By Allan Stein
Tens of thousands of independent California truck owner-operators could be out of business soon because of a new state-level worker classification law that designates them as employees.
On June 30, the U.S. Supreme Court denied a review on whether California Assembly Bill 5 (AB 5) violates the Federal Aviation Administration Authorization Act of 1994 as it applies to self-employed truck drivers.
âGasoline has been poured on the fire that is our ongoing supply chain crisis,â the California Trucking Association (CTA) wrote in a June 30 response to the high courtâs decision regarding the associationâs legal challenge to the measure.
âIn addition to the direct impact on Californiaâs 70,000 owner-operatorsâwho have seven days to cease long-standing independent businessesâthe 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,â the association added.
âWe are disappointed the court does not recognize the irrevocable damage eliminating independent truckers will have on interstate commerce and communities across the state.
âThe legislature and [Gavin] Newsom administration must immediately take action to avoid worsening the supply chain crisis and inflation.â
The California State Assembly adopted AB 5 in September 2019, sparking CTAâs legal challenge and the Supreme Courtâs latest decision.
The billâs primary sponsor was Democrat Lorena Gonzalez, a union leader and former Assembly member.
Under AB 5, a self-employed commercial truck owner must satisfy a three-part test to be considered an independent contractor, with exceptions for construction trucking services.
The bill adds that existing law âcreates a presumption that a worker who performs services for a hirer is an employee for purposes of claims for wages and benefits arising under wage orders issued by the Industrial Welfare Commission.â
Existing law defines employees for purposes that include âany individual who, under the usual common law rules applicable in determining the employer-employee relationship, has the status of an employee.â
Self-Employed Truckers Entitled to Benefits
The bill would entitle those self-employed truck drivers and owners to the same benefits and workersâ compensation as regular employees.
According to Globecom Freight Systems, a leading provider of transportation services, owner-operators make up 9 percent (350,000) of the commercial truckers on the road today. Their average salary is about $50,000.
A recent study by the American Trucking Association found that the nationwide shortage of 80,000 truck drivers could double by 2030. In light of the shortage, many trucking companies now offer lucrative sign-on bonuses and salaries to attract more drivers.
The Federal Motor Carrier Safety Administration recently launched an apprenticeship driver program for those aged 18 to 20 that would allow them to cross state lines to help further alleviate the shortage.
Tony Bradley, president and CEO of the Arizona Trucking Association, criticized AB 5 as a âhorribly misguided piece of legislationâ by California labor unions that will have a âdrastic impact across all trucking.â
âItâs unclear at this point how it will affect owner-operators that donât live in the state of California,â Bradley told The Epoch Times.
âWe 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.â
âHow are people supposed to follow their dream of starting their own trucking company if they canât be their own boss? In California, theyâve effectively stopped that practice,â Bradley said.
Currently, 97 percent of all trucking company fleets include 10 trucks or fewer, and every large company began with âone truck,â Bradley said.
He said AB 5 will force independent truck owner-operators to join an established trucking company or âfollow some other career path.â
âThis 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,â Bradley said.
Given Arizonaâs proximity to California, the worldâs third-largest economy, Bradley said itâs challenging for Arizona independent truck owner-operators not to do business in California.
âI think some of them will exit the business and pursue other dreams though we donât know what the repercussions will be for out-of-state drivers,â Bradley said.