Rideshare Employees vs Independent Contractors
In November of 2020, California passed Proposition 22, an initiative that would allow certain rideshare and delivery companies to classify their drivers as independent contractors. The statute overruled California’s Assembly Bill 5 (AB 5), which was signed over a year prior in September of 2019. AB 5 instituted a three-factor test for acquiring independent contractor status.
To be categorized as an independent contractor, the bill requires the person/employee to be:
- Free from a hiring entity’s control in regards to their performance and work completion
- Performing tasks/work outside of the hiring entity’s usual course of operations
- Engaged in an established trade, occupation, or business of the same nature as the work performed
The passing of AB5 and its test led to an abundance of gig economy workers being labeled as employees instead of independent contractors. This classification change took a toll on benefits, wages, and other occupational aspects. So, what does Proposition 22 mean for rideshare and delivery employees?
→ What’s the Difference Between an Owner/Operator and an Independent Contractor?
How does Proposition 22 affect app-based drivers?
Proposition 22 was a California ballot initiative that responded to the state’s recently passed Assembly Bill 5. AB 5 codified the California Supreme Court’s decision in Dynamex Operations West, Inc. v. Superior Court of Los Angeles that required employers to classify workers as employees unless they met the qualifications of an independent contractor according to the bill’s “ABC test.” And while AB 5 included exemptions from the Dynamex test for certain occupations, app-based rideshare drivers were not among the list. Since the bill’s passing, rideshare companies and delivery services have faced numerous legal suits disputing driver classification. With Proposition 22, companies like DoorDash, Uber, and Lyft could continue classifying their California drivers as contractors.
More specifically, the proposition allows these companies to label their drivers as independent contractors so long as they don’t:
- Provide specific dates, times, or a minimum number of hours a driver must work
- Require drivers to accept specific delivery requests
- Prevent drivers from taking employment with other rideshares and/or delivery services or any other lawful business
In exchange for this allowance, the proposition requires these rideshare and delivery businesses to offer specific compensation and benefits for their drivers. The initiatives’ statement of purpose declares that it intends to enact labor policies specific to California rideshare companies and drivers. These policies will protect the legal rights of rideshare drivers and ensure that they are afforded employment protections and benefits, including minimum wage, healthcare subsidies, automobile accident insurance, and more.
Proposition 22 also states:
- Rideshare drivers are entitled to 120% of California’s mandated minimum wage for their engaged time (i.e., the time between accepting a service request and fulfilling/completing said request) in addition to 30¢ per engaged mile.
- Rideshare companies will provide drivers who average a minimum of 15 hours per week with a healthcare subsidy that is consistent with the requirements stated in the Affordable Care Act.
- Rideshare companies will provide occupational accident insurance (with at least $1 million in coverage) to drivers for medical expenses and lost income resulting from an injury sustained while active on the company’s app.
- Rideshare companies must obtain automobile liability insurance (with at least $1 million in coverage) to protect and compensate third parties that sustain any injuries and/or losses caused by a driver during their engaged time.
→ How the PRO Act Could Affect Owner/Operators
Why was Proposition 22 declared unconstitutional?
While companies like Uber, Lyft, and DoorDash praised the passing of the ballot, others were not so enthused. Some even saw the proposition as unconstitutional, including Alameda County Superior Court Judge Frank Roesch. In August of 2021, he ruled in favor of a lawsuit filed by the Service Employees International Union, calling the initiative “unenforceable.” He stated that multiple sections negated specific California laws, including a stipulation that required a seven-eighths majority for amendment approval, making any attempt at change nearly impossible. The judge also agreed that the proposition’s ban on workers’ rights to collective bargaining violated California ballot measures that limit single subject provisions.
Despite the judge’s ruling, the proposition remains in effect. The Protect App-Based Drivers & Services Coalition (PADS) and other committees and companies in favor of Proposition 22 plan to appeal the ruling to keep it in effect. However, other organizations, like the “No On Proposition 22” coalition, are fighting against those in favor and working to have copycat bills in other states overruled.
What are the pros and cons of Prop 22?
As previously mentioned, Proposition 22 would give rideshare companies the right to classify their employees/drivers as independent contractors and guarantee things like minimum wage, occupational benefits, and more. However, there are some concerns in regards to the effect this initiative could have on would-be employees.
