The contract truck driver and owner-operator model is under a real threat. As SCDigest has written about many times, in 2019 California’s legislators voted into law the so-called AB-5 bill. In great simplicity, the law provides a three-part test to determine if a worker can be considered a contract employee or not.
Supply Chain Digest Says...
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| The test did include unmarked police car following about a mile behind the truck just in case the truck had to come to an emergency stop. |
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The test provides a very high bar for a company to be able to classify a worker as a contractor, and would seem to prelude almost any contractor or independent truck driver from not being classified as an employee.
Scheduled under the law to go into effect at the start of 2020, its enforcement has been delayed by a federal court ruling. But the state won an appeal of that decision, leading the California Trucking Association to file its own appeal in August to the US Supreme Court. The Court has not yet decided whether or not to hear the case. (See Trucking’s Challenge to California AB 5 Law will See Last Chance with Pending Appeal to US Supreme Court.)
With that backdrop, the American Transportation Research Institute (ATRI) decided to coduct a survey of drivers and their views on key employment-related issues, gaining responses from about 2000 drivers. Most were either owner-operators or independent contractors (OO/IC) but about 33% were company drivers.
The results are very interesting.
For example, among company drivers, the top three "motivating factors" were (from #1 to #3) Job Security/Stability, Income, and Healthcare/Retirement Savings.
But the same top 3 motivating factors perhaps not surprisingly were very different for the OO/IC respondents.
For that group, the top three motivators were: Independence/Ability to Set Hours, Schedule/Flexibility, and Choice of Routes/Length of Haul. This result clearly indicates why they have chosen the path they have.
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It is interesting to see how the different groups of drivers are compensated. For this and some other survey questions, ATRI breaks the OO/IC group into two different categories, one that is more dependent on the carrier for equipment leasing and other support services (“leased to carrier”) and another more truly independent (“with own authority”).
As can be seen in the chart below, company drivers are overwhelmingly paid by the mile or per hour, while OO/IC leased are commonly paid as a percent of the freight bill, while OO/IC with own authority usually get paid per load.
Source: ATRI
And the OO/IC group does not expect good results if they are eventually be forced to become employees. As seen in the chart below, about 70% of respondents believe they will see “significant” reductions in job satisfaction and income if that transition were to happen.
Source: ATRI
There is a lot more data in the full report, which can be downloaded here.
The report concludes in part by noting that “The trucking industry has long-relied on OO/IC to transport goods across the US. The use of OO/IC offers one solution to the fluctuating demand for freight transportation and provides an opportunity for drivers to have autonomy over the services they offer.”
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