California ruled that independent drivers are employees not contractors. The US Supreme Court refused the case. The ruling creates a huge potential for a massive truck shipping logjam.

A Tweet Chain by Freight Waves spells out the problem.

California ports are going to be a mess and not because of a strike – but because California just made most of its port dray drivers illegal. https://t.co/bHpTHcKBWn

— Craig Fuller 🛩🚛🇺🇦 (@FreightAlley) July 1, 2022

Half of the Industry is Impacted

Half of the trucking companies in California are at risk of closure next week due to the AB5 law going into effect.

— Craig Fuller 🛩🚛🇺🇦 (@FreightAlley) July 1, 2022

Supreme Court

Catastrophic news for truckers in California. #ab5 #independentcontractors https://t.co/71ZxmnDcML

— BiStateMotorCarriers (@BiStateMC) June 30, 2022

Breaking News: SCOTUS denies certiorari; California’s trucking sector braces for AB5

Supreme Court outcome means it goes into effect immediately https://t.co/dAMloAdqgZ

— Craig Fuller 🛩🚛🇺🇦 (@FreightAlley) July 1, 2022

Working Entrepreneur Screwed

Maybe, in time, AB5 improves the working conditions for drayage port operators – but in the meantime, Cali totally screwed the working class trucking entrepreneur that is just trying to make a living.

— Craig Fuller 🛩🚛🇺🇦 (@FreightAlley) July 1, 2022

Blame the Unions

Unions pushed for this

— Craig Fuller 🛩🚛🇺🇦 (@FreightAlley) July 1, 2022

Expect Illinois and New Jersey to Follow

Illinois and NJ have passed laws that attack the independent contractor model. They are almost certainly headed to expand it.

— Craig Fuller 🛩🚛🇺🇦 (@FreightAlley) July 1, 2022

Not Just Trucking

Wasn’t just trucking, it was a lot of other industries. Independent contractors got completely screwed. It was a tax grab. No write offs, no benefits.

— 1.618 (@ichimatter) July 1, 2022

Converting to a New Model

Wasn’t just trucking, it was a lot of other industries. Independent contractors got completely screwed. It was a tax grab. No write offs, no benefits.

— 1.618 (@ichimatter) July 1, 2022

“Converting to an employee isn’t as simple as you think. Independent truckers are small businesses and finance their trucks through cash flow. If they shut down their business, they risk bankruptcy.”

CTA vs California

BackupTheTruck reports CTA vs California AG denied certiorari – AB5 goes into effect in 7 days.

The Owner-Operator and Independent Driver Association (OOIDA) has released comments about the court’s refusal to hear the argument:

“AB5 is so wide ranging that knowing how to comply is impossible for many directly working in trucking. With AB5 now set to go into effect, thousands of owner-operators driving in California face an uncertain future. California has provided no guidance to owner-operators about how they can work as independent contractors under this new scheme, and truckers will be at the mercy of the courts to interpret how the law will be applied. “

California Trucking Association responds:

“In addition to the direct impact on California’s 70,000 owner-operators who have seven days to cease long-standing independent businesses, the impact of taking tens of thousands of truck drivers off the road will have devastating repercussions on an already fragile supply chain, increasing costs and worsening runaway inflation.”

AB5 Ruling Enters Trucking Into the Inferno

Please consider AB5 Ruling Enters Trucking Into the Inferno

What’ll this do to rates in California? Chris Gonzalez with Clean Harbors says, “Drivers will either have to run on their own authority, be with a true OO company or become a company driver. This affects the port OOs mostly.”

For 70,000 independent owner-operators in Cali, they now have to get compliant with the law or get out. Rooster sees the most immediate impacts being a jump in rejects and escalating rates to match payroll increases.

More Fat for the Recession Fire

Hey, why not throw more fat on the stagflation fire so Powell will have to keep those rate hikes coming.

For discussion, please see GDPNow Forecast Dives to -1.0 Percent Following Income and Spending Data.

Article posted with permission from Mish Shedlock