The pros and cons of Proposition 22 include:
PRO: Drivers will have guaranteed minimum earnings, calculated at 120% of minimum wage.
CON: Earnings are based on a driver’s engaged time and do not cover the time spent waiting for a service request.
PRO: Drivers will receive a 30¢ reimbursement for engaged miles.
CON: Reimbursements will not be given for gas, maintenance, cleaning, or necessary PPE (i.e., disposable face masks, sanitizer, etc.).
PRO: Employers will subsidize 41% of healthcare at a weekly average of 15 hours (engaged time). At 25 hours or more, employers will subsidize 82%.
CON: On average, ⅓ of a driver’s time is spent waiting for a service request, meaning it could take at least 20 hours to reach the 15-hour requirement.
PRO: Rideshare companies are required to provide occupational accident insurance (with coverage equaling at least $1 million), automobile liability insurance (with coverage equaling at least $1 million), and disability payments. Accidental death insurance will also be made available to the driver’s spouse, children, and/or other dependents.
CON: Insurance coverage and disability payments will be dependent on a driver’s engaged time. For instance, if an accident occurs while the driver is awaiting a service request, the coverage may lapse. Regarding disability payments, the driver will only receive 66% of their average weekly earnings (calculated from the month before the sustained injury).
In addition, rideshare workers would not have access to paid paternal/family leave, paid sick leave, or unemployment compensation or benefits with Proposition 22. However, there is no way of knowing whether or not this will become an amendment in the foreseeable future. The Legislative Analyst’s Office also said that with the passing of Proposition 22, app-based companies wouldn’t be forced to pay their employees as much, which would keep fares and fees low for customers.
As the coronavirus took its toll on the world in 2020, some industries—like the hospitality sector—were deeply impacted as government-mandated restrictions and virus-related fear prevented restaurants and bars from operating at maximum capacity. E-commerce, on the other hand, saw an enormous surge in demand with companies like Walmart and Amazon seeing record levels of revenue during the pandemic. The trucking industry, too, was not insulated from the impact of the pandemic. Large numbers of jobs lost and new challenges on the roads forced the industry to quickly adopt innovative new technologies in order to overcome the impact of the pandemic. Here are four technology trends emerging in the trucking industry that owner/operators should keep an eye on in the coming months.
1. Autonomous Vehicles
Almost straight out of a science-fiction movie, autonomous—or self-driving—vehicles are becoming a reality as manufacturers like Tesla begin producing more autonomous consumer vehicles. The trucking industry has become an early adopter of autonomous technology for their freight shipments due to an increased demand for shipping and a shortage of long-haul drivers—caused by economic instability and the tough nature of the trucking industry. Autonomous trucks manufactured by Waymo are already in use on the roads today in California, Arizona, New Mexico, and Texas, and Waymo has plans of expanding into more states in the future. Proponents of autonomous vehicles argue that self-driving semi-trucks will eliminate human error behind the wheel, lower costs of shipping, and increase efficiency across the board for trucking companies. There is some trepidation about turning toward autonomous vehicles; some worry about accidents caused by self-driving trucks while others worry about the loss of critical jobs due to the addition of autonomous vehicles. If companies begin turning toward utilizing their own autonomous vehicles, it could have a negative impact on the number of available trucking jobs.
2. Smart Technology
Another important trend to watch out for in 2021 is the use of new and improved technologies to optimize the efficiency of long-haul shipping. Smart technologies on trucks improve safety for lane departure detection, lane keep assist, assisted braking, tire pressure monitoring, and even load stability. Furthermore, logistics companies are utilizing new technology for enhanced tracking and reporting to minimize human error and to have a better grasp of where their freight is at all times. The improved tracking is beneficial for planning when truckloads can be dropped off and picked up, as well as for providing customers with accurate updates. Alongside this technology, owner/operators can use new technology to locate cargo while on the road to reduce the amount of time spent on the road with an empty truck. With freight matching technology, drivers can ensure their trucks are always full and they are maximizing revenue capabilities at all times.
