The so-called ABC test institutes a three-point criteria for determining whether a worker can be classified as an independent contractor. For trucking, that relates to loads that motor carriers can contract to independent contractor drivers, such as leased owner-operators. The B portion of the ABC test is widely interpreted as prohibiting motor carriers from contracting with such owner-operators. The PRO Act, introduced in Congress last month in both chambers of Congress, would institute a national ABC test criteria for determining worker classification.
A bill making its way through the U.S. House would follow in the footsteps of California’s A.B. 5 law, passed in late 2019 and codifying a prior court decision, by severely curtailing the ability of leased owner-operators to haul freight for larger motor carriers.
The Protecting the Right to Organize (PRO) Act of 2021, in addition to other broad reforms to the nation’s labor laws, would institute the so-called ABC test for determining whether a business can contract work to an independent contractor. In the case of trucking, that means a motor carrier contracting loads to a truck driver, often via the common leased owner-operator model, in which a driver owns their own truck and business and runs under the authority of a larger carrier. The PRO Act was introduced in early February in both chambers of Congress.
Trucking groups say the leased owner-operator model, which accounts for some hundreds of thousands of operators, would be dashed by the ABC test. “Whether it’s the language that exists in this bill or California’s A.B. 5, it’s certainly not friendly toward the business model that has been employed in this industry for decades,” said David Heller, vice president of government affairs at the Truckload Carriers Association. “It jeopardizes the opportunity to work toward the American dream that has permeated trucking and proven itself over the years.”
Heller pointed out that many trucking companies in existence today, including some of the country’s largest fleets, originally hung out their own shingle as a leased owner-operator before expanding from there.
There’s a strong chance the U.S. House passes the legislation within the coming months, if not weeks, said Joe Rajkovacz, head of government affairs for the Western States Trucking Association. WSTA has been on the front lines in recent years of the fight against ABC test laws and court decisions in California, and Rajkovacz has seen firsthand the effects that this type of regulation can have.
Virtual elimination of owner-operator leasing would, Rajkovacz contends, severely stunt the entire owner-operator model. “The pathway to getting your own authority is by becoming an owner-operator leased to a motor carrier," he said. Absent that stepping stone, there are few realistic opportunities for drivers to transition directly from being employee drivers to independent operators, he adds.
