An update on AB5 and its potential impact on global mobility

California's Assembly Bill 5 (AB5), which passed on Sept. 18, 2019, and went into effect on January 1, has created some concern around how it might impact the supply chain for relocation management.  

Probably one of the biggest concerns was how this would impact the cost for household goods shipments, which is an industry affected by the ability to find staff, particularly in the busy summer season. 

The new law utilizes something known as the ABC test to define whether a worker is a full-time employee or an independent contractor. The elements of the test include the following: 

1. The company must prove that the worker is free from the company’s control.
2. The worker performs work outside the company's primary business.
3. The worker is regularly engaged in the trade the worker is hired for, independent of work for the company.

After appealing AB5, a new ruling from the Superior Court of the State of California has deemed the trucking industry to be exempt from the law. This article from Supply Chain Dive shares that this ruling means the industry likely won't have to comply with the changes. The judge concluded that AB5 would have resulted in impacts to carriers' prices, routes and services. At the same time, the court acknowledged that there are substantial grounds for a difference of opinion and it was also noted that there is still one other legal challenge, which leaves open the possibility of a conflicting ruling in federal court.

Some feel that this is a win for the trucking industry, at least temporarily. Stay tuned to see where this goes ultimately, but for now, let us know what other concerns you have related to AB5.

See also: "2020 will be an interesting year for the gig economy"