Landstar, Prime among fleets telling owner-operators they’ll need to leave Calif. to continue as contractors

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Updated Dec 6, 2019

Prime, Inc. and Landstar System, two of the largest contractors of owner-operators in the country, have told their California-based owner-operators they can no longer contract with them unless they move out of state.

The fleets are overhauling their California operations to manage the requirements of the state’s Assembly Bill 5 — a restrictive legislative package that effectively makes it illegal for fleets to contract with owner-operators under their authority. Swift and Knight, part of the Swift-Knight conglomerate, reportedly cut ties with its California owner-operators earlier this year, offering those truckers the option to leave the state or sell their equipment to the fleets and become company drivers.

Prime which contracts with nearly 6,000 owner-operators, is offering its California-based owner-operators the option to leave California or transition to company driver if they wish to continue operating with the fleet after the state’s sweeping new labor law takes effect Jan. 1.

The fleet, No. 13 in the CCJ Top 250, said it will provide owner-operators with relocation packages if they wish to move and remain owner-operators. A Prime spokesperson did not elaborate on how many operators would be affected.

Landstar, No. 8 in the CCJ Top 250  and the country’s largest owner-operator fleet, confirmed to CCJ last week that it is calling its California-based owner-operators to discuss options, too, but the fleet would not elaborate on available options.

Landstar owner-operators familiar with the calls have said the choice is simple: Leave California or “they’re done at Landstar,” said one of the company’s owner-operators, who wished to speak anonymously.

Landstar declined to comment on that interpretation or whether drivers would be offered relocation packages.

Owner-operator Ivan Mikhov, based in Sacramento, is one such operator facing A.B. 5’s existential threat. He has four brothers also leased as individual one-truck businesses to the company, and all have been told that, in order keep their contracts into the new year, when the new contractor law goes into effect, they must either commit to only hauling loads that originate outside the state, or else relocate to another state and update their CDL from their current California licensing.

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“We’re trying to decide” exactly what to do, Mikhov says. “We’ll probably move.”

–Todd Dills contributed to this report.