Trucking Braces for Impact as Uncertainty Surrounds California’s AB5 law

January 2, 2020

Update: U.S. District Judge Roger Benitez issued a restraining order temporarily blocking enforcement of Assembly Bill 5 (AB5) for truck drivers Tuesday, Dec. 31. A hearing on a more permanent injunction is scheduled for Jan. 13, delaying the operational impacts feared by supply chains operating in the state. More details on the latest developments here.

On Jan. 1, California’s Assembly Bill 5 (AB5) will take effect, sending contractor-dependent industries into varying states of limbo. The law ushers in a new test for what constitutes an independent contractor. To boil it down, any worker completing tasks core to the hiring company’s business will be deemed an employee.

The new standard (called the ABC test) is intended to keep businesses from avoiding providing overtime pay and benefits to contract workers who work near full-time hours or make an equivalent contribution as a full-time employee. Unions, ride-sharing drivers and the AFL-CIO have hailed the legislation as a win for worker’s rights.

But the implementation presents a major shift for supply chains in California that experts expect to affect trucking capacity and eventually rates.

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Source: Supply Chain Dive