3. Data Analytics
Data analytics has made its way into pretty much every industry, from marketing to manufacturing to the trucking industry. Owner/operators use analytics to capture important data pertaining to their cargo, their trucks, and their routes; using this data, they can make valuable improvements to their performance, thus saving time and money and even helping them to drive more safely. According to Transmetrics, one study conducted by Supply Chain Management World found that “64 percent of executives think that big data and the insights it brings will have a disrupting power that can pivot the industry forever.” Data analytics also provide valuable insights into freight markets that help owner/operators uncover trends and patterns in the industry to pinpoint new opportunities and improve existing ones.
4. Electric Trucks
Electric trucks are making their way into the freight industry. Tesla already designed an electric semi-truck that can travel almost 500 miles on a single charge, and in 2019, Neuron EV released the TORQ, a fully electric semi-truck. With rising fuel costs, electric trucks can save owner/operators money in the long-term, improving their overall bottom line. Additionally, electric semi-trucks are much better for the environment, and companies have begun employing electric trucks to lower their carbon footprints. While electric trucks will not be replacing your entire fleet right away, they might eventually as states like California begin passing legislation to crack down on carbon emissions produced by the trucking industry.
As truckers begin preparing for 2021, it’s important to embrace the new technologies that are changing the long-haul industry for the better. While the trucking industry isn’t going anywhere, we’re seeing the emergence of new technologies that can benefit both drivers and carriers. Autonomous vehicles, smart technology, data analytics, and electric vehicles are reshaping the modern trucking industry, making the job easier, more accurate, and safer along the way.
Why Truckers Needs Digital Tools Now More Than Ever
Whether you’re a semi-truck owner/operator currently helping to move supplies in America or a logistics expert managing a fleet of trucks, it’s important to be aware of the technology that’s available to help freight workers manage shipments all across the country. The American supply chain has continually undergone changes in the wake of the Coronavirus pandemic, and it’s become increasingly important for truckers to rely on digital tools to get their jobs done.
The Latest Uber Freight Update
First-come-first-serve freelance trucking software has been on the rise for months now. The most notable of which, Uber Freight, has been positively impacting independent owner/operators’ ability to find shipments that chain efficiently together. It’s not always the case that a trucker’s destination will have a profitable pickup destination nearby, and the use of digital freelancing tools has been a huge factor in making sure that independent owner/operators can maintain profits while supply chains have been so severely disrupted across the country. Uber Freight in particular has updated their software infrastructure to allow for truckers to get better access to the jobs that are available.
As of last April, Uber Freight has begun to use a bidding system on its load app, that gives drivers more options. “It’s vital that carriers and drivers have access to loads with transparent pricing so they can make fast, informed decisions about their business,” the company said in the blog post that announced the upgrade. “That has never been more apparent than it is today, with the freight market in flux and drivers and carriers in our network working around the clock to keep shelves stocked and the country moving forward.”
Uber Freight said that truckers and motor carriers can now submit bids and receive feedback on select loads directly in the app, and then get notified later if they won or lost the bid. If the bid is won, the load will be temporarily reserved at the winning price. In addition, “all the loads Uber offers will still have an instant ‘book now’ price for those who find it’s still in their best interest to lock in a load. As a complement to our dynamic pricing engine, and by automating and streamlining the traditional bidding process, Uber Freight’s in-app bidding aims to improve functionality for the entire freight marketplace,” the company said. For truckers on the app, and suppliers everywhere, this should be a significant step in leveling out supply versus demand supply chains.
Other Mobile Apps Impacting Owner Operators
There are plenty of smartphone apps available to the general public that can make a big impact on the ability to avoid infection and keep up to date with the COVID-19 pandemic. Some of the best include the CDC Mobile App, which can help anyone stay informed on best practices to avoid infection, and how our understanding of the virus continues to improve over time. There have been plenty of trucker-friendly apps available for years however, and now is a better time than ever to make sure you’re using all of the best tools available that can help you while you drive your truck during the pandemic.
One of our favorites is Overdrive, which includes the weather forecast and can help you locate rest stops. It also gives you access to Overdrive online magazine, an integrated message board and an integrated load tracker. Our second favorite tool is the Weigh My Truck App, which keeps you from having to walk into weigh stations to pay down your truck load. The Weigh My Truck App was built to work with CAT Scales and allows you to weigh your truck and pay your weight with your smartphone at the scale, without needing to leave your truck. In times like these, avoiding delays and hazards can be crucial for ensuring that you get to your next load on time, and it makes sense to see what tools the app stores have to offer you.
