The Chairman's Corner

By John Chipman, Jr.

December 2020

Is it OK to gloat about a ballot victory?  Yes, at least when the result represents the will of Californians and is sprinkled with irony.  That is the outcome of Proposition 22’s victory on November 4, 2020.   After all ballots were counted, 58.5% of CA voters supported Prop 22, which means app-based drivers for rideshare and delivery companies can work as independent contractors (“ICs”).  Now AB 5’s three prong employment test does not apply to them, which was the main purpose of the legislation in the first place.  It is difficult to miss the irony.  Sacramento Politicians specifically targeted the emerging gig economy when AB 5 went into law on January 1st of this year, deciding that app-based workers should presumptively be employees.  But then the very companies Sacramento targeted, including Uber and Postmates, successfully fought back with buckets of money and a commonsense appeal to voters.  Nine million Californians responded by voting for worker independence when they said “Yes” to Prop 22.  Please gloat.

The legal distinctions between employees and ICs in CA have degenerated from the venerable Borello test because of Dymanex, AB 5, AB 2257, and Prop 22, and now resembles the “Theatre of the Absurd.”  Here are several examples.

The Lyft driver headed to Pasadena gets to be an IC, but the yoga instructor riding to work in the back seat must satisfy the stringent AB 5 test to be an IC.  Recording artists and writers can work as ICs, but massage therapists and hairstylist are legally presumed to be employees. (Editorial: Could the distinction be that therapists do not write politically critical Op-Eds, and hairstylists don’t make millions recording for music companies?)  There is a legal presumption the driver hauling frozen chickens in San Diego is an employee, but the Door Dash driver delivering pizza in Redding is now definitely an IC.  What if Maoists set up a trucking company in Bakersfield and want to operate using an IC model?   Theoretically they could, but only after satisfying AB 2257’s Business to Business (B2B) exception rule, which is more convoluted than the Chairman’s Little Red Book.  At the same time the Maoists seek advice from counsel regarding the B2B exception, “Fisherpeople” in Del Norte County operate as ICs while they reel in the catch of the day.  Who knows a good sea-shanty?  Lord help us: there is no rhyme or reason to the spectacular worker classification mess in CA.

Which gets me to the State of Georgia.  Run-offs for two US Senate seats will be held on January 5, 2021. If Democrats win both seats, they will have control of both houses of Congress and the White House. The outcome will have huge impact on Joe Biden’s Presidency for at least the next 2 years.   It is difficult to find an historical equivalent for the upcoming Peach State election. Not since General Sherman captured Atlanta during the Civil War -- effectively re-electing President Lincoln in 1864 -- has Georgia played such an outsized role in US politics.

Why is GA’s election a big deal for CA Movers and Suppliers? President elect Biden and Democrats support the Protecting the Right to Organize Act (PRO Act).  If signed into law, the PRO Act would fundamentally change how movers operate throughout the US. The PRO Act adopts AB 5’s three prong employment test. It also creates a presumption of an employment relationship between employers and ICs.    

Under the PRO Act, ICs would not be entrepreneurs; they’d be employees.   Interstate ICs would be denied the opportunity to take on greater risk in exchange for higher compensation, flexible scheduling, and the ability to accept and reject work as they see fit.  Van lines and independent movers would have to abandon the interstate IC transportation model they have used successfully for decades to take care of customers.  Unions would surely be tempted to organize interstate drivers. 

The American Moving & Storage Conference’s Katie McMichael sums it up this way: “The PRO Act would be a nightmare for the moving community.” 

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On November 23, CA Movers and Suppliers celebrated (via Zoom) former CMSA President Doug Hill’s life and service to our industry.

The first time I saw Doug was in the early-1990’s.  We were at crowded PUC sponsored meeting on Van Ness Avenue in San Francisco.  There were lots of unhappy movers on hand to hear about the end of the minimum rate tariff in California.  (Does anyone recall when a van & two men were $77.50/hour, and the extra helper was $24.10/hour?)  Actually “unhappy” does not properly describe the audience’s mood that day.  Bay Area movers were livid about the tariff change and seemed on the verge of storming the PUC offices.  Thank goodness no one was handing out tire irons. 

Just as I was eyeing my escape route to avoid the riot, Doug spoke up.   His voice quieted the would-be mob.  Doug patiently described the PUC’s lengthy regulatory process, including eliciting public opinion and determining the fiscal impact of the tariff changes.  Unfortunately, Doug’s thoughtful, regulatory explanation was completely lost on most of the movers.  As far as the crowd knew, Doug might as well have been conjugating Latin verbs at the black board.  As the befuddled movers started to find their anger again, Doug quickly changed tactics. He deployed his commanding voice and confident stature to full effect saying: the deadline to fight the PUC’s change had past, and the minimum rate tariff is dead in CA.  Doug shut the crowd up.  The movers were not happy, but at least they understood.  Hostilities averted; Doug laid out what was to expect from the new maximum rate tariff.  Mission accomplished.

Doug was a champion for the CMSA and will be greatly missed.

December 2020 - CMSA Communicator