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Another Wrench in the Supply Chain, 70,000 truckers in Limbo

The US Supreme Court on June 28 declined to consider the appeal of truck drivers against California's labor law AB5 and, as a result, it will now take force. The ruling could put up to 70 000 California truckers into legal trouble and put further stress on the already stressed supply chain.

AB5 is an employment classification law that was created to require gig-economy firms such as Uber, Lyft, and DoorDash to treat their workers as employees instead of being independent contractors. That means they'd be entitled to benefits. Of course, lobbyists from these tech giants were able to make their businesses exempt from it.

RedState has published numerous reports on AB5 over the years.

Truckers were not as fortunate as Uber and Lyft and had to comply with the laws. Bloomberg exposes the grave consequences for the state's massive number of truck owners:

More than a dozen truckers spoke to Bloomberg News. They're unsure how to meet the state's Assembly Bill 5, which demands that employees pass the three-part test in order to be considered independent contractors, or be considered employees with benefits. The trucking industry is dependent on contractors that have until now had the flexibility to operate according to their own rules and has fought to be exempted from laws of the state for many years.

The majority of the goods in the country are shipped by truck. Any disturbance to that system is likely to be severe and could affect the country's supply chain. Truckers don't know what to do. “We have never gotten any good answers from anyone official in California on how this is supposed to be enforced or how our members can comply,” said Norita Taylor, head of the department of communications for the Owner-Operator-Independent Drivers Association.

Bloomberg

Over 70% of the truckers working at some of America's biggest ports — such as Los Angeles, Long Beach, and Oakland are owned by owners and AB5 will govern their relations with brokers, carriers, and shippers, in the majority of cases as per the CTA.

It is likely that the timing and date of the Supreme Court's ruling could also cause chaos. “This denial couldn't have come at a worse time,” said Eric Sauer, senior vice president of administration at CTA. “We're in the peak harvest season. Also, we're in the peak construction season. This is also the peak time for holiday imports to our ports.”

There's a good chance that you'll be looking at empty shelves at your local grocery shop soon.

Kevin McMaster, vice president of sales for carriers for Flock Freight, told Bloomberg that many carriers would be forced to cut their workforces due to the expense of hiring the owner-operated trucks. He continued:

It could create an impact on the market, pushing drivers to pursue their own lease authority outside of the state, possibly to Arizona or Nevada, and possibly forcing some to retire due to the increased pressures on the market. There is likely to be pressure to increase capacity in California which could further exacerbate the already difficult situation where drivers are in high demand.

One of the major issues with this law is that many truckers prefer to be independent. They like owning their own vehicle, can choose their working hours and which jobs they undertake, and, most importantly, they enjoy freedom. Owner-operator Hedayatullah Abrahami is proud of his truck: “Oh, yeah, why not?” he stated. “Yeah. This is my personal truck. being a self-employed person, which is great. I'm pleased with that.”

My guess is that he will move out of the state and so will a number of other people. Life may soon become more difficult everywhere though, as the Biden Administration–never passing on a chance to punish people–is also reportedly taking a hard look at what California's doing so they can impose something similar on a national level.

There's many unknowns to be addressed in the wake of AB5 beginning to show throughout the trucking industry. According to CBS News, “Now it's law and no one seems to know what it will mean or who will be the one to enforce it. There's not much time to work that out.” One thing's for certain that there will be many interruptions to the chain of supply in California  and, as California is home to three major cargo ports, it will affect everyone.

AB5 is yet another progressive, charitable law, which is claimed to protect the worker, but it's actually an obscure push to boost unionization throughout the state. It's going to have massive “unforeseen” negative effects for everyone.

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