How to Avoid Costly AB5 Misclassification Lawsuits and Penalties

November 4, 2022

How to Avoid Costly AB5 Misclassification Lawsuits and Penalties

The California AB5 law has been on the radar of the trucking industry for several years, and for good reason. For non-compliant carriers, the risks of a misclassification lawsuit and/or costly penalties are reason enough to be concerned. Civil penalties can range between $5,000 and $25,000 per violation and lawsuits can cost companies millions.

Effective Immediately: Owner Operators must be reclassified under California law

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In fact, earlier this month, Instacart, the popular grocery delivery and pick-up service company, agreed to pay $46.5 million to settle a California misclassification lawsuit. The lawsuit, originally filed in 2019 by the city of San Diego, claimed the company misclassified its 300,000+ workers.

For a smaller company, a lawsuit of this magnitude could have a significant impact on the organization's ability to stay in operation. Fortunately for carriers, there are options available to get compliant with CA AB5:

  • Carriers can terminate agreements with ICs and hire new drivers directly.
  • Carriers can convert all independent contractors to employees.
  • Owner-operators can utilize or establish a brokerage (subjected to ABC test).

Get AB5 compliant with TransForce

Compliance is a must for all carriers who lease owner-operators to move freight in California. By partnering with TransForce, 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.

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Related Content

For more information on AB5 compliance, check out the following: