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Trucking Industry in Need of Ideal Resolution on Independent Contracting: Augusto Beato

The legislature should enact the necessary bill to counter the ill-effects of the California Supreme Court ’s interpretation in Dynamex v. Superior Court that bars operators from leasing on to carriers, avers Ice Break Shipping CEO, Augusto Beato.

The Dynamex ruling set the state’s new standard for determining whether a worker is an independent contractor or an employee. The ruling states that if a worker’s tasks are part of the business’s core functions, then that worker should be classified as an employee, not an independent contractor.

In Dynamex, the Supreme Court adopted a new standard for determining whether a California worker is an employee or independent contractor under the California Industrial Welfare Commission’s wage orders.

Beato agrees with the Western States Trucking Association (WSTA) that the ruling violates a stipulation in the 1994 Federal Aviation Administration Authorization Act which says that states cannot enact laws, in this case, the California Industrial Welfare Commission’s (“IWC”) wage orders, that interfere with federal law on motor carriers’ “prices, routes or services.”

"Consequently, owner-operators are merely circumventing the ruling setting up brokerages separate from their trucking operation, " said Beato. "A new California law that supersedes relevant provisions of the wage orders would provide the ideal resolution," said Beato, who is also the CEO of Portland SEO.

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For trucking, this means that if a fleet, whose core business is for-hire trucking, gives loads to an owner-operator, then the owner-operator should be classified as an employee.

While single-truck operators previously leased to carriers have now obtained their authority and become independent owner-operators, to circumvent the effects of the ruling, Joe Rajkovacz, head of government affairs for the WSTA, said this is not an ideal resolution since few owner-operators ever receive a safety rating in today’s compliance regime.

An influx of independents under this workaround would only further exacerbate the issue.

A federal court in California heard oral arguments in WSTA's lawsuit against a California Supreme Court ruling, due to its potential widespread impact on the use of owner-operators by fleets in California.

Rajkovacz says the California Supreme Court ruling “gets right to the prices, route, and services” provision.


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