The last bit of trucking tech worth talking about is platooning. “Improved driving systems can now allow for trucking rigs to arrange into formations. These formations are controlled by complex computing systems that communicate with one another, allowing trucks to follow closely behind other trucks in their fleet. The end result makes for a long line of heavy vehicles heading in the same direction, one after the next,” says Transmetrics.
This method can be a powerful cost-saver when it comes to emissions and fuel consumption. The platoon of trucks that’s created works to fight against wind resistance and traffic jams. The resultant file of large vehicles creates stability in traffic, allowing for other vehicles to navigate around them smoothly. Platoon technology can result in “fuel savings of 4.5% for the lead truck, and 10% for the following truck,” as shown by Peloton. It might be time to investigate whether platooning could improve your ROI.
Make sure to follow our blog for more updates on the freight industry, and contact us if you’re looking for a financial lender you can trust.
Amazon’s got a new fleet of vehicles, and now it needs drivers to operate them. The company has been expanding rapidly when it comes to their delivery assets. Here’s your guide for understanding what the retail giant has done to meet its massive delivery needs, and how that’s going to affect business for carriers and owner-operators.
Amazon’s Give and Take for the Freight Industry
Amazon has previously been a significant revenue stream for shipping solutions like FedEx and USPS, but the company has chosen to outsource delivery solutions less and less as they’ve grown in size. An order by Amazon for 20,000 sprinter vans has been placed with Michigan-based company Spartan, to help the company meet its own last-mile shipping needs independently of providers like the Postal Service, FedEx, and UPS. This order further indicates Amazon’s desire to solve their shipping needs internally, which specifically gives their last-mile fulfillment alternatives reason to worry.
Amazon is continually expanding, however, which should be good news for semi-truck drivers in general. There’s news of Amazon making an aggressive push to scale themselves into freight brokering, with their new platform freight.amazon.com offering beyond-competitive pricing on shipments along the Eastern seaboard, undercutting other carriers in the area since the platform went online in April of last year. If you’re an independent owner-operator, it might be worth signing on with a carrier that participates in Amazon Freight.
It’s unclear what this means for carriers across the U.S., however, with only some carriers being taken on as approved partners with Amazon. It’s possible that Amazon’s capacity to meet a razor-thin margin could cause trouble for carriers that get denied a deal with Amazon’s new brokerage endeavor.
What this Means for Carriers
Participation with Amazon has also been cited as a pressure-point for carriers in the past, however. When New England Motor Freight declared bankruptcy in February of 2019, it was suspected that the company allocated too many resources towards its Amazon contracts, which resulted in the company moving an increasing number of Amazon packages at a time where the price per package had been steadily declining compared to standard freight. It’s difficult to speculate whether Amazon Freight partners will experience similar difficulties in the long run.
Finally, Uber Freight seems to have a business model that’s exerting less turbulence on the industry in general. The transportation giant offers a similar service to Amazon Freight, except it’s not just for carriers. It’s available to independent owner-operators as well. The industry is getting increasingly competitive when it comes to who manages to meet shipper’s needs first, but with Amazon Freight putting pressure on carriers to compete with their prices, and Uber Freight offering increased opportunities for independent owner-operators, it’s a more important time than ever for independent drivers to do their homework before signing on with a big carrier company.
What Work is Like for an Amazon Last-Mile Driver
As Amazon continues to invest more heavily into freight solutions, it’s made a corresponding investment in last-mile solutions. As mentioned, Amazon’s order for sprinter vans has created a new niche for drivers who want to work. There’s a surprisingly low barrier to entry when it comes to Amazon’s jobs for sprinter van operators, as a Commercial Driver’s License (CDL) is not required. While there is a demand for these jobs, they likely won’t compete in terms of payout with the average rates for semi-truck drivers. According to the listings on Amazon’s website, sprinter van drivers make $16.00 per hour usually, and delivery assistants make $15.00 per hour. These are all full-time jobs, with most drivers working 10-hour days for a total of 40 hours per week. Conventional jobs in semi-truck driving pay better on average, with the U.S. median pay being $21.00 per hour according to the U.S. Bureau of Labor Statistics.
