The California Senate recently voted to advance a bill that would deter shippers from utilizing trucking services from ocean ports to other destinations that engage in the “rampant exploitation” of truck drivers. Approximately 25,000 truck drivers currently move goods between the 11 ports in California and various inland distribution centers and warehouses, according an analysis of the bill.
The port of Los Angeles alone ranks as the number one container port in both the United States and North America. When combined with the fellow “mega port” of Long Beach, the San Pedro Bay port complex is formed. The two ports handle more containers per ship call than any other port complex in the world and rank as the world’s 9th busiest container port complex. When combined with California’s remaining “mega port” in Oakland, the three ports process more than 40 percent of U.S. shipping-container traffic.
With California being a leader in the United States for imports, it would be logical to assume that the state is also a leader in the port truck driving industry. However, an investigation last year by USA Today found that a large number of port trucking companies in Southern California have been partaking in lease agreement schemes that force drivers to take on debt they can not afford and essentially work for free.
Under a so-called “lease-purchase agreement,” a motor carrier will lease a truck to an independent driver with promises of fair compensation, ownership, and “freedom” from traditional employer-employee requirements. In reality, drivers are improperly classified as independent contractors, are tricked into financing trucks that they can not afford and end up owing so much money to the offending motor carriers that it is almost akin to indentured servitude.
This all-too-common scenario does not sit well with Senator Ricardo Lara of Bell Gardens, who said his bill could “clean up our port truck driving industry once and for all.” The bill, S.B. 1402, would require the issuance of joint and several liability for customers who contract with port drayage motor carriers that have failed to pay final judgments regarding unpaid wages, damages, expenses, penalties and/or workers’ compensation liability. Retailers that hire port trucking companies with unsatisfied judgments would, in turn, be liable for future state labor and employment law violations by these companies.
The Owner-Operator Independent Drivers Association supports this legislation, and echoes the opinion that many of California’s port drayage drivers are mistreated. The association believe that the bill can address concerns about lease-purchase agreements without jeopardizing legitimate business agreements between motor carriers and leased owner-operators. The bill has been referred to the Assembly Labor and Enforcement, and Judiciary committees.
About American Team Managers Insurance Services
Founded in 1998 by Chris C. Michaels, American Team Managers Insurance Services (ATM) has provided wholesale and MGA services to more than 5,000 independent insurance agents throughout the United States. Our goal is to establish close, long-term relationships with our agency partners and insurance carriers and provide competitive products for the Exclusive and Non-Exclusive markets that we serve. For more information on our products and services, give us a call at (714) 414-1200 to speak to a representative.