California’s new pro-union law could put a stop to the supply chain

Truck drivers in California are protesting in several locations to voice their opposition to Assembly Bill (AB) 5, a new bill supported by unions that reclassifies them as employees as opposed to independent contractors and could have a drastic impact on an already strained supply chain.

The regulation will complicate or make illegal many of California’s approximately 70,000 independent truck owner-operators’ current employment statuses, according to The Wall Street Journal.

The regulation was partially enacted to protect gig workers at companies like Uber and Lyft that hire independent contractors in large numbers without providing them with the benefits given to employees.

According to CalMatters, the bill is expected to drive some truckers out of business, which will reduce shipping capacity and drive up the cost of shipping goods in the Golden State at a time when California ports have already had significant supply-chain bottlenecks due to the COVID-19 outbreak.

White House port envoy Stephen Lyons said Wednesday in reference to the law, “The truckers are so critical to this supply chain and we’ve got to make sure there are conditions that will take care of them. We’ll continue to watch and assess these impacts.”

The U.S. Supreme Court declined to hear the case on June 30, allowing AB 5 to take effect earlier this month, as per CalMatters.

AB 5 was first signed into law by California Governor Gavin Newsom in 2019 and has since been making its way through the courts.

According to the WSJ, truckers may now need to obtain their own licenses and insurance, which may raise their annual costs by $20,000 or more.

After the Supreme Court decided not to hear the case back in late June, the California Trucking Association released a statement saying, “Gasoline has been poured on the fire that is our ongoing supply chain crisis.”




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