By forcing independent truckers out of the market, California legislation may unleash even more supply chain suffering and inflation on the residents of the Golden State.
The California Legislature passed Assembly Bill 5, a bill authored by Dem. Lorena Gonzalez, a former state Assemblywoman, and signed by Gov. Gavin Newsom in September 2019.
California’s AB5, which was signed into law in 2019, abolished the independent contractor test. The bill stated that “a individual providing services and labor for compensation shall be considered an employee instead of an independent contractor unless the hiring entity shows that the individual is free from the direction and control of the hiring entity when performing work, that he or she performs work outside of the normal course of business for the hiring entity, and that he or she is regularly engaged in an independently established occupation, trade or business.”
Truckers were not exempt from AB5, as certain vocations were. Ins. agents, health care professionals, realtors, investment advisers, barbers, and fishermen are just a few examples of professions that were excluded. However, truckers were not immune to the law.
California’s AB5 targeted rideshare drivers and app-based delivery drivers. Ironically, Lyft, Uber, and Postmates were exempt from AB5 after Proposition 22 was passed in Nov. 2020.
The trucking business has fought the legislation since it took effect, and in January 2020, it obtained an injunction that prohibited AB5 from including the independent truckers.
California Attorney General Xavier Becerra urged District Court Judge Roger T. Benitez to reverse the ban.
“The court also violated its discretion in the assessing of the remaining preliminary injunction criteria by incorrectly determining that Plaintiffs had caused irreparable harm after they delayed seeking injunctive relief for more than 19 months, and giving short shrift to California’s interest in dealing with misclassification of state employees,” Becerra said in March 2020. “It should be reversed by this court.”
On June 28, the U.S. Supreme Court refused to hear the case of California truckers challenging AB5.
“This decision really took everyone by surprise, especially after they rushed it back and effectively made it law,” Paul Brashier, the vice pres. of a commercial transportation firm, said.
To be able to work in California, truckers must now be employees of trucking firms rather than independent contractors.
