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California Bill Would Ban Owner-Operators at Ports

May 11, 2011

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A group of trucking and shipping groups is opposing a law in California to ban the use of owner-operators at state ports, which could be voted on as early as today.


AB 950, the Port Drayage Owner-Operator Ban, declares that any drayage truck operator is an employee of the company who arranges for or engages their services. The practical effect of this bill is to ban all independent contractors, also known as owner-operators, from California ports and will negatively impact activity at West Coast ports, say opponents.

The bill was introduced in February, but this week, the Assembly Labor and Employment Committee voted 5-1 to advance a bill to the full Assembly. The bill could be considered on the Assembly floor as soon as today. If approved there, AB950 would advance to the Senate for further consideration.

Assembly Speaker John Perez, D-Los Angeles, a former labor organizer, is one of the sponsors of the bill. Supporters say drivers at California's ports and intermodal rail yards are being misclassified as independent contractors rather than employees.

The bill contends that nonemployee truck operators cannot freely report many safety concerns without fear of retaliation, that nonemployee truck operators typically lack workers' compensation insurance, and that drayage driving involves a greater degree of public health and safety and worker health and safety concerns than other types of commercial driving due to the heavy weights, large loads, and frequent trips through neighborhoods, which are adversely impacted by truck pollution.

"Today, thousands of independent owner-operators provide critical goods movement services at each of California's ports," says a letter sent to California State Assembly members this week by opponents of the bill. "Owner-operators provide necessary capacity and flexibility to meet the varying demands of port drayage. To impose an employee driver mandate on the companies who arrange for drayage services is simply not consistent with reality of port activity and places California ports at another financial disadvantage to other North American ports."

The letter notes that concerns about improper misclassification can be addressed using existing and established enforcement mechanisms.

An anticipated drayage truck shortage in the coming years will be exacerbated by mandates like AB 950 that force a specific business model that results in higher, uncompetitive costs, the letter says. According to a report by Dr. John Husing on the employee mandate in the San Pedro Bay ports, the cost of drayage would increase 167 percent over the current use of owner-operators. A second report by the Boston Consulting Group on the same mandate stated that annual drayage costs would rise by at least $500 million.

Opponents also contend that the employee driver mandate proposed in AB 950 is preempted by federal law. Federal law prohibits states from taking actions that impact the rates, routes, or services of trucking companies absent qualification under a specified "safety exception." In August 2010, the U.S. District Court for the Central District of California reaffirmed its earlier finding in a case regarding the Port of Los Angeles Clean Trucks Program that the employee mandate does not meet the safety exception and is preempted by federal law. The same facts that led the District and Ninth Circuit Courts to reject that employee mandate would apply to AB 950, opponents say.

Groups opposing the bill include the California Trucking Association, the Owner Operator Independent Drivers Association, the shipper group Nasstrac, the California Chamber of Commerce, American Trucking Associations, the Intermodal Carriers Conference, the national Retail Federation, the Harbor Trucking Association and many others.


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