California Law AB 5 Threatens Port Drayage

By In Insight On 14th July 2022

On June 30th, the United States Supreme Court declined to hear arguments regarding California Assembly Bill 5 (AB5).

This bill requires workers to satisfy a three-part test to determine their eligibility as full-time employees with benefits or as independent contractors. This bill will significantly impact the 70,000 owner-operators that form the backbone of the California trucking industry. For years, the California trucking industry has relied on contractors and has fought to be exempt from state regulations.

The California Trucking Association (CTA) estimates that this law might take thousands of independent truckers off the road while the truckers and trucking companies determine the necessary steps needed to comply with the new regulations.

An estimated 70% of the truckers that service the Ports of Los Angeles, Long Beach, and Oakland are owner-operators. AB5 now governs their relationships with carriers, brokers, and shippers.

The CTA and 12 California legislators have reached out to Gov. Newsom to provide an exemption for truckers as they feel the law was written with gig workers in mind, not truckers who owned their own equipment.

The ports are already feeling the early impacts of this decision.

On July 13th, the teamsters helped coordinate the shutdown of several gates at the port complex. They organized a convoy of slow-moving trucks to further disrupt the operations of containers being drayed to the railyard. 

The teamsters are claiming a big victory on this, as most of the truckers are independent contractors. The drivers will have to become employees, face retirement, or many small trucking companies will have to become trucking brokers. In any case, trucking in California just became more expensive.

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