19 Legislators Call on Gov. Newsom to Stop AB 5 from Hurting Truckers & Supply Chain

Posted July 12, 2022

In International Shipping, peak season, port congestion, shipping, Supply Chain, Truck Driver Shortage, truckers, trucking

Last week, we blogged about California’s Assembly Bill 5, also known as AB 5 and the gig worker bill. After the U.S. Supreme Court decided not to hear the California Trucking Association’s case against the bill, it is now set to be implemented and could take as many as 70,000 independent truck owner-operators off the road and away from the ports in California.

Obviously, that would be devastating for the supply chain.

Almost a score of California’s legislators petitioned the man who signed AB 5 into law, Governor Gavin Newsom, to use his power to delay the implementation of the bill or exempt the trucking industry from it.

I wouldn’t hold my breath on California’s governor actually taking positive action, even though the bill threatens the supply chain right as we’re hitting stride in international shipping’s peak season, when imports increase in preparation for the back to school and holiday shopping seasons.

Legislators’ Arguments Against AB 5

The 19 assemblymembers who signed the letter did a few things in it to induce Governor Newsom to take action.

First, the legislators highlighted the importance of the trucking industry to California’s economy and the supply chain, emphasizing that “the independent owner-operator trucker has long been the backbone” of that trucking industry.

Second, the lawmakers emphasized how AB 5 will hurt those whom Democrats like Newsom make a big deal out of claiming they care about: minorities. The legislators write:

Within California, the driver workforce is comprised of a majority-minority demographic, with over 50% Latino, and an overwhelming percentage of small-business companies that operate 5 or fewer trucks within their fleet (91.8%). Sadly, these are the individuals who stand to lose the most as AB 5 takes effect within the state.

Finally, the assemblymembers argue that if nothing is done about AB 5, it will add to inflation in California.

Best Chance for AB 5 Not Damaging the Supply Chain

While the legislators don’t talk about it, the out of control inflation is a large factor that could have citizens voting sitting politicians out of office later this year and in the 2024 election. Newsom has shown that he has high political aspirations, with his eyes seemingly on the White House, as he recently ran unwise attack ads on Florida’s governor, Ron DeSantis. Perhaps seeing the political danger he is in if things get even worse with AB 5 could be the best chance of causing Newsom to take action.

The best chance, however, of the gig worker bill not deeply hurting the trucking industry in California and the larger supply chain is not from the potential of Newsom using his gubernatorial powers: the best chance of limited damage from AB 5 comes from how it will be implemented.

There are questions over how the bill will be enforced. If the legislation is enforced to its fullest, tens of thousands of truckers will be stopped from operating the way they currently do. With the fact we’ve already been facing a trucker shortage problem for many years, the damage this would do could be intense.

On the other hand, if implementation and enforcement of the law aren’t as strict as they potentially could be, the consequences obviously wouldn’t be as dire. Still, that’s a pretty big gamble, and so far, gambling on Democrat policies hasn’t been working out very well in California nor around the country.

Full Text of Letter to Governor

Here’s the full text of the letter the assemblymembers sent to Governor Newsom:

California Legislature

July 5, 2022

Honorable Gavin Newsom
Governor of California
1021 O Street, Suite 9000
Sacramento, CA 95814

RE: Request For Executive Action – AB 5 Implementation

Dear Governor Newsom,

We, the undersigned members, respectfully request that you utilize your executive powers to assist the trucking industry in California as they prepare for the imminent implementation of AB 5 (Chapter 296, Statutes of 2019). Due to the Supreme Court’s decision to not hear the California Trucking Association’s petition of the Ninth Circuit U.S. Court of Appeal’s ruling, the fate of California’s trucking industry is in question.

The importance of the trucking industry to the economy of California, let alone the United States as a whole, cannot be understated. California’s ranking as a world economy is due in part to its ability to move more than 40 percent of the nation’s products through its ports. However, the historic ongoing congestion felt at our State’s ports exposed the dire need for a stronger and more reliable supply chain infrastructure. To this end, the state has openly expressed the need for an increased workforce, yet the available supply of drivers, “owner-operator” or otherwise, will be drastically reduced given the imminent application of AB 5 to the trucking industry.

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. Within California, the driver workforce is comprised of a majority-minority demographic, with over 50% Latino, and an overwhelming percentage of small-business companies that operate 5 or fewer trucks within their fleet (91.8%). Sadly, these are the individuals who stand to lose the most as AB 5 takes effect within the state.

Given the critical role of our truck drivers in maintaining our supply chain, we implore you to take any means within your authority to either delay the implementation of AB 5 or exempt the trucking industry altogether from the ABC test. Without immediate action, we can expect a devastating reduction in our driver workforce, especially among minority-operated businesses.

Furthermore, without immediate relief, the cost of products in stores will rise due to higher shipping costs. This will fuel inflation, since shipping is a key component in the price of products. Californians are already suffering heavily from inflation and should not be subjected to additional price rises as a result of AB 5. At this critical juncture, we ask that you utilize all resources at your disposal to prevent this looming disaster.

Sincerely,

Devon J. Mathis
Assemblymember, 26th District

James Gallagher, Republican Leader
Assemblymember, 3rd District

Randy Voepel
Assemblymember, 71st District

Heath Flora
Assemblymember, 12th District

Thurston “Smitty” Smith
Assemblymember, 33rd District

Kelly Seyarto
Assemblymember, 67th District

Steven Choi, Ph.D.
Assemblymember, 68th District

James Patterson
Assemblymember, 23rd District

Frank Bigelow
Assemblymember, 5th District

Marie Waldron
Assemblymember, 75th District

Vince Fong
Assemblymember, 34th District

Laurie Davies
Assemblymember, 73rd District

Kevin Kiley
Assemblymember, 6th District

Philip Chen, Ph.D.
Assemblymember, 55th District

Janet Nguyen
Assemblymember, 72nd District

Megan Dahle
Assemblymember, 1st District

Suzette Valladares
Assemblymember, 38th District

Tom Lackey
Assemblymember, 36th District

Jordan Cunningham
Assemblymember, 35th District

CC:
The Honorable Anthony Rendon, Speaker of the Assembly
Stuart Thompson, Office of Legislative Affairs – Governor Newsom
Suzane Sutton, Assembly Republican Caucus
Paul Dress, Assembly Republican Caucus
Lauren Prichard, Assembly Republican Caucus

Jared Vineyard

For more than ten years, Jared has researched and written about the international shipping industry for the freight forwarder Universal Cargo. His work has been republished on the web and in print, including the maritime news magazine Inside Marine. When first joining Universal Cargo, Jared trained in the freight forwarding process and helped customers with their imports and exports, giving him his initial international shipping sea legs.