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The Coming Changes for California Trucking

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The Coming Changes for California Trucking

The California trucking industry is undergoing some changes. AB5 is a new law that makes it difficult for trucking companies to classify regular drivers as independent contractors. If the concept sounds familiar, it is. This is part of a larger regulatory battle country-wide over the independent-contractor arrangement. Ride-sharing giants like Lyft and Uber spend hundreds of millions of dollars lobbying for contractor status. California trucking firms don’t have that type of clout, but the backlash against AB5 is growing. 

A large share of trucking companies employ their own drivers. However, there is an equally significant share of independent owner-operators. Some estimates point to roughly 70,000 independent drivers in California alone hauling goods to and from the state’s biggest ports. Independent truckers typically own or lease their own rigs. They then engage in contract work with trucking firms and take advantage of the firm’s insurance discounts and permits. The freedom of owning or leasing their own trucks with the flexibility of choosing the company and working arrangements are the frequently cited advantages of having that independent, contractor status. The worry around AB5 is it will cost independent divers more as they’ll invariably need to take on additional expenses, namely, insurance. 

The Harbor Trucking Association has weighed in, stating rather “matter-of-factly” that the law will force drivers to choose between working independently with freight brokers or becoming employees of trucking firms. The trade group for West Coast truckers estimates that independent truckers will need to take on roughly $20,000 in additional costs should AB5 move forward. On the other end of the argument is the International Brotherhood of Teamsters. Their objective is to organize California truckers around the premise that large trucking companies have for years misclassified drivers. As independent contractors, they’ve been deprived of benefits and fair wages. 

Zooming out, California has been devastated by supply-chain bottlenecks. Approximately 40% of all US containerized imports arrive through California ports and any reductions at this point would aggravate an already tense environment. Currently, the California Trucking Association has a pending lawsuit against AB5. They argue that federal laws concerning the governance of interstate commerce effectively prohibit drivers from state regulation. A growing number of testimonials from small owner-operators are becoming more commonplace in an attempt to sway public opinion. 

Take for example Ms. Bianca Calanche and the 15 owner-operators her Compton, California firm, Jaspem Truck Line Inc. works with. Coupled with 15 full-time employees, AB5 would increase her employment costs forcing her to absorb all her independent drivers and purchase more trucks for their fleet. SImilar firms are reporting the costs would be too exorbitant to take on and they’d likely go out of business. 

A conglomerate of trucking groups have already asked California Gavin Newsom for more time. We’ll see which way the political winds are blowing in the coming months.