Logistics Weekly

Proposed California Law Has Potential Major Impacts on 3PL Hiring, Liability

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The California State Assembly is currently considering a bill that would have major impacts on every 3PL who books drayage at a California port using independent owner-operator port truckers. Under this new bill, the California Division of Labor Standards Enforcement would post on its website the essential information of all port drayage motor carriers who have any unresolved court or Department of Labor judgments related to a broad variety of wage-and-hour concerns. The port drayage motor carrier would be required to inform any company retaining its service of this website notification, and any company that hires that port drayage motor carrier would then be held jointly and severally liable alongside the motor carrier for future unpaid wages and penalties that result from those wage-and-hour cases against the motor carrier.

Obviously, this would create enormous liability concerns for the 3PL industry that facilitates the movement of millions of TEUs of containerized cargo every year. This harmful bill is a new effort by the State of California to address worker classification of port truckers. As a general issue, 3PLs have already struggled with many state governments seeking new revenue through investigations and penalties related to 3PL relationships with independent owner-operator motor carriers and independent sales representatives. These misclassification investigations, as well as U.S. Department of Labor investigations, can take months or years, and cost thousands of dollars even if the 3PL successfully avoids penalties (which can themselves bear significant costs).

TIA works hard to ensure that members have the tools they need to protect their business. The Association strongly encourages members to not issue 1099s to motor carriers (taking advantage of a broad exemption in tax law for the movement of freight, and reducing exposure to contractor misclassification issues). TIA also encourages members to secure signed workers compensation waivers from all subcontractors, which again helps to protect the TIA member from unnecessary liability. To access those documents, or if you are concerned about the impacts of this new regulation, please contact advocacy@tianet.org.


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