California's AB5 Law - Will it impact You?
AB5 is a law that was passed in California making it virtually impossible to use independent contractors in many industries, including trucking. The law has gone through a series of legal challenges, which prevented its enforcement until the U.S. Supreme Court declined to hear the latest challenge in June. Since that time hundreds of independent drivers have protested at ports like Los Angeles, Long Beach, and Oakland.
Fruit, nuts, and wine began flowing through the Port of Oakland after truckers quietly ended a multiday blockade amid a crackdown on AB5 protesters by port authorities. The protest put a chokehold on the port, delaying California Central Valley agricultural exports at one of the West Coast’s largest shipping hubs and sending jitters through global supply chains. On July 25 the truckers, who are not backed by a union, largely returned to work as they now face the possibility of arrest for blockading the port and hope to recoup days of lost income.
The self-employed truckers have no conflict with the port. But they successfully held the cargo flow captive for days as they called on Gov. Gavin Newsom to amend AB5, a controversial labor law that would require about 70,000 truckers and other independent contractors to register as employees
In early July, all of the state trucking associations sent a letter to the California governor urging his intervention. A total of 70 associations, representing wide-ranging supply chain interests, sent letters asking for a short-term pause in the enforcement of AB5 and urges a negotiated compromise to avoid further supply chain disruptions.
Will this affect your company/operation?
AB5 is a California state law. If you do not travel to California, there is no impact on your business. If you do go to California, but your drivers are company employees, there is no impact on your business.
The unknown question is how does AB5 impact non-domiciled independent drivers traveling into and working in CA? The law is not clear. If you have a CA domiciled independent driver, one who spends a large amount of time in CA, or you have a location in CA, you are at risk of that driver being classified as an employee if he is currently an independent contractor.
