Employment Solutions Industry Updates
January 20, 2021
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California’s Assembly Bill 5 (CA AB5) has been making headlines since it was originally proposed in April of 2018. Under the new law, companies must classify independent contractors as employees – having a significant impact on truck drivers and the companies who contract them.
To understand if your business must reclassify drivers, the 3-pronged ABC test is the recommended first course of action. The next step is understanding if your business has exemption status under one of the many exemption classifications.
In this blog, we address the most common exemption status our customers turn to when investigating their exemption criteria: Business-to-Business exemptions.
Unfortunately for motor carriers, Business–to–Business (B2B) exemptions for AB5 are among the narrowest. The statute defines these as relationships in which a “business service provider” (driver) provides services to a “contracting business” (motor carrier).
This exemption only applies to entities that are actual “service providers” – defined as “a sole proprietorship, partnership, limited liability company, limited liability partnership, or corporation.”
For a Business-to-Business contract to be considered exempt from AB5, ALL of the following criteria must be met:
In most cases, motor carriers are not able to apply for B2B exemptions under AB5 when contracting to owner–operators because drivers are:
B2B exemptions can apply to motor carriers when the business service provider is performing a non-business-related service, such as:
By partnering with TransForce Group, we can help you get compliant with AB5 regulations quickly and eliminate the risk of misclassifying workers – so you can continue to keep your trucks moving without disruption to your customers.
If you are still questioning your ability to apply for Business-to-Business exemption under AB5, check out the following resources:
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