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The Hidden Costs of AB 5 to Medical Transportation

 

You may have heard of the effects of AB 5 to major companies but have you considered the liabilities and massive cost increases associated with your delivery vendors? 

As the oldest employee-only medical courier in the market, we’ve weathered through every major up and downturn in the market and every regulation impacting the medical transportation industry.  We can give you our expert opinion about where the industry is headed.

In this in-depth guide, we break down how the cost of benefits, service disruptions, and exposure to liabilities can impact your business due to  AB 5. 

 

The Uncertain and Certain Employee Benefit Costs 

The major uproar against the AB 5 legislation came from companies like UBER and LYFT, because their once-independent contractors now must become full-time employees threatening their operations in California due to the increased costs. 

While the fight continues in the courts, there are two potential outcomes of the AB 5 Legislation. 

The first being that the state of California forces companies like UBER and LYFT, who’s main business is run by independent contractors, to convert their contractors to  Employees.

The second potential outcome is that the state allows them, and similar companies, to continue to operate with their current contractor model but will require they provide employee benefits to all contractors. 

Whichever way the court favors, we know that this will result in increased costs for the employer to provide and implement the employee benefits and in turn, these companies will have to increase their costs. 

 

How Employee Benefits Impacts Your Costs

Unfortunately, like UBER and LYFT, many medical delivery couriers function with the same independent contractor model, meaning, the prices you’ve paid for your courier service will increase without any increase in the value of service. 

The only question that remains unanswered is, “How much will they increase?” 

That number will be determined by the shift in legislation over the next few months. 

Unlike most delivery vendors, Medical Couriers are one of the few medical-only employee-based fleets which means all our drivers are already full-time employees. Thus, protecting us and our customers from the cost impact of AB 5.  We’ve used our fifty years of evolution and the efficiency of our processes and technology to absorb those costs and remain pricing competitive.

 

Unforeseen Service Disruptions

Forced to increase their prices by up to 38%, you can expect many medical delivery vendors to lose customers and/or shut down their businesses entirely simply because their customers can’t afford the new pricing. 

When customers leave, that couriers’ optimized delivery routes become disrupted, leading them to additional costs, and by extension, more price increases! This vicious cycle puts medical couriers using independent contracts and their customers at great risk.

At Medical Couriers, we’ve spent decades refining our business model to incorporate the use of employees while maintaining phenomenal service at market competitive pricing. Our reliable command of these dynamics has allowed us to maintain loyal relationships with our customers, some lasting over 20 years and still going to this day. 

 

Exposure to Liabilities

When you hire an employee, not only do you take on the cost burden of providing employee benefits but you also take on the responsibility of an entirely new management role. 

New employees require the administration of benefits programs, vacation time, protections of couriers discrimination, safety rights, compliance training, and a lot more. 

Most delivery vendors who have operated with an IC-model for their entire business are inadequately trained and inexperienced to manage this type of responsibility. 

With the shift from IC to employee, your company becomes exposed to joint-employer risks and more, if the courier service fails to maintain the appropriate contractual, procedural, and operational checks and balances.

Why leave such a critical part of your business in risky inexperienced hands? 

At Medical Couriers, our highly trained team of delivery professionals have a track record of never losing a specimen in the 50 million we’ve delivered.  We’re experts in the medical-only delivery business and have a diverse portfolio of marquee medical shippers who demand service excellence and expect near perfection. We would love to add your company’s name to that rapidly growing portfolio.

We hope this article has helped you gain a firm understanding of the hidden losses AB 5 could bring to your business. 

If you’re concerned about the potential risk AB 5 could have on your business, contact our team of experts to schedule a demo, and to learn more about how Medical Couriers can help. 

Contact us via email info@medicalcouriersinc.com or by phone at 800-652-1147. 

 

Experience the Medical Courier difference: 

  • 50 years of experience
  • Company-owned and audited “green” vehicles
  • Full-time, highly vetted,  employee drivers
  • App-based delivery protocols that ensure the success of our drivers
  • Never lost a specimen with 50 million specimens delivered

About Medical Couriers

Medical Couriers is a third-generation company with over 50 years of experience in medical specimen transport nationwide. Our highly-trained team of professionals stops at nothing to ensure your customers’ specimens are delivered on time and without error.