Sprinter van services are set to take the pressure off of Amazon’s other unorthodox last-mile solution, Amazon Flex, which hires drivers as independent contractors to deliver Amazon packages in their own personal vehicles. This job also doesn’t require a CDL. Amazon Flex is only available in around 50 U.S. cities, and pay rates vary depending on the day, which means that this service won’t fit every driver’s lifestyle.
Is Now a Good Time to Get a Commercial Driver’s License?
It’s definitely a good time to be a semi-truck driver. There’s a huge demand for semi-truck drivers in America, which means that work can be easy to find for truckers just breaking into the industry. According to the National Bureau of Labor Statistics, the number of semi-truck operators in America is projected to increase all the way through 2028, which is a level of job security that’s hard to beat, especially when compared to the volatility of Amazon’s brand new last-mile driving solutions. The barrier for entry as a semi-truck driver is easily overcome for most Americans looking for work, with competitive financing options being readily available for anyone who can pass a credit check. If you’re ready to get started in the trucking industry, browse our blog for more information, and contact us when you’re ready to step into your new career.
How New Legislation May Impact the Commercial Trucking Industry
As we finish out 2019, we gain some additional insight as to how we can expect the transportation industry to look going into 2020. This year was an especially busy year, with a significant uptick around the holiday season. We’re finishing out 2019 with more freight activity than ever. The rise of online retail paired with increased demand for quick and immediate shipping services has fostered a demand for shipping and carrying services at a bigger capacity than in previous years. FedEx is estimating a holiday load of 510 million individual packages to be delivered this year, a staggering figure. The busy holiday season truly exemplifies the growth of the industry as a whole. It is from this that we gauge where we are headed in the future. Here are the big ideas that truckers can expect to be addressing in 2020.
New Overtime Laws
One of the most controversial policies coming into effect in the year 2020 is about overtime regulations and pay. It’s expected to impact the jobs of 1.3 million Americans who might be in for some extra cash. This affects a smaller portion of the community, as it is most beneficial to drivers who are paid by the hour. For reference, most truckers are paid by the mile to avoid inflation of rates during traffic fluctuations. This new change will mostly affect carriers and those working in facilities and ports. This rule would increase the salary threshold for who is and is not exempt from overtime pay. It lifts the threshold from $23,660 up to $35,568, a significant increase.
Additionally, it places regulations on what can and cannot be considered salary. Only up to 10% of commission earnings or bonuses can be counted towards a “salary” when it comes to being eligible for overtime pay. For example, say an employee makes $25,000 annually and brings in about $10,000 of commission. According to this new legislation, you can only estimate their income as being $26,000. This is permanent and not adjusted every three years as it was in the Obama-era counterpart.
And finally, employees must pass something called a “duty test” in order to properly determine if they qualify for overtime pay consideration. This is to ensure that the types of tasks they complete on a daily basis line up with the proper descriptions set by the Department of Labor.
Drug and Alcohol Clearinghouse
The Drug and Alcohol Clearinghouse is a new set of rules and regulations that is scheduled to be implemented on Jan. 6, 2020. This system will work to provide more substantial information to employers about their employees. This Clearinghouse is a modern online database. It provides potential employers to see previous drug and alcohol violations that someone might have before making a decision about hiring them.
Previously, it was very easy for drivers with serious drug and alcohol violations to remain undetected when they looked for new jobs in different areas. The trucker life is fairly nomadic as it is, and the consistent moving made it difficult to keep track of a driver’s history when they moved to a new state. Drivers who have poor criminal records would simply move around frequently to avoid unemployment, but this led to high risk drivers and poor quality control. This database transcends state lines and allows for a more accurate view of potential hires for carriers. It aims to more effectively uphold quality, safety, and legal standards and overall make for a better employee pool for companies to pull from. While this is good, it makes the pool of candidates smaller, which adds to the national driver shortage that the industry is experiencing right now.
The Effect of the ELD Mandate
The ELD Mandate has been in the works for years, but the deadline for implementation is finally upon us. While this originally was supposed to improve safety and productivity, many industry experts fear that it may be doing the opposite. This new regulation requires special Electronic Logging Devices to be installed in all commercial trucks. With new ELDs, you cannot reclassify your drive time and there is a speed threshold sensor to log your drive time only when you’re traveling at five miles per hour or more. This particular feature of the program is controversial with many drivers, as sitting idle in traffic does not count towards your pay scale with this type of logging.
