California Governor Jerry Brown (D) has signed into law a bill that aims to hold retailers partly accountable for working with trucking companies that have a record of labor violations.
The bill, SB 1402, makes retailers jointly liable for violations of state labor and employment laws when they hire trucking companies with unpaid final judgements for failure to pay truck driver wages, imposing unlawful expenses on employees, failure to remit payroll taxes or to provide worker’s compensation insurance, misclassifying employees as independent contractors, and other labor law violations.
“Governor Brown’s signing of SB 1402 will allow port truck drivers to share in the benefits from California’s leading role in global trade,” said California State Senator Ricardo Lara (D), whose district includes the Port of Long Beach. “Retailers using their power to end exploitation and restore good jobs for workers at our ports will mean port truckers are left behind no more.”
Lara introduced the bill earlier this year, proposing it as a way for the state to curb a practice at the ports of Los Angeles and Long Beach that the labor department has repeatedly deemed a misclassification of truck drivers as independent contractors. The California Division of Labor standards Enforcement has won more than $45 million on behalf of 400 truck drivers in cases involving driver misclassification.
Under SB 1402, the Division of Labor Standards Enforcement will create a list of port trucking companies that have failed to pay final judgments. Retailers hiring port trucking companies on that list would be liable for future state labor and employment law violations incurred by these companies.
Harbor Trucking Association, a group that represents port trucking companies and other drayage stakeholders on the West Coast, opposes the new law, despite working with lawmakers to address concerns. In a statement to Heavy Duty Trucking, HTA CEO Weston LaBar said that the bill could hurt business in the state and may set the stage for excessive regulation in the future.
“The HTA appreciates the author’s office working with industry to remove many of the initial concerns and clarifying certain provisions,” said LaBar. “However, we were unable to remove our opposition for two main reasons. First, we feel that this bill will cause shippers to pursue cargo gateways outside of California solely on the unknown unintended consequences and mere perception of being anti-competitive. Second, because the California State Legislature routinely takes reasonable legislative measures and over time turns them into unmanageable over-regulation, with a series of trailer bills that attach new unreasonable provisions to the initial legislation.”
Proponents of the new law believe that truck drivers who are classified as independent contractors and not employees are not truly independent from the companies for which they contract. Therefore, it is contended that by misclassifying these drivers as independent, they are denying them proper wages and benefits. Other alleged practices by these companies include placing drivers in truck leases that leave them with little take home pay and no ability to work for other companies.