Legislation in California that aims to expand worker protections for so-called gig economy workers has led to a debate in the state’s freight services market and a lawsuit hoping to block the law.
New legislation in California, set to take effect in January, was met with resistance from the California Trucking Association (CTA), Yahoo! Finance reported Monday (Nov. 18). CTA filed a lawsuit to block the law, claiming it would harm operations of independent trucking owner-operators by forcing these professionals to adhere to minimum wage and other labor laws.
The rules would also require such independent players to remain under one company that hires them, rather than have the flexibility to service various corporate clients based on the ebbs and flows of supply chain demand.
The legislation classifies gig workers, like independent truckers, as employees, not contractors — the opposite of what the U.S. Labor Department proposed in its earlier opinion on gig worker classification earlier this year. Critics of the law say it will render those independent owner-operators unable to operate, likely leading to supply chain disruptions.
The U.S. Supreme Court rejected an appeal by the CTA earlier this year that challenged the classification of truckers as employees. The CTA filed its lawsuit to block California’s law last week, the report said.
“To the extent the gig economy-contractor law makes it more difficult or more expensive to operate a truck in California, it may drive up the cost of all the things that the residents of the state consume even further,” warned Donald Broughton, Broughton Capital principal and managing partner.
According to another industry player, Jetco Delivery President Brian Fielkow, becoming an owner-operator is “a very, very good living, and it’s a preferred way of life.” He warned that the California law “will definitely discourage people from achieving what can be the best paying job for a professional driver, or group of drivers, in the industry.”
“You’re really hurting and preventing a large group of independent business people from succeeding and achieving the American dream,” he said.