I just heard that the California Trucking Association has dropped their legal battle after four and a half years and their message was pretty direct.

California’s new law is basically kicking owner operators out as independent contractors, which means 70,000 truckers are out of a job.

Now, some major trucking companies are taking a surprising step.

They’re telling their drivers to leave California altogether.

Landstar, one of the biggest trucking firms in the country, is even advising drivers to relocate out of state.

Other companies are telling their truckers to turn down any loads that start in California.

It’s like they’re not just putting up a fight anymore.

They’re heading for the hills.

And Governor Nuomoe is going to learn the hard way what happens when a law pushes truckers to leave the largest economy in America rather than comply.

California is responsible for moving 40% of all shipping containers that come into the United States.

The ports of Los Angeles and Long Beach are the busiest in the Western Hemisphere.

Yet now the trucks that transport all that cargo are being told to steer clear.

In this discussion, I’ll lay out what this law actually does, why 70,000 truckers are feeling the pinch, what the big companies are saying to their drivers, and what a halt in trucking will mean for California’s supply chain.

Let’s break down what happened in California.

Back in September 2019, Governor Nuome signed Assembly Bill 5 into law known as the gig worker bill.

This law aimed to change the status of independent contractors to employees.

It relies on something called the ABC test to determine contractor status.

Basically, to be seen as an independent contractor, a worker has to meet three requirements.

First, they need to be free from the control and direction of the hiring company.

Second, the work they do should be outside the typical operations of that company.

Third, they must usually be involved in an independently established trade or business.

Now, here’s where things get tricky for truckers.

It’s the second requirement or the BPM.

If you’re an independent truck driver hauling freight for a trucking company, you’re doing the exact same work that the company does.

Under Assembly Bill Five, that automatically categorizes you as an employee instead of an independent contractor.

The California Trucking Association made it clear the BP prong of the ABC test effectively excludes leased owner operators from operating legally in California.

Some professions like licensed doctors, attorneys, engineers, and direct sellers managed to dodge the impact of Assembly Bill 5, but that didn’t help the truckers.

The trucking industry in California has been facing a real challenge, and the situation only got worse when Assembly Bill 5 came into play.

Unlike other states that have some leniency, California’s laws are the toughest in the nation, leaving truckers without any exemptions.

The main kicker is that while most places only deny independent contractor status based on location, California decided to tie it directly to the essence of how businesses operate.

Essentially, this decision has devastated the entire trucking community.

The truckers didn’t just sit back and take it.

They fought back hard.

Just a day before Assembly Bill 5 was set to go into effect on January 1st, 2020, the California Trucking Association jumped in with a lawsuit.

A federal judge stepped in to issue a restraining order, keeping the law from applying to motor carriers.

For 4 and a half years, truckers were able to operate under that order while the case worked its way through the legal system.

Fast forward to May 2021 when the 9inth Circuit Court of Appeals made a ruling against the trucking industry and overturned the lower court’s decision.

They allowed the injunction to remain in effect while the case was appealed all the way up to the Supreme Court.

By June 2022, the Supreme Court decided not to hear the case, kicking it back down to the lower courts.

That’s when the Owner Operator Independent Drivers Association or OIDA for short stepped up to continue the battle.

They argued that Assembly Bill Five goes against the Constitution’s commerce clause, saying it discriminates against drivers coming from other states and conflicts with federal trucking rules.

In May 2024, a California district judge turned down their request for a new injunction, claiming that Assembly Bill 5 doesn’t violate the fundamental principle of preventing discrimination against interstate commerce.

Just a few months later, in August 2024, the California Trucking Association officially called it quits on their legal challenge.

After years of fighting, they finally admitted defeat, acknowledging that Assembly Bill Five’s ABC test essentially wipes out the chance for owner operators to be classified as independent contractors.

They issued a warning about the potential harm to California’s 70,000 independent truck drivers, signaling that their legal strategies had run dry and the industry was left behind.

