California Truckers Facing Employee Status Legal Limbo Spells More Port Strains

Matt Schrap, the CEO of the Harbor Trucking Association in Long Beach, California, offers some free advice to independent drivers after the United States Supreme Court ruled that their employment status is unconstitutional.

Source: Bloomberg | Published on July 11, 2022

Cargo trailer truck parked loading at dock warehouse. Cargo shipment. Freight truck transportation.

"Get a lawyer," he advised.

California truck drivers must follow Assembly Bill 5 after the Supreme Court refused to hear a case challenging the legislation that establishes the tests for employment-status classification on June 30.

More on the trucking fallout in California can be found in Bloomberg's Augusta Saraiva and Ngai Yeung's full story here.

Schrap anticipates some capacity loss as drivers leave the market because they don't want to be employees or because they don't want to obtain their own operating authority.

According to him, the cost of transitioning from an owner-operator model could reach $20,000 per year as truckers apply for the necessary licenses and pay additional fees and insurance.

In 2019, California passed the AB5 law, which targeted gig-economy giants such as Uber, Lyft, and DoorDash. However, these businesses, along with other professionals such as musicians, freelance writers, and architects, were granted exemption.

The trucking industry obtained a temporary injunction, which was in effect until the Supreme Court decision. Now, the cloud of legal uncertainty has descended on the West Coast, where ports are struggling to keep cargo moving smoothly across multiple modes of transportation during a busy season for imports.