New California Law: What You Need To Know About Port Drayage Services. You Could be Affected.

More than 40 percent of United States shipping-container traffic flows through the Ports of Los Angeles / Long Beach – and the drivers who perform these tasks are an important part in the global supply chain. Lack of compliance with regards to labor laws in the sector represents a major risk to the carriers / customers who employ them.

New California Law: What You Need To Know About Port Drayage Services. You Could be Affected.

If any of your cargo flows through these ports, and your business is reliant on drayage services – this news piece could be very interesting for you.

On September 22, 2018, Governor J. Brown signed the California Senate Bill  (“SB 1402”) , which went into effect January 1, 2019, adding significant regulation and liability for port drayage customers in California.

Per SB 1402, “’Customer’ means a business entity, regardless of its form, that engages or uses a port drayage motor carrier to perform port drayage services on the customer’s behalf, whether the customer directly engages or uses a port drayage motor carrier or indirectly engages or uses a port drayage motor carrier through the use of an agent, including, but not limited to, a freight forwarder, motor transportation broker, ocean carrier, or other motor carrier.”

Why the law was passed?

The intent of this law is to improve compliance with Federal and State labor employment standards. Labor violations which include failure to pay remit payroll taxes, and failure to provide workers’ compensation insurance are well known issues.

The California Legislature believes that holding customers of trucking companies jointly liable for labor law violations, especially when the company has a documented history with unsatisfied judgements for labor law violations, will help prevent drivers from being exploited further. One way the legislature is holding companies accountable is by publishing and maintaining a list of trucking companies on the DLSE website. 

Nationwide, according to the National Employment Law Project “as much as $485 million in worker’s compensation premiums and $60 million in federal taxes go unpaid in the drayage industry. In addition, numerous other violations have been found to be endemic within the industry.

Port drayage carriers may be liable for

  • Unlawful deductions by the motor carrier from wages
  • Unpaid minimum, regular, or premium wages by the motor carrier
  • Out-of-pocket business expenses incurred by commercial drivers that are not reimbursed by the motor carrier
  • Failure to provide workers compensation insurance or misclassifying employees as independent contractors
  • Civil penalties for the failure to secure valid workers’ compensation coverage and
  • Damages or penalties, as provided for by law, that are due to the commercial driver or the state based upon the failure of the motor carrier to pay wages owed

What list?

The California Division of Labor Standards Enforcement (DLSE) posted a list of port drayage companies  on the DLSE’s website that have unsatisfied final court judgments, tax assessments or tax liens (Labor Code Section 2810.4). 

Heads up!

Any business entity that directly or indirectly engages California port drayage carriers should take several steps to reduce their risk under the new law:

  1. Review their own compliance with state and Federal labor laws
  2. Review the list of drayage carriers who have violated the law at the DLSE website prior to contracting with a drayage carrier
  3. Check the DLSE website for updates regarding the law and its enforcement

For more information about this matter, please contact your local  DSV Air & Sea representative

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