Transportation Tuesday: California Law May Disrupt Trucking
The enactment of a new California law with strict classification requirements for independent contractors may disrupt the region’s numerous trucking owner-operators – especially at its ports.
The changes will arrive as part of a law called AB5. After successfully clearing a Supreme Court hurdle last week, AB5 will set new criteria for independent contractors. According to FreightWaves, the new law assumes that workers are fully employed unless they meet the strict ‘ABCs’ of independent contract labor.
New Requirements for Independent Contractors in California
- “(A) Is free from the control and direction of the employer in performing work, both practically and in any contractual agreement.
- (B) Performs work that is outside the usual course of the employer’s business.
- (C) Is usually engaged in an independently established trade, occupation, or business of the same nature as the work performed for the employer.”
The barrier to entry for independent contractors will be significantly higher in California. While originally intended to rein in gig work companies like Uber, the law will also challenge truck carriers and drivers in the region.
A sizable portion of drivers in the state work for carriers as owner-operators. By AB5’s new criteria, however, these drivers will likely qualify as full employees. This creates a ream of technical hurdles to navigate in order to operate within compliance.
Impacts for Drayage Drivers and Port Trucking
The issue could impact ports especially – where an even greater share of drayage drivers are owner-operators. Parties will have to review their practices and designations thoroughly as the law takes effect in the coming weeks. Most carriers will likely need to make their drivers full employees as a result. AB5 technically becomes official on July 8. However, JOC.com reports that actual enforcement will take more time.
As carriers and drivers work on clarifying their compliance with AB5, shippers may feel the effects. Service disruptions are possible even as the threat of container dwell fees at the ports of Los Angeles and Long Beach loom.
Mixed Responses from Industry and Labor
News of AB5’s initiation has met mixed reactions. According to a JOC.com report, many carrier executives expect to continue with only minor disruptions. On the other hand, FreightWaves reports that law firms and others have expressed dismay at the law. Labor advocates, meanwhile, are excited about the situation’s opportunities for union building among drivers.
If you are concerned about how AB5 and trucking operations changes may affect your supply chain, contact Scarbrough Transportation for assistance and insight.
UPDATE: California Truckers Protest AB5 at LA and Long Beach Ports
Hundreds of California truckers have intentionally stalled operations at the ports of Los Angeles and Long beach in a coordinated protest against the new law that would limit their ability to work as owner-operators. According to FreightWaves, drivers have turned off their trucks and blocked terminals Wednesday. Truckers are planning another protest at the Port of Oakland for Monday. These disruptions will likely slow freight movement at these major ports. Scarbrough will share updates as they become available.