Beware of the company you keep…At least in California
Starting January 1, 2019, persons using California port drayage commercial drivers may unknowingly assume employment liabilities for those drivers. Senate Bill 1402 is now law, and it makes customers of such services potentially liable for unpaid wages, employment taxes, workers’ compensation insurance, or other liabilities associated with the misclassification of port drayage drivers as independent contractors. In an effort to clean up poor employment practices involving port drayage drivers, and failed attempts to make all such drayage drivers employees (and not independent contractors), SB 1402 makes every customer of port drayage transportation services, jointly and severally liable for a motor carrier’s failure to properly pay and insure such drivers. If your motor carrier uses port drayage drivers who are covered by a collective bargaining agreement, you will not be subject to the liabilities imposed by this new law. If, however, this is not the case, possible measures to address the potential liability are as follows:
- 1. Re-evaluate whether you need to use California ports, and when possible use ports in other states or in Vancouver;
- 2. Terminate agreements with and stop using port drayage drivers hired by motor carriers listed on the California Division of Labor Standards Enforcement (DLSE) website for unsatisfied final court judgments, tax assessments or tax liens. Liability begins once a motor carrier is listed on the site.
- 3. In agreements covering port drayage services, contractually (a) prohibit subcontracting and require that all such services be provided by the motor carrier’s employees, (b) require compliance with all applicable laws including laws pertaining to employment compensation, benefits and workers’ compensation; (c) require certificates of insurance evidencing that the motor carrier has obtained workers’ compensation insurance for all employees; (d) require that the motor carrier immediately share any notices it receives from the DLSE, as notice is to be given to the motor carrier before it is included on the DLSE website; (e) require to the fullest extent permitted by law that the motor carrier indemnify you for any liabilities, judgments, costs and expenses (including attorneys’ fees) arising from its or any of its subcontractor’s payment or non-payment of wages, benefits, taxes, workers compensation premiums and or any costs associated with a misclassification claim or demand; and (f) require prior notification and disclosure of all motor carriers used to provide port drayage services before any such services are engaged.
- 4. Set up a process to monthly check the DLSE website to assure motor carriers with you engage for services are not included on the lists pertaining to unsatisfied final court judgments, tax assessments, or tax liens. The site is to be updated on the 5th of each month, so regular attempts to review the site are important.
As of this date there are no regulations to add greater detail to the requirements and process for compliance. We anticipate rapid development of the regulations and the DLSE website. Please feel free to contact us for additional information and updates.
Angela has practiced in a broad range of areas including employment law, labor law, legislative, general business, business litigation, premise liability defense, real estate litigation, liquor regulation, corporate, commercial transactions, cargo, and commercial real estate. Recognized by attorneys across the country as practicing with the highest possible rating in both legal ability and ethical standards, Angela has been awarded the Martindale-Hubbell® AV preeminent™ Award since 2010.
Angela graduated from Capital University Law School in 1988. She earned her undergraduate degree in Nursing and Health from the University of Cincinnati. She is licensed in all Ohio courts, U.S. District Court for the Southern District of Ohio, and the U.S. Court of Appeals, Sixth Circuit. Read more