OPINION: This article may contain commentary which reflects the author's opinion.
In the vast majority of cases, laws signed in individual states rarely have the potential for impacting the entire country, but that’s not true of California.
Our most populous state, California has an economy larger than most countries and is home to several ports that take in trillions of dollars worth of goods every year, effectively making it vital to our national supply chain.
So when the state’s Democratic super-majority passes legislation that can affect our supply chain and it is then signed into law by Democratic Gov. Gavin Newsom — increasingly seen as a potential 2024 presidential contender — such measures have the potential to create a national crisis.
California Assembly Bill 5 was introduced by former state Assemblywoman Lorena Gonzalez, a Democrat, and signed into law in September 2019 by Newsom. The measure states that “a person providing labor or services for remuneration shall be considered an employee rather than an independent contractor unless the hiring entity demonstrates that the person is free from the control and direction of the hiring entity in connection with the performance of the work, the person performs work that is outside the usual course of the hiring entity’s business, and the person is customarily engaged in an independently established trade, occupation, or business.”
There were certain professions exempted from the law including insurance agents, health care professionals, investment advisers, realtors, barbers, and fishermen.
But one group of independent contractors was not exempted: Truckers.
The Blaze adds:
AB5 targeted independent contractors who were app-based delivery and rideshare drivers. Ironically, companies like Uber, Lyft, and Postmates were exempted from AB5 after Proposition 22 was passed in November 2020.
The trucking industry has been fighting the law ever since it went into effect, and secured an injunction that prevented AB5 from including independent truckers in January 2020.
California Attorney General Xavier Becerra called on U.S. District Judge Roger T. Benitez to reverse the injunction.
“The district court also abused its discretion in assessing the remaining preliminary injunction factors, erroneously concluding that Plaintiffs established irreparable harm despite the fact that they waited over 19 months to seek injunctive relief, and giving short-shrift to the State’s interest in addressing misclassification of state employees,” Becerra, now the Biden administration’s Health and Human Services secretary, stated in March 2020. “This Court should reverse.”
On June 28, the U.S. Supreme Court refused to take the case of the California truckers who were challenging AB5. And now, in the throes of a supply chain crisis that began as a result of the pandemic but has only worsened under the Biden administration, tens of thousands of independent contractor truckers must become employees of trucking companies in order to work in the state. And of course, when companies take on employees, they also take on new costs such as providing health insurance and other benefits.
“This ruling really took everybody off-guard, especially at the speed that they kicked this back and essentially made it law,” Paul Brashier – vice president of a commercial transport company – told CBS News.
Norita Taylor, director of public relations for the Owner-Operator Independent Drivers Association, told Bloomberg, “We have never gotten any good answers from anyone official in California on how this is supposed to be enforced or how our members can comply.”
If the state enforces its law, California will face a potential mass exodus of an estimated 70,000 independent truckers.
The Port of Oakland is especially vulnerable if independent truckers are forced out of work, The Blaze reported.
“There’s 9,000 trucks that serve the port on a daily basis, and 90 percent of them are independent contractors. So, this is a big, big impact,” said Bill Aboudi owner of AB Trucking in Oakland.
He went on to explain that the truckers own their vehicles.
“It just doesn’t work. You own your own truck, it’s your truck. I can’t take possession of it and start using it,” he added. “In a case like my company, we just eliminate owner/operators and just reduce the workload.”
Kevin McMaster, vice president of carrier sales at Flock Freight, predicted: “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.”
The California Trucking Association delivered a warning: “Gasoline has been poured on the fire that is our ongoing supply chain crisis. In addition to the direct impact on California’s 70,000 owner-operators who have seven days to cease long-standing independent businesses, the impact of taking tens of thousands of truck drivers off the road will have devastating repercussions on an already fragile supply chain, increasing costs and worsening runaway inflation.”
Gonzalez, who authored the measure and has since left the state Assembly, had no sympathy for truckers or, apparently, California and U.S. consumers.
“They’ve known for the last two and a half years that it was equally possible that this injunction would not hold,” Gonzalez, now head of the California Labor Federation, said. “This is not a shock.”
