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American ShipperIntermodalShippingTrade and ComplianceWarehouse

Port trucking reform bill targets shippers

California State Sen. Ricardo Lara’s proposed legislation would “exert pressure across the supply chain to protect drayage drivers from further exploitation.”

   California State Sen. Ricardo Lara (D-33) said Wednesday that legislation (SB 1402) he has introduced “makes retailers jointly liable for violations of state labor and employment laws when they hire port trucking companies with unpaid final judgments for failure to pay wages, imposing unlawful expenses on employees, failure to remit payroll taxes or provide worker’s compensation insurance, misclassifying employees and other violations.”
   While Lara highlighted the effect of the legislation on retailers, the bill would apply to all shippers that are customers of drayage companies, with limited exceptions for those employing fewer than 25 workers and local and state governments.
   Lara, whose district includes the Port of Long Beach, said his goal was “to end the rampant exploitation of truck drivers who haul cargo from California’s ports. More than a decade of court rulings, media stories and independent reports have revealed extensive labor violations in the port trucking industry, which employs an estimated 25,000 drivers.”
   The bill says that a law passed by the California Legislature in 2014 that went into effect in 2015 (AB 1897) made it possible for business entities that are provided workers from subcontractors to “be jointly liable for the nonpayment of wages and failure to provide unemployment insurance by the subcontractor” and points to a California Supreme Court ruling in S. G. Borello & Sons, Inc. v. Department of Industrial Relations (1989) 48 Cal.3d 341, saying it “established a test for whether employers are manipulating independent contractor rules. Port drayage customers can apply the Borello test to ensure that trucking companies they hire are not engaging in exploitative labor practices and misclassification of workers.
   “Holding customers of trucking companies jointly liable for future labor law violations by port drayage motor carriers who they engage, where the customer has received advance notice of their record of unsatisfied judgments for labor law violations, will exert pressure across the supply chain to protect drayage drivers from further exploitation,” the bill says.
   Lara’s legislation calls California’s port drayage drivers “the last American sharecroppers, held in debt servitude and working dangerously long hours for little pay.”
   “Port truckers are driving the global economy and delivering for the biggest brands, but they can barely afford to buy clothes for their families,” said Lara in a press release. “These used to be good jobs, and they can be good jobs again if retailers join us in improving labor conditions here in California and putting dignity back in the driver’s seat.”
   Lara said his bill will create a list of trucking companies that have failed to pay final judgments. Customers hiring port trucking companies with final judgments would be jointly and severally liable for future state labor and employment law violations by these companies.
   The bill states the “joint and several liability provided by this section shall not apply to employees covered by a bona fide collective bargaining agreement, if the agreement expressly provides for wages, hours of work, working conditions, a process to resolve disputes concerning nonpayment of wages, expenses, damages and penalties.”
   The Teamsters endorsed the approach of targeting shippers.
   “Until the major retailers like Amazon, Sony and Home Depot are held jointly liable for the unconscionable and systemic lawbreaking by their harbor trucking contractors, we will not be able to solve the problem of having thousands of immigrant drivers being treated as ‘indentured servants’ by their employers here at the Ports of Los Angeles and Long Beach,” said Randy Cammack, president of Teamsters Joint Council 42.
   Cammack added that the bill is “paving the way for port trucker jobs to become good jobs.”
   Weston LaBar, the chief executive officer  of the Harbor Trucking Association, which represents drayage companies in California said it is closely looking at Lara’s proposal.
   “On the surface we find it to be quite misguided. We think it could curb the amount of cargo that may come in and out of California’s ports,” he said. “It shows a misunderstanding of the port drayage industry and the overall international trade and cargo industries.”
   LaBar said Lara has not sat down with drayage companies to see what the negative impacts of the legislation might be and its impact on the market or the HTA. and said “he has avoided us,” he said.
   The bill was “put together hastily and with one lens” and narrowly focused to “accomplish political favors for groups that support him” including the Teamsters, LaBar charged.
   Lara is running for Insurance Commissioner.
   “That’s misguided when you are representing the state of California,” added LaBar. “There is a responsibility to meet with all parties and I don’t feel that has been accomplished.”
   Tyler Rushforth, executive director of the American Trucking Association’s Intermodal Motor Carriers Conference, said that he will have to examine the bill closely but thought the legislation “is a stretch.”
   Jon Gold, vice president of supply chain and customs policy at the National Retail Federation, said, “I’m not able to provide a comment at this time. We have not had an opportunity to review the bill or discuss it with our members yet.”
   It’s not clear yet whether the bill will be supported by the California Legislature, but the mayors representing the state’s three largest ports — Long Beach Mayor Robert Garcia, Los Angeles Mayor Eric Garcetti and Oakland Mayor Libby Schaaf — provided statements to Lara in support of his bill.
   Lara said the California labor commissioner’s office has won in excess of $45 million in judgments for more than 400 drivers and that no higher court has overturned any of these awards on appeal.
   “Drayage drivers at California ports are routinely misclassified as independent contractors when they in fact work as employees under California and federal labor laws, contributing to wage theft and leaving drivers in a cycle of poverty,” he said.
   The bill says, “A common practice is for a company that owns port drayage trucks to enter into a sublease agreement with drivers, with the promise that they will own the truck someday. Drivers can be terminated at any time and lose the money they thought they were paying toward the truck. Companies deduct money from driver paychecks for business expenses that lead to poverty wages or to the driver owing the company money.”
   Lara also said port drayage drivers are a largely immigrant workforce and particularly vulnerable to labor exploitation.
   “The Ports of Los Angeles and Long Beach attempted to address misclassification of drayage drivers in 2008 through their Clean Air Action Plan by requiring drivers to be classified as employees,” Lara’s bill says, noting the 9th Circuit Court of Appeals struck down that requirement.
   Lara’s bill defines the port drayage industry, port trucking industry, and port drayage services broadly as “the movement within California of freight containers or cargo by a commercial motor vehicle to or from the port terminals and intermodal terminals, railways, border points, warehouses, retail establishments, and other distribution centers.”
   It exempts “employees performing the intra-port or inter-port movement of cargo or cargo handling equipment under the control of their employers.”
   That provision could represent an effort to steer clear of the issue of whether the work of draying containers trucks from marine terminals to off-dock intermodal rail yards like the proposed Southern California International Gateway (SCIG) or dray-off yards like the Harbor Performance Enhancement Center being proposed in the Port of Los Angeles is under the jurisdiction of the International Longshore and Warehouse Union or truckers like those the Teamsters are trying to organize.

Chris Dupin

Chris Dupin has written about trade and transportation and other business subjects for a variety of publications before joining American Shipper and Freightwaves.