This month, California’s truck drivers are protesting a state law that regulates whether they can work as independent contractors. In mid-July, a convoy protest slowed traffic on Los Angeles freeways, and a week of protests effectively shut down the Port of Oakland.
The demonstrations are in opposition to California’s Assembly Bill 5, which makes it difficult for companies to classify truck drivers as independent contractors.
If that law sounds familiar, you’ve probably heard about it in the context of Uber drivers and other app-based delivery workers, who were exempted from AB5 by the passage of Proposition 22.
- AB5 was approved in 2019, but hasn’t previously been applied to truck drivers because of a court-issued injunction.
- Earlier this summer, the US Supreme Court declined to review the law, and the injunction was lifted.
How did we get here? AB5 stems from a California Supreme Court decision, which prescribes a three-part test for deciding how a worker should be classified. The California Trucking Association sued in 2018 to block the application of AB5 to the state’s truck drivers, warning the law’s implementation could result in thousands of drivers being taken off the roads, exacerbating supply-chain issues around the country.
“Gasoline has been poured on the fire that is our ongoing supply-chain crisis,” the group said in a statement after the top court refused to weigh in.
- Just last week, a bipartisan group of lawmakers introduced draft legislation creating “worker flexibility agreements” that would override state classification laws like AB5, Bloomberg Law reported. (TBD on whether the proposal makes it to a vote.)
Eleventh hour: Still, labor expert Ken Jacobs, who chairs the University of California Berkeley’s Center for Labor Research and Education, said the application of AB5 is something the trucking industry has known was coming for years. If classified as employees, truck drivers would have the right to earn minimum wages, have their expenses covered by the trucking company, get paid for overtime, and receive workers’ compensation insurance, among other benefits, Jacobs explained.
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“None of this should be a surprise to anybody,” Jacobs said. “The courts have consistently ruled against the companies for a very long time,” he added.
Pump the gas: All this is happening in the wake of pandemic-related shipping issues, inflation, ongoing labor contract negotiations at West Coast ports, and the potential of an impending recession, coming together in a perfect storm of chaos for California’s supply chain.
Rachel Michelin, president of the California Retailers Association, told us that the “unintended consequences” of a rule primarily geared at Uber and Lyft drivers are partially to blame for today’s supply-chain issues—and that consumers will ultimately feel the impact.
- “California represents 40% of the goods coming through the ports,” she said. Stoppages will send cargo ships around to other ports that might not have the capacity for them, slowing down or preventing deliveries around the country, she explained.
Despite the hectic conditions, AB5’s overall impact is likely to be positive, said Steve Viscelli, an economic sociologist who studies the trucking industry.
“The big problem we have in trucking is not a shortage of workers—it’s turnover,” he explained. “Long term, it’s going to stabilize the labor supply and the supply chain, and that’s a good thing.”