AB5 Update

Hurdle Against California's Assembly Bill (AB5)

On June 30^th the U.S. Supreme Court made a decision that has added another hurdle against California’s Assembly Bill (AB5). An estimate of 70,000 independent rig operators have been affected during this two-year battle between California’s independent rig operators and the American courts. AB5 was originally passed in 2019, however it was delayed, and the bill has been returned to the lower court.

The bulk of the trucking industry is moved within California and outbound of the state. More than 223 million tons was moved within the state opposed to 447 million tons moved throughout the rest of the United States, according to a study in 2021. Almost 50% of the tonnage moved in this country is accounted for within or out of California.

Scholars are asking the question, “Does AB5 foster an impractical dynamic that keeps California truckers to a law not set up in other states?” Drivers who are not capable to work within California due to the opposed AB5 bill could potentially move or shut down. Business owners could potentially not conform with the law and will pursue other methods of transporting freight. The result of this could cause more insecurity for America’s already-struggling supply chain and add to the overwhelming increases due to inflation.

While a select few labor-based organizations are for AB5, there are a great number of  trucking advocacy groups who are against it. The California Trucking Association (CTA),  joined forces with more than 70 trade organizations and petitioned for AB5 to be paused by executive order, and “consult a path forward to preserve small business trucking in the state of California and avoid further interruptions to the supply chain.”

The Owner-Operator Independent Drivers Association, Inc. (OOIDA ), an international trade organization continues to seek for solutions for California’s truckers. The President and CEO Todd Spencer wrote a distinctly articulated three-page letter to California Governor Gavin Newsom describing the destruction to livelihoods that AB5 could cause for individuals and on a worldwide level. After the Supreme Court’s decision, Spencer concluded,

“While enforcement of AB5 will create disruptions and challenges for the supply chain and economy in California and across the country, small-business truckers face the most immediate uncertainty and potential harm. Our members who live in the state, as well as tens of thousands of truckers who travel through it, are now wondering if they can continue working in the same arrangements they have for years—arrangements that benefit their operations. For some, this means they don’t know whether they will be able to make their next truck or mortgage payment. California must prioritize these drivers’ perspectives as it considers its way forward.”

More than 70,000 independent rig operators’ future remain unknown as the bill has been returned to the lower court. Will the bill be passed or will a plan be put in place to  preserve small business trucking in the state of California and avoid further interruptions to the supply chain?