On Monday, a federal judge formally lifted the injunction preventing A.B. 5, a California law passed in 2019, from applying to truckers. The law seeks to classify more workers as employees instead of independent contractors. That affects owner-operator truck drivers, who are small-business owners who contract with shippers rather than being employees of trucking companies. Owner-operators are especially common among the drayage truckers who work in and around California’s major seaports near Los Angeles and Oakland.
California Democrats decided they knew better than the truckers and sought to force more of them into being employees. Being an employee comes with more protections under labor law than being an independent contractor, but it can also come with less freedom to decide when to work and which deliveries to make.
One of the biggest factors, though, has always been unionization. Truck drivers who are employees can unionize, but truck drivers who are independent contractors can’t.
Getting more truck drivers to be classified as employees means fresh recruits for the Teamsters, and they’re already taking advantage. FreightWaves reports:
A lengthy unionization battle in Southern California involving Universal Logistics has ended with what backers of the AB5 law on independent contractors said they want to see in the state’s trucking sector — a new batch of Teamsters union members.
In a deal that involved the National Labor Relations Board refereeing the dispute, Universal (NASDAQ: ULH) and the Teamsters agreed on a multipronged settlement that involves drayage drivers who had been classified as independent contractors becoming employees, recognition of the Teamsters as the bargaining representative of the drivers and a collective bargaining contract covering them.
The article goes on to say:
Other methods for complying with the independent contractor law are more complex, such as the “two-check” system where trucking companies hire drivers employed by an outside agency (which have hired the drivers as employees), or the brokerage model, where a trucking company modifies its business plan to become more of a brokerage house and brokers freight into drivers that had been operating under a lease from the company but instead went out and received their own motor carrier authority from the Federal Motor Carrier Safety Administration.
Having once-independent contractors converted to employees has always been seen as the least ambiguous road to compliance with AB5 but one which conventional wisdom had said companies would try to avoid.
“I think Universal is a role model now for complying with AB5 and reclassifying these workers as employees instead of independent contractors,” said Julie Gutman Dickinson, an attorney with the firm of Bush Gottlieb, which represents the Teamsters.
Isn’t that convenient? Democrats passed a law, and the best way to comply with it involves increasing the membership of an organization that donates money almost exclusively to Democrats.
Meanwhile, California truck drivers and the businesses that depend on them are still unsure exactly how the law will shake out. On top of that, California has new environmental standards that come into effect on January 1 that will ban any truck with an engine built before 2010, which is expected to take about 80,000 trucks off the road. Harbor Trucking Association CEO Matt Schrap estimated that about one quarter of the trucks that run drayage routes around Los Angeles/Long Beach will have to be removed. By 2035, all trucks will need to be electric, but California is asking the relatively few residents who own electric cars right now to avoid charging at certain times because the state doesn’t have enough electricity.
But the Teamsters are celebrating, so California Democrats are happy.