside of California. True, they can survive, but at what cost? These companies in the article are already headquartered outside of California, but the issue is their operations with California residents that are contractors. Without these contractors, especially Landstar, they will be forced to change their business model or give up their customer base in California.

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