Dive Brief:

• The state of California is poised to begin enforcement of its AB5 labor law, rejecting calls from the trucking industry for a delay to give drivers and carriers more time to comply.
• Dee Dee Myers, director of the Governor’s Office of Business and Economic Development, said in a statement that the state spent years developing guidance and creating tax breaks and financial assistance programs for small businesses and drivers before the Supreme Court declined to hear a challenge to the law on June 30.
• “Now that the federal courts have rejected the trucking industry’s appeals, it’s time to move forward, comply with the law and work together to create a fairer and more sustainable industry for all,” Myers said in the statement, provided by the governor’s office.

Dive Insight:

Intended to eliminate worker misclassification and expand employee benefits, AB5 could affect an estimated 70,000 owner-operators in the state, according to the California Trucking Association.

Owner-operator drivers across the state protested the law in recent weeks outside port terminals, slowing traffic. Truck movement in and out of the Port of Oakland ground to a halt on Tuesday, with some terminals suspending night gates due to the protests.

A spokesperson for Gov. Gavin Newsom did not respond to a question about exactly when enforcement will begin. But state Labor Commissioner Lilia Garcia-Brower tweeted July 12 encouraging truck drivers who believe they are being misclassified to request an investigation from the commissioner’s office.

Drivers, if you believe that you and other colleagues at the same trucking company are being misclassified as independent contractors, you can file a report of labor law violations and request an investigation from our office: https://t.co/BH6KLHm94o pic.twitter.com/NQs97GRkhg

— CA_Labor_Commissioner (@CA_LaborCommish) July 12, 2022

California’s stated intention of moving forward with enforcing the landmark labor law followed a pledge by Newsom’s office that it would look into the request for more time to comply by the state trucking association and more than 70 other industry groups. 

The Owner-Operator Independent Drivers Association added its voice to the chorus in a July 14 letter to the governor. The association, which represents nearly 6,500 California-based drivers and thousands more who drive in the state, requested a delay “until the State clearly communicates how owner-operators can continue operating as independent contractors.”

“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,” OOIDA President Todd Spencer wrote.

The group acknowledged worker misclassification — the issue at the heart of the law — is a problem, but said the state’s solution “is far too broad to account for the specifics of the trucking industry.”

“We are asking you to announce a delay in enforcement of AB5 in the trucking industry until the state fully considers how the law will affect small-business truckers, and provides remedies to ensure true independent contractors are not forced to be reclassified as employees,” the letter said.