California’s AB5 law restricting the use of independent contractors has some “fatal flaws,” said Glenn Fehribach, CFO of World Group, in introducing a session at American Trucking Associations’ 2022 Management Conference & Exhibition in late October in San Diego.

“It assumes independent contractors want to be employees, and it assumes somehow all ICs will magically convert to employees,” he said. “We’re already 80,000 drivers short… have we already forgotten the port and rail congestion from the past year?”

Assembly Bill 5 was passed in the fall of 2019, but a preliminary injunction prevented it from being enforced while the California Trucking Association challenged it in court. After the U.S. Supreme Court refused to hear its appeal in June, that injunction was officially lifted in August.

AB5 set up a stringent ABC test that companies must pass in order to show that their independent contractors are not employees, certifying that:

• A That the worker is free from the control and direction of the hiring entity in connection with the performance of the work, both under the contract for the performance of the work and in fact;
• B That the worker performs work that is outside the usual course of the hiring entity’s business; and
• C That the worker is customarily engaged in an independently established trade, occupation, or business of the same nature as the work performed.

Why is the ABC test so bad? Greg Feary explained, “First, it assumes employee status unless an...

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