So, what do you think is going to happen when 70,000 independent truckers find out they can’t operate legally in California anymore? They’re going to pack up and go elsewhere.

Landstar, one of the largest trucking companies in the country, has even been suggesting that drivers should relocate out of California altogether if they want to keep their status as independent contractors.

So, here’s the situation with the trucking industry in California.

Landstar has told their truckers to either head out of state or get their own authority.

Other companies are following suit, too.

Some are even looking over their lease agreements, while others are switching from independent contractors to employee drivers or simply advising truckers to skip loads that come from California altogether.

Now, a workaround has popped up.

California’s AB5 law stops independent contractors from picking up loads that start in California, but it doesn’t stop them from delivering loads coming from other states.

So, what truckers are doing is dropping off their deliveries and then driving back out empty, avoiding any freight that comes from California.

Once they’re out of state, they can find new loads and keep rolling along.

But honestly, that’s not really a way to run a trucking business.

That’s more like an evacuation.

And the effects are hitting the Californiabased carriers the hardest since they can’t just pack everything up and move overnight.

Carriers from out of state are increasingly opting to avoid California entirely rather than deal with all this legal uncertainty.

To make matters even more complicated, California hasn’t really enforced AB5 against trucking companies.

So far, there haven’t been any audits, investigations, or lawsuits against these companies concerning AB5 violations.

The industry is crumbling, not because of enforcement, but due to this cloud of uncertainty hanging over them.

Companies are worried about what might hit them next.

Back wages, tax penalties, or lawsuits.

So, they’re bailing out before that happens.

Now, the impact on California’s supply chain is quite significant.

The ports of Los Angeles and Long Beach manage about 40% of all shipping containers coming into the United States.

In 2025, despite all the tariff chaos going on, the Port of Los Angeles saw around 10 million container units processed, making it their third busiest year ever.

And every single one of those containers has to be moved off the dock by a truck known as a dreage truck.

These trucks are essential for transporting containers from the port to warehouses and distribution centers.

But here’s where it gets tricky.

Under California’s advanced clean fleet regulations, Dreage trucks have to meet some of the toughest requirements out there.

Starting in January 2024, only zero emission DRAGE trucks can be registered in California’s trucking system.

So, not only is California pushing truckers away with AB5, but they’re also piling on demands for those who manage to stay.

So, here’s the deal.

California just told around 70,000 truck owners that the way they do business is now illegal.

And that’s causing quite a stir.

Imagine being one of those truckers who typically drives diesel trucks and now you’re being pushed to switch to electric vehicles that cost three to four times as much.

It doesn’t quite add up, does it? If even a small number of those truckers decide to stop taking loads in California, we’re looking at a big drop in capacity.

And when capacity dips, shipping rates shoot up.

This isn’t just about trucking either.

Everything that travels on a truck gets more expensive.

That means your groceries, the gas you fill up with, the materials for new homes, and those packages that arrive at your doorstep all may end up costing more.

Essentially, every American household relies on trucking for almost everything they buy.

Let’s zoom out for a second.

California has the largest economy in the United States, ranking fifth in the world.

It’s a giant marketplace.

So, when there’s a hiccup in California’s trucking capacity, it sends ripples across the entire western supply chain, leaving states like Arizona and Nevada especially vulnerable.

We’ve talked about how Arizona gets one-third of its gasoline and Nevada gets a staggering 88% through California pipelines, but that’s just the beginning.

They also rely on California’s ports to bring in consumer goods since neither Phoenix nor Las Vegas has major container ports of their own.

Goods typically flow from places like Los Angeles and Long Beach onto trucks destined for the rest of the Southwest.

If truckers start avoiding California loads, some goods will either get stuck at the port, leading to congestion, or they’ll get rerouted through pricier channels.

In either scenario, we’re all going to feel the pinch.

Higher prices for everyone in the region.

Now, there’s this organization, the Owner Operator Independent Drivers Association, that argued in court that Assembly Bill 5 unfairly targets outofstate drivers.