The implementation has been coming since 2017, but the deadline for switching is here and many of us waited until the very last minute to make the switch. Going into 2020, many drivers are going to require training on the usage of these new devices. Training drivers gradually wouldn’t have interrupted productivity in an excessive way, but many companies choose to do it all at once right before the mandate took effect. Industry experts predict that productivity at the start of the 2020 year will be decreased due to the sudden adjustment of many major carriers.
Photo Credit: Wired
As artificial intelligence increases in modernity and practicality, its usage increases across all industries and fields, and trucking is no exception. Society is slowly warming up to the idea of self-driving cars, but self-driving semi-trucks is severely more frightening of a concept. Self-driving semis seem riskier because they’re bigger and more physically intimidating, but the technology is not as different as you might think.
United States government research facilities have allowed for the testing of self-driving vehicles nationwide. Over 12 states have rolled out programs to test the practicality and safety of self-driving trucks and ultimately the Department of Transportation’s National Highway Traffic Safety Administration (NHTSA) will determine the rules and regulations. This government involvement will limit the extent of biases from specific companies.
Is Autonomous Technology Safe?
One of the main public concerns is safety. Software can often be inconsistent due to bugs and programming errors, and people tend to trust themselves more than a computer. Industry experts are even predicting that once the technology is perfected, this AI opportunity could dramatically increase safety on the roads. Humans make mistakes, and machines are typically much more consistent and predictable since they’re automatic in their decision making.
Additionally, autonomous driving comes with the added benefit of an instant reaction time, eliminating the single largest source of automotive accidents, which is human error. The number of front and back-end collisions will be reduced because this technology will monitor and maintain safe distances between vehicles.
You’re not Giving up ALL Control
While these advancements are coming at us quick, the transition definitely won’t be instantaneous. The switch to self-driving vehicles will most likely happen in smaller pieces incorporated into the current system. For the foreseeable future, automation in large scale transportation vehicles will still be overseen by a living, breathing human. There will be a tech-savvy person in the cab catching any technical errors or insights that need to be handled. This measure will mostly be a “just in case” sort of arrangement.
Theoretically, the truck should be mostly automatic, but it’s important to have a safety net, especially since these trucks will be on the roads with non-self-driving vehicles. Human error is simply something that cannot be planned for or programmed into a software, so the human presence is mostly to account for other drivers on the road and not the truck itself.
This component of the process is also important to the livelihoods of truckers everywhere. A big concern with self-driving semi-trucks is that they will put drivers out of work and damage the industry and culture that truckers have built. Since self-driving cars will still have to be monitored and accompanied by actual living people, truckers will be able to stay employed even if their job becomes slightly more automatic.
Decreasing a Driver’s Heavy Workload
One of the biggest problems in the trucking industry right now is overworked drivers. There is currently a national driver shortage that is leading to tired and overstretched days that result in decreased productivity and an increased risk of mistakes and accidents. As mentioned previously, we would be gradually easing into this new era of self-driving vehicles. That would mean that slowly, the workload for truckers would get more and more manageable as we settle into these new advancements. The exhaustion and over-exertion of the job could potentially be a thing of the past.
Companies That Are Making It Happen
There are many companies who want a place at this table. It is projected to be the future of the industry, therefore companies such as Embark and Daimler are starting to invest more and more in recent years into the process. Embark comments that self-driving semis are even more crucial to the future of our roads than self-driving cars. The incredible influence that this technology could have on delivery, productivity and general efficiency in countless industries makes this all a huge potential for profit.
This is an immensely controversial topic. Many fear for what self-driving vehicles mean for safety and job prospects alike. While it’s impossible to truly predict these things until we see them happen in real time, industry experts are optimistic about what it means for drivers and their employers. If this transition goes as predicted, companies can increase profits and drivers will have improved qualities of life, all with the benefit of added safety. Autonomous vehicle testing is already in progress and growth and development of this new and innovative technology is expected to blossom in upcoming years.
At Mission Financial, we’re here to help you start your trucking career with semi-truck financing options. We have amazing rates, customer service, and informative resources that will help you make the smartest decisions when getting started.