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July 18, 2022 8:04 PM, EDT

Trade Groups Ask Newsom to Delay Enforcement of AB 5

California Gov. Gavin NewsomThe letter asks Newsom to call labor and industry to the table “to negotiate a path forward to preserve small business trucking in the state of California and prevent further disruptions to the supply chain.” (Rich Pedroncelli/Associated Press)

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More than 70 trade associations representing wide-ranging supply chain interests have sent a letter to California Gov. Gavin Newsom asking him to issue an executive order to temporarily pause enforcement of the state’s AB 5 contractor law.

The letter, signed July 11 by trade organizations representing interests ranging from trucking and retail to agriculture and business, also asked Newsom, a Democrat, to immediately call labor and industry to the table “to negotiate a path forward to preserve small business trucking in the state of California and prevent further disruptions to the supply chain.”

Last month, the U.S. Supreme Court declined to hear a legal challenge by the California Trucking Association to the controversial AB 5 law, putting into effect a requirement intended to reclassify independent owner-operators as motor carrier employees.

Some of the signers to the letter to Newsom included American Trucking Associations, CTA, Harbor Trucking Association, Truck and Engine Manufacturers Association, National Retail Federation, California Chamber of Commerce, Associated Builders and Contractors, and the Agriculture Transportation Coalition.

A spokeswoman for the CTA declined comment on the letter.

aerial view of AB 5 protest at port of oakland July 18

Truckers protest California's AB 5 law at the Port of Oakland in Oakland, Calif., on July 18. (David Paul Morris/Bloomberg News)

“Independent truckers service all parts of California’s economy, including but not limited to, providing seasonal capacity to support agricultural harvests, specialized construction equipment and aggregate hauling, transportation of refrigerated food commodities, port and intermodal rail delivery, home deliveries and all points in between,” according to the letter.

The letter said that of the 73,023 trucking companies active in California in 2017, 71.3% (or 52,064) of these companies ran just a single truck.

“In total, 91.8% of all trucking companies in California operated five or fewer trucks in 2017,” the letter said.

“Experienced drivers, such as the typical owner-operator, are in high demand and could easily secure employment as company drivers,” the letter said. “However, owner-operators are independent by choice for reasons related to freedom, flexibility and economic opportunity.”

That notion of freedom also was underscored in a separate letter to Newsom by the Owner-Operator Independent Drivers Association.

AB5 protester holds sign

A man protesting California's AB 5 law displays a sign at the Port of Oakland. (David Paul Morris/Bloomberg News)

“While enforcement of AB 5 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 in a July 14 letter to Newsom. “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 which benefit their operations.”

“The independent owner-operator trucker has long been the backbone of the trucking industry. There are approximately 500,000 owner-operators nationwide, constituting about 15-20% of the entire driver workforce,” the sign-on letter said. “The average owner-operator is an experienced driver who has been in trucking for 26 years.”

At press time, Newsom’s public affairs office did not return a message seeking comment, but according to reports his deputy press secretary, Daniel Villasenor, said Newsom was “looking into the concerns raised by the California Trucking Association.”

The AB 5 law, which was originally planned to take effect in January 2020, was stalled for a little more than two years due to the federal lawsuit filed by CTA, aimed at seeking to put a stop to the law’s so-called “ABC test” designed to reclassify independent contractors into motor carrier employees.

The three-pronged ABC test requires motor carriers to classify their workers as employees unless they demonstrate that the worker:

  • Is free from the control of the hiring entity.
  • Performs work outside the usual course of the hiring entity’s business.
  • Is customarily engaged in an independent trade or occupation.

During its legal fight, CTA has claimed that the second condition, the B-prong of the test, makes it virtually impossible to block an owner-operator from being reclassified as a motor carrier employee.

In addition to letter-writing campaigns, owner-operators at the ports of Long Beach, Los Angeles and Oakland continued their protests that began July 13, blocking traffic to protest the AB 5 law, said Matt Schrap, CEO of the Harbor Trucking Association.

“The bottom line is that people need clarification on how they can remain independent,” Schrap told Transport Topics. “I hear from drivers they don’t want to be employees. I’ve been told that hundreds of thousands of times.”

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