Supply Chain Shock – Leftist California Law Could Double Trucker Shortage Nationwide

Photo by Jametlene Reskp on Unsplash

Independent truckers in California may soon be out of business under a new statewide worker classification law. Some 70,000 self-employed owner-operators have been designated “employees” under California Assembly Bill 5 (AB-5).

On June 30, the Supreme Court of the United States (SCOTUS) denied a request to review the legislation and determine if it violates the Federal Aviation Administration Authorization Act of 1994 as it applies to self-employed truck drivers.

The California Trucking Association (CTA) responded to the SCOTUS decision in their legal challenge of the bill.

“Gasoline has been poured on the fire that is our ongoing supply chain crisis.” The CTA response continued, “In addition to the direct impact on California’s 70,000 owner-operators, taking tens of thousands of truck drivers off the road will have devastating repercussions on an fragile supply chain, increasing costs and worsening runaway inflation.”

California’s State Assembly adopted AB-5 in September 2019, initiating the CTA’s legal challenge. The breakdown of AB-5 points to the owner-operator companies and their failure to meet the criteria as “independent contractors.” The individual would be the hiring entity (trucking company) and the person hired (truck driver), therefore not a valid independent contractor. In simple terms, the driver is employed by the trucking company and the company’s owner, which, according to the new law, makes them employees, not independent contractors. According to the Employment Development Department, workers are considered employees unless proven otherwise.

According to the Epoch Times, the legislation’s primary sponsor was Lorena Gonzalez (D), a union leader and former Assembly member. It would also entitle those self-employed truckers to the same benefits and worker’s compensation as regular employees.

According to Globecom Freight Systems, a leading provider of transportation services, owner-operators make up 9% (350,000) of the commercial truckers on the road today. Also, the American Trucking Association estimated that by 2030 the nationwide shortage of truckers could double from 80,000 to 160,000.

Tony Bradley, president and CEO of the Arizona Trucking Association, criticized AB-5 as a “horribly misguided piece of legislation.” Bradley blamed the California labor unions for what will have a “drastic impact across all trucking.”

“This was largely run by the California labor unions, who find it difficult to unionize people who work for themselves. I think it will have a huge impact on our industry and economy,” Bradley said.

Bradley told the Epoch Times he didn’t know how this would impact owner-operators who live outside of California with Arizona right next door. However, Bradley noted the difficulty for Arizona truckers not to do business with California.

“We are evaluating and looking at it closely, but putting 70,000 people out of work is not the thing to do when we have raging inflation and supply chain issues.”