Are California labor laws holding back supply chain? Businesses ask Newsom for a break
The California business community has an idea for easing the supply chain crisis: Suspend recent labor-friendly laws affecting warehouse workers and independent contractors.
Businesses say they will be able to move goods more quickly if the state suspends the 2019 law that requires companies to provide more workers with employment benefits. Ditto for the law that prevents warehouses from enforcing quotas that limit people’s ability to take bathroom breaks.
Nineteen state business organizations argued those points in their Oct. 19 letter to Gov. Gavin Newsom.
Newsom and labor interests strongly disagree.
“Getting rid of bathroom breaks for warehouse workers, and suspending a regulation that doesn’t even apply to truckers, are not solutions,” said Newsom spokesman Alex Stack.
Unions say that the supply chain crisis stems in part from decades of low pay and bad working conditions many truckers and warehouse workers have faced, issues they maintain won’t be resolved quickly.
Experts agree there’s no easy solution to the short-term crisis. Demand is up and inventories tend to be low, as consumers are unleashing pent-up demand while companies that cut back during the COVID pandemic are trying to keep up.
“The simple answer to this crisis is people simply stop buying stuff but that’s not going to happen,” said Assemblyman Patrick O’Donnell, D-Long Beach, chairman of the joint Ports and Good Movement Committee.
Suspending implementation could be of some help, said Christopher Tang, faculty director of the UCLA Center for Global Management. Doing so could make more truck drivers available or get products moved more quickly in other ways.
But, he said, suspending the warehouse law is good only “if it can be done without sacrificing safety to have more orders filled.”
The business view
The plan outlined in the letter, spearheaded by the California Business Roundtable, outlines nine requests for Newsom.
Those include declaring a “State of Emergency” at clogged ports, as well as suspending implementation of Assembly Bill 701, a law he signed in September that aims to prevent companies from using algorithms that block their warehouse employees from taking meal or bathroom breaks. AB 701 goes into effect Jan. 1.
Organizations are also calling on Newsom to suspend Assembly Bill 5, the 2019 law that requires companies to classify more workers as employees and provide benefits such as overtime and paid sick leave.
“Let’s be clear, we are not asking for your leadership in order to ensure there are toys on the shelves for Christmas; we are asking for your leadership in order to ensure working families have access to affordable medical supplies, diapers, and other basic necessities,” organizations said in their letter.
The Ninth Circuit Court of Appeals in April ruled that as many as 70,000 truck drivers in the state should be reclassified as employees under the law. The ruling has yet to be enforced, however, as trucking organizations have appealed the case to the U.S. Supreme Court.
Newsom could act to simply suspend the law during the crisis, said Rob Lapsley, California Business Roundtable president.
“How do you execute a (supply chain) plan if 70,000 truckers don’t know what their status is?” he asked.
Warehouse workers and executives also face uncertainty, said Rachel Michelin, president of the California Retailers Association.
She saw the warehouse algorithm law as having a chilling effect on not only an ability to hire and retain workers, but to build and expand new facilities.
“Eventually you break the camel’s back,” she said of the law. “People will start looking at building centers in other states.”
Newsom’s office insisted it is sensitive to these concerns.
“The state has moved decisively, working with stakeholders on strategies to ease congestion and increase efficiency – solutions that will actually make a difference in both the short- and long-term,” Stack said.
The state has also changed some regulations such as weight limits for agricultural trucks, said Dee Dee Myers, the director of the Governor’s Office of Business and Economic Development, or Go-Biz.
The labor view
Many California legislators and unions call the businesses’ argument misleading.
For years, port truck drivers financed their own vehicles from their companies, forcing workers to take on debt they could not afford. If the drivers couldn’t make payments, the companies seized the workers’ trucks, according to a 2017 USA Today investigation.
Companies also had classified many workers as independent contractors, meaning they don’t have to be paid minimum wage. A 2018 UC Berkeley Labor Center and Working Partnerships USA study found port drivers classified as independent contractors earned $28,783 a year on average.
“What’s happened with port drivers and the inability to have people taking containers out of the ports is a direct reaction to how we’ve been doing that business for the last 50, 60 years,” said Rome Aloise, international Teamsters vice president. “It used people and threw them away. What it created was jobs that weren’t worth coming back to.”
Advocates and unions have also charged that practices in warehouses push workers to the point of getting injured on the job.
In their Nov. 3 letter to Newsom, 18 Democratic California legislators said suspending laws and regulations will “ultimately hurt the very families we are trying to protect.”
“Instead we should be addressing existing issues in the supply chain and matching those problems with solutions from our next surplus,” legislators said.
And rather than blaming workers, businesses need to look at why they are facing labor shortage, said Eduardo Martinez, the legislative director at the California Labor Federation.
“To us, this seems like a good opportunity for the industry to take a closer look at their mirror,” he said.
This story was originally published November 8, 2021 at 5:25 AM.
.jpg)
