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Trucking companies and truck owner-operators are scrambling to figure out how to operate under a new California law that toughens definitions of nonemployee drivers, upending decadeslong practices that have allowed truckers to work as independent contractors.
The law known as AB5 is expected to go into effect this year after the U.S. Supreme Court on June 30 declined to review a lawsuit brought by California’s trucking industry.
Truckers warn the law could push many independent owner-operator drivers out of the business, reducing trucking capacity and driving up shipping rates as many ports and inland terminals continue to struggle under heavy cargo volumes and freight backups triggered by the Covid-19 pandemic.
“I will have to take less work and charge more,” said Bill Aboudi, president of Oakland Port Services Corp., an Oakland, Calif.-based firm with about six full-time drivers and a fleet of about eight trucks.
The law, which was originally due to take effect in 2020 before the legal challenges, makes it harder for trucking companies to classify as independent contractors the drivers that work regularly for them, and it pushes the companies to treat drivers like employees with the benefits that come with full-time work.
It sweeps up thousands of truckers who own or lease their own vehicles and work as contractors while taking advantage of their employers’ permits and insurance discounts.
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