2026 California Employment Law Update: Independent Contractors and Employee Vehicle Business Expenses

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Effective January 1, 2026, SB 809 adds Labor Code sections 2750.9, 2775.5, and 2802.2. The law reaffirms that mere ownership of a vehicle, including a personal vehicle or a commercial vehicle used by a person in providing labor or services for remuneration, does not make that person an independent contractor. The ABC test still applies, meaning drivers may be classified as independent contractors only if they are free from the hiring entity’s control, do not work outside the hiring entity’s usual course of the business, and are running an independent business.

SB 809 also reaffirms the Labor Code provision requiring employers to reimburse employees for necessary work-related expenditures (i.e., Labor Code section 2802) includes costs associated with the use of personal and commercial vehicles. In the context of construction trucking, this bill requires employers to reimburse employees who are commercial drivers and who own their trucks, tractors, or trailers for expenses related to use, maintenance, and depreciation.

Further, it creates the “Construction Trucking Employer Amnesty Program,” which relieves eligible construction contractors from liability for statutory or civil penalties from misclassification of drivers as independent contractors if the contractor executes a settlement agreement with the Labor Commissioner by January 1, 2029 that contains certain driver classification provisions, including payment of all wages, benefits, taxes owed, obtaining workers’ compensation coverage, and agreeing that future drivers performing the same work will be treated as employees.   

In sum, the bill addresses the ongoing issue of independent owner-operator truck drivers being misclassified as independent contractors by providing employee rights and benefits.

Recommendations for employers

• Reevaluate contractor relationships, particularly those involving drivers, delivery workers, or anyone using a personal vehicle;
• Revaluate independent contractor classifications; and
• Review and update, if necessary, reimbursement policies for employees using personal and commercial vehicles for work.

If you have further questions about SB 809, Maynard Nexsen's Labor & Employment law team stands ready to help.