Story by: Vishnu Rajamanickam @ FreightWaves.com

Ever since California Gov. Gavin Newsom signed Assembly Bill 5 (AB 5) in September, there has been heated debate around changes to the gig economy. AB 5 lays out stricter regulations for the way companies classify their independent contractors, who lawmakers said were often exploited.

The gig economy was made famous by the advent of Uber, but U.S. companies long have brought on truck drivers to work as independent contractors without such employee benefits as sick leave or paid vacation.

On-demand cab-hailing and delivery companies like Uber, Lyft and DoorDash have registered their opposition to the bill, pledging to spend $30 million each on a 2020 ballot initiative to reverse AB 5. The law is set to take effect Jan. 1.

FreightWaves caught up with Erik Malin, the vice president of operations at Loadsmart, a digital freight marketplace, to discuss the impact of AB 5 on the California freight industry.

“This legal move will lower the threshold for what is the dividing line between an independent contractor and an employee,” said Malin. “When it lowers that threshold, it effectively lets more independent contractors fall under the employee status. The impact has to do with associated costs. On one side, you have truck drivers who will make more money, but on the other side, it increases the cost for carriers.”