Truckers in legal-limbo over California gig economy law

July 8, 2022

By JOSH FRIEDMAN

An estimated 70,000 truck owner-operators, representing much of California’s transport industry, are now in legal limbo due to the status of the state’s gig economy law, raising concerns over already stressed United States supply chains. [Bloomberg]

Signed into law in 2019, Assembly Bill 5 requires businesses to treat numerous workers as employees, not independent contractors. The California Trucking Association (CTA) has been challenging AB 5 in court. As a result of the legal challenge, a temporary injunction against enforcement of AB 5 on the trucking industry had been in place.

But on June 30, the United States Supreme Court opted to refuse to review the case. The injunction has since been lifted, and California truck owner-operators must comply with AB 5, though it is unclear how the state plans to enforce it.

The CTA estimates the law may force thousands of independent truckers off the road while they take steps to comply with the new regulations. More than 70 percent of truckers serving some of the United States’ largest ports, including Los Angeles, Long Beach and Oakland, are owner-operators. AB 5 will, in most cases, govern their relationships with carriers, brokers and shippers, according to the CTA.

Kevin McMaster, vice president of carrier sales at Encinitas-based Flock Freight, said AB 5 may force carriers to immediately downsize their contracted owner-operator fleets or hire former owner-operators as company drivers

“This would cause a ripple effect in the industry, pushing many drivers who don’t want to apply for their own authority to lease out of state, likely in Arizona or Nevada, and even force some into retirement due to increased market pressures,” McMaster said. “There will likely be pressure added on capacity in California that could exacerbate an already tough environment where drivers are at a premium.”

Eric Sauer, senior vice president for government affairs at the CTA, also warned about the potential worsening of supply chain issues, while saying the Supreme Court’s decision to turn down the case could not have come at a worse time.

“This denial couldn’t have come at a worse time,” Sauer said. “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.”


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Adam Trask

Somewhat surprised SCOTUS passed on this one. The Roberts’ court has generally sided for big business in recent years.


It is highly consequential for the trucking sector in California, though not so dire as the California Trucking Association makes it out to be. Bottom line, many independents are getting screwed right now, between varying levels of pay—per mile, per load, flat fee, etc, and a lack of other benefits such as health insurance and pensions. The Dynamex decision in 2018 made that abundantly clear. Many of them, however, are Ok with it.


I’ve always believed the major intent of AB5 was to limit ride-sharing apps such as Uber and Lyft, who do indeed cheat their drivers out of a fair wage. Many of these drivers are immigrants who are just happy to participate in the economy. Unfortunately, Uber poured billions into an initiative and, since it is a well known part of our economy, Cal voters punted.


I think on this one, SCOTUS got it right. If you’re going to allow states to figure out their own abortion laws, then the same principles should apply to other areas of society. Their refusal to allow the implementation of concealed carry laws in NY also seems consistent. Guns are specifically mentioned in the Constitution—abortion and independent truckers, not so much.


Remember, the majority of these justices have an “originalist” interpretation of the document—however ridiculous that is, 234 years after its ratification.


ryguy

I don’t think it’s “ridiculous” the Court has an originalist view at all. The Founders put the main power in the Congress who are elected by us. The Supreme Court is only supposed to strike down bad laws not create them. Still makes sense after 234 years


Adam Trask

Yep, but they never mentioned the filibuster, which has consistently thwarted the will of the people in recent years. Abortion and a ban on assault weapons are perfect examples of the tyranny of the minority.


matthwy58

The state is trying to force unemployment and other payroll taxes on businesses and owner- operators. How can you be an employee if you own your truck, carry insurance and have no supervisor or manager?

My dad got out of trucking in the mid 1950’s when Hoffa and the mob started strong arming drivers and companies to go union. This is no better.


Michael A.

It’s a typical California attempt at screwing up something that should be natural and free. Don’t we pay enough in taxes and fees? Stupid greedy legislators. All they know is how to feed their bureaucracy.


Jon Tatro

This would lead to General Contractors who sub out electrical, plumbing, concrete to sub contractors on a regular basis to have to hire them full time. This will sky rocket new building cost and California will never have affordable housing because of liberal policies like this.


Zoiebowie

Wow! California is really trying to find solutions to problems that don’t exist.


MrYan

If that owner operator driver takes “gigs” from only one company and accepts direct payment from them then the law may apply.

Most owner operators take on business through an intermediary, they deliver to a wide range of customers, and typically do not contract their “gigs” on their own so there isn’t a direct relationship with the shipping client.


unusualsuspect

“Gig economy” is the biggest scam perpetrated on the American people since One Hour Martinizing!


Jorge Estrada

A prelude to communism. Certain Dems (not all) want to break us first so we too can be re-organized into dependent forever. They hate those who get wealthy and don’t need them, or should I say vote for them.


kettle

“prelude to communism” Lol


“But on June 30, the United States Supreme Court opted to refuse to review the case. The injunction has since been lifted, and California truck owner-operators must comply with AB 5”


The right wing mostly catholic United States Supreme Court is promoting communism?


Also “re-organized into dependent forever.” yes it’s called needing a job and healthcare, it’s capitalism not communism.


SLO Thought

Do you really believe the supreme court decline to review is because ‘they’ are Catholic and right wing? Or is because they are following the law. I don’t agree with Ab 5…. but unfortunately it is a State law that doesn’t breach the constitution. Same interpretation of the Law that over turned Roe v. Wade. Up to the States, not the Fed’s. Unfortunately what those on the Left don’t see or understand is that these types of State Law’s crush the little guy, the independent businessman. AB5 plays into the hands of Big Business. Large Corporations will benefit by eliminating competition. The consumer and the Small Business owner will suffer. But I guess compassion for the ‘Little Guy’ went out the window for Progressives some time ago. Better to have power than compassion or concern about your neighbor.