They claimed that truckers based in California can better handle the costs of complying with this law compared to those from out of state, which gives local businesses a leg up.

The judge didn’t agree, but the reality is that interstate commerce is getting disrupted regardless of what the court decided.

For a trucker based in Texas, it’s a tough call.

They’re faced with a choice.

Take a load heading for California and wind up driving back empty or skip California altogether and take something else.

More and more, they’re opting for the ladder.

And honestly, the whole situation is pretty wild.

Back in 2019, California passed Assembly Bill 5.

But here we are in 2026, and the law hasn’t really been enforced against trucking companies at all.

No audits, no investigations, and not a single lawsuit aimed at these companies for violating the law.

In 2022, the state’s labor commissioner even encouraged truckers who felt misclassified to come forward.

Yet, it doesn’t seem like anything has happened to any trucking company since then.

So, it’s interesting to consider why the trucking industry is facing a collapse when the law isn’t being enforced.

The reality is that the mere threat of enforcement creates enough anxiety.

Companies just can’t operate with all this uncertainty hanging over them.

They find it nearly impossible to sign contracts, make investments, or even plan for the future when they’re unsure whether the state will suddenly come after them for years of unpaid wages and taxes.

The California Trucking Association actually warned about this situation.

They pointed out that even without active enforcement, the existence of Assembly Bill 5 poses serious challenges for owner operators and carriers.

Turns out they were spoton.

The industry is essentially opting out of California, not because they’ve faced actual penalties, but because they’ve witnessed the fate of other industries that don’t comply with California’s rigorous regulations.

They’ve seen refineries throw down a billion dollars just to leave the state.

And they’ve watched companies move their headquarters to Texas.

Truckers looked at Assembly Bill 5 and decided they weren’t going to stick around to figure out what compliance would mean for them.

Looking ahead, the owner operator independent drivers association lawsuit is still technically in play, but legal experts view it as a long shot since multiple courts have already dismissed the main constitutional arguments.

California shows no signs of relenting either.

Governor Nuomoe has stood by Assembly Bill Five, claiming it protects workers by ensuring independent contractors get benefits like minimum wage overtime and workers compensation.

However, the trucking industry operates on a different wavelength compared to gig workers for services like Uber or Door Dash.

Owner operators have put tens of thousands of dollars into their own rigs, crafting their own businesses.

They choose to be independent because they want control over their schedules, roots, and earnings.

But Assembly Bill Five strips away that choice.

Some trucking companies have attempted to adjust by turning independent contractors into employee drivers.

But that shift also means taking on payroll taxes, offering benefits, and carrying a heavier financial load.

So, here’s the deal.

California has passed a law that pretty much puts a stop to the independent trucker business model, and it’s having a huge impact.

We’re talking about 70,000 owner operators who are now affected.

After fighting this for 4 and a half years, the industry didn’t win this round.

It gets even trickier because major carriers are actually telling drivers to leave the state altogether and truckers are refusing loads that originate from California.

That’s a big issue since the supply chain that keeps 40% of America’s shipping containers moving is really losing its steam.

And here’s the kicker.

California hasn’t even started enforcing this law yet.

The governor thought he was doing the right thing to protect workers, but instead he’s watching the whole trucking industry go down the drain.

Rather than becoming employees, these truckers are turning into ex Californians.

The ports of Los Angeles and Long Beach are designed to handle 10 million containers, but those containers don’t move by themselves.

They need trucks.

And now the folks who drive those trucks are being told they’re not wanted anymore.

Now, the California Trucking Association has mentioned that if enough political or economic pressure comes into play, they could possibly get an exemption for the trucking industry.

But for that to happen, California’s legislature would have to admit they made a misstep.

And given their history on issues like refineries and high gas prices, I wouldn’t hold my breath on that one.

So, the exodus of the trucking industry seems like it’s just going to keep on rolling.

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This trucking collapse is just one chapter in a much larger story, and it certainly won’t be the