3PL Perspectives
AS MANY OF you know, last month the Supreme Court decided not to review (in its terms it “denied cert”) the California Trucking Association (CTA) case litigating the California Independent Contractor law called AB5. TIA filed an amicus brief in support of the CTA’s contention that the AB5 law was preempted by the Federal Aviation Administration Authorization Act (the F4A act). The Supreme Court’s action means that AB5 will likely be enforced in the state of California, and TIA wants to understand better what the enforcement will mean to its members. AB5’s intent, ostensibly, was to classify more independent contractors as employees. However, its three-part test (ABC test) as well as its exceptions to the employee classification mean that its applicability to brokers, agents, and its overall impact to the marketplace is not yet well enough understood to implement.
TIA has put together an AB5 Task Force, under the leadership of TIA Board Vice Chair Mark Christos, and within that Task Force are three subcommittees, looking at 1) How AB5 will affect the broker’s relationship with owneroperators in California; 2) the impact of the law on agents used by brokers; and 3) the overall impact to capacity in California. Through discussions among our members, we will develop a strategic response, which could entail more state lobbying activities and other actions.
We will also include AB5 as one of the issues we cover as part of our Policy Forum, this year held in Washington, D.C., September 19-21. We will also activate on illegal or double brokering and what we have started to call supply chain sustainability—advocating for the modernization of regulations that are outdated or obsolete, such as 49 CFR Sec. 371.3, an outdated regulation promulgated in 1980 when motor carriers paid brokers a commission. The ICC was worried about shippers and brokers having common ownership and double dipping on payments. In today’s marketplace this is not how the industry works. Today, there are separate business transactions with the shipper and with the carrier, with the shipper paying the broker for their services and the broker paying the carrier for their services. Since our members sit in the center of the supply chain, and our role is critical to a well-functioning transportation network, it is time the law reflected our changed industry.
Flying into D.C., getting on Capitol Hill, and meeting with Congressional representatives in person has been a difficult enterprise during the pandemic, but always vital for us to do. Our representatives are not going to understand our industry and our priorities if we are not there to explain all of it to them. Worse, those who don’t have our best interests at heart may try to shape how we are perceived. And our members can drive home how important our industry is to their respective representatives; members of Congress always pay the most attention (or they should) to their constituents.
