70,000 truckers in limbo; supply chain worries arise
About 70,000 truck owner-operators who form the bedrock of California’s transport industry are in limbo as state-level labor rules start applying to them, creating another choke point in stressed U.S. supply chains.
Almost a dozen truckers said they’re unsure how to comply with California’s Assembly Bill 5, which requires workers satisfy a three-part test to be considered independent contractors,or else be seen as employees entitled to job benefits. The trucking industry relies on contractors — who until now have had flexibility to operate on their own terms — and has fought to be exempt from state regulations for years.
California truck owner-operators must now comply with AB 5 after the Supreme Court on June 30 refused to review a case challenging the legislation that sets out the tests for employment-status classification.
Off the road
The California Trucking Association, which brought that challenge, estimates the law may push thousands of independent truckers off the road while they take the necessary steps to comply with the new regulations.
More than 70% of truckers serving some of the country’s largest ports — including Los Angeles, Long Beach and Oakland — are owner-operators, and AB 5 will govern their relationships with carriers, brokers and shippers in most cases, according to the CTA.
“We have never gotten any good answers from anyone official in California on how this is supposed to be enforced or how our members can comply,” said Norita Taylor, the director of public relations at the Owner-Operator Independent Drivers Association.
The law comes into effect for truckers in the busiest months of the year as retailers stock up on back-to-school and holiday goods. At the same time, dockworkers and railroad workers are currently negotiating contracts with their respective employers. Additional transportation snarls would only worsen pandemic-era supply-chain chaos and add to inflationary pressures, threatening to slow economic growth.
“This denial couldn’t have come at a worse time,” said Eric Sauer, senior vice president for government affairs at the CTA. “We’re in peak harvest season. We’re also in peak construction season. And this is the time for peak holiday imports coming into the ports.”
The Port of Long Beach is monitoring the trucking situation as AB 5 comes into effect.
“We understand the capacity concerns at this very busy time for the port complex,” Deputy Executive Director Noel Hacegaba said.
Exemptions, injunctions
California passed AB 5 in 2019, aiming at gig-economy giants including Uber, Lyft and DoorDash.
But these companies won exemption, along with other professionals, including musicians, freelance writers and architects.
The trucking industry scored a temporary injunction that remained in place until last week’s Supreme Court decision.
The timing of the decision is “nothing new,” said former Assemblywoman Lorena Gonzalez, the Democrat who proposed the bill.
“They’ve known for the last 2½ years that it was equally possible that this injunction would not hold. This is not a shock.”
Still, some see in the law an opportunity to address longstanding pitfalls within the industry.
The International Brotherhood of Teamsters, which represents about 1.2 million U.S. and Canada workers mainly in trucking, says the law will avoid misclassification and will guarantee independent contractors are paid fair wages, benefits and employee-related fees.
“Over the last decade, the California Labor Commissioner found misclassification is rampant at our ports,” Randy Cammack, president of Teamsters Joint Council 42, said in a statement. “The race to the bottom in trucking is going to end.”