The issue of the status of workers in logistics businesses such as express and last-mile has long been controversial. In what is now called the ‘gig economy’ such work practices provide a key element of the business model not just of last-mile providers but also the likes of Uber. The sense that these businesses were exploiting a loop hole in labour regulations has led to demands for unions and others to change the regulations around contract workers. The response by the US State of California has been to introduce what is called the ‘Assembly Bill 5’ or AB5. Applied from the January 1, the legislation defines self-employment as being “free from direction and control” of any one company. It also applies quite aggressive measures in terms of the amount of work that can be done for one employer.
This has had major implications for various types of workers in the logistics sector. In particular owner-drivers have had their status questioned. However, a Los Angeles court has recently ruled that truck drivers are covered under US Federal law facilitating interstate commerce and therefore are exempt from the AB5 law.
The case was triggered by attempts by the State to prosecute drayage trucking service providers operating in the ports of Long Beach and Los Angeles. The Los Angeles City Attorney accused a number of trucking companies of abusing the concept of self-employment to drive-down wage costs. Not only did these road freight companies object but many owner-drivers did as well, fearing they would have to change their business model to work in California.
The judgement may be referred to a higher court for a further opinion, however it represents a significant block to Californian politicians who are seeking to make substantial changes to employment law for truck and light-commercial vehicle drivers.
Although the heavier truck sector appears to have avoided such regulations for the moment, it does seem that there is some impetus for revising labour laws around other areas of road freight, especially last-mile operations. California has a fairly left-wing State government which has taken an aggressive stance on such issues, however other States in the US and possibly other countries may also begin to develop new legislation in this area even if their perspective on the problem is different.
Source: Transport Intelligence, January 9, 2020
Author: Thomas Cullen
GLOBAL SUPPLY CHAIN INTELLIGENCE (GSCi)