The supply chain issues may get a little worse. Bloomberg reports that thousands of California truck drivers are in a legal gray area as they face new labor laws originally meant for ride-sharing drivers.
The issue surrounds California’s Assembly Bill 5 which went into effect in January 2020. The bill originally targeted Uber, Lyft, and food delivery drivers but went on to affect all independent contractors. Many truckers, who were owner-operators, found themselves affected. These drivers have fought for years to be exempt from the very rules that are leaving their jobs in limbo. Under AB5, trucking companies are no longer under any right to enter into a contract with owner/operators to use them exclusively to move shipments. AB5 may also affect how goods are transported over state lines. According to Law360, trucking companies would have to either have to rework their trucking routes or work with owner/operator drivers to transfer their shipments to drivers employed by companies that are full on employees with said company. Its all a mess.
While AB5 didn’t look to be much of a problem before due to an injunction, a Supreme Court ruling on June 30th changed that. The challenge was brought forth by the California Trucking Association, which sought to keep drivers from having to adhere to AB5, but it failed. With the injunction gone, drivers are scrambling.
Industry experts are predicting an exodus of drivers who don’t want to be employees of trucking companies, as that comes with added annual costs. Supporters of the bill though, like former state Assemblywoman Lorena Gonzalez feels no remorse because they all knew this day was coming. “They’ve known for the last two and a half years that it was equally possible that this injunction would not hold. This is not a shock.”
AB5 is now the law of the land, which means drivers’ relationships with their respective companies are in jeopardy. And no one seems to know what the hell to do. Norita Taylor, director of PR for the Owner-Operator Independent Drivers Association, says there hasn’t been any direction on how to enforce the law: “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.”
Others think it will just make the supply chain problems worse, as the law is kicking in right at the start of peak seasons for industries such as construction and retail.
Whatever happens, an industry that was already turned on its side due to the pandemic is about to flip completely over in a state with some of the busiest ports in the country. And it might make the supply chain crisis worse.