BILL ANALYSIS
SENATE TRANSPORTATION & HOUSING COMMITTEE BILL NO: Ab 145
SENATOR ALAN LOWENTHAL, CHAIRMAN AUTHOR: de leon
VERSION: 6/1/10
Analysis by: Carrie Cornwell FISCAL: yes
Hearing date: June 15, 2010
SUBJECT:
Dump trucks: brokers
DESCRIPTION:
This bill requires that a broker of construction trucking
services post a bond to ensure payment to a dump truck operator
whose services he or she is brokering and that the broker
receive certification of the dump trucker operator's permit to
operate.
ANALYSIS:
Motor carriers of property transport property, other than
household goods, for hire. The Department of Motor Vehicles
(DMV) and the California Highway Patrol (CHP) regulate those
motor carriers that operate within California, and existing law
requires that a motor carrier have a valid motor carrier permit
of property to operate in this state.
DMV issues motor carrier permits subject to the motor carrier
paying the required fee, providing proof of financial
responsibility (e.g., liability insurance), certifying that it
has workers' compensation coverage for its employees, securing a
CHP inspection, and obtaining a carrier identification number
from CHP. A motor carrier must renew this permit every year.
No person, including another motor carrier, may engage the
services of a motor carrier of property, unless that motor
carrier holds a valid permit. In instances in which a motor
carrier enlists the service of another motor carrier, the
contracted motor carrier must certify in manner prescribed by
CHP that it possesses a permit to operate and must immediately
notify the contracting motor carrier to whom it is contracted if
AB 145 (DE LEON) Page 2
DMV suspends or revokes the permit.
Existing law defines a "broker of construction trucking
services" (broker) as any person, excluding a licensed
contractor, who arranges services from and is responsible for
paying an independent contractor motor carrier of property in
dump truck equipment (dump truck operator). Existing law
requires that a broker pay a dump truck operator by the 25th day
following the last day of the month in which the dump truck
provided services, provided that the dump truck operator
documents the charges, the dump truck operator is properly
permitted, and no dispute exists. If the broker does not pay in
a timely fashion, state law prescribes a penalty of two percent
per month of withheld charges.
This bill :
1.Prohibits a broker from contracting with or engaging the
services of any motor carrier of property unless that
contracted motor carrier certifies in a manner prescribed by
CHP that it possesses a valid permit to operate and requires
that the contracted motor carrier immediately notify the
broker if DMV suspends or revokes the motor carrier's permit.
2.Requires a broker to secure a surety bond of not less the
$15,000 to ensure payment of the claims of a contracted dump
truck operator, if the broker fails to pay the dump truck
operator by the 25th day of the month following when services
were rendered. A broker who does not secure this surety bond
shall be guilty of a misdemeanor and subject to a fine of up
to $5,000.
3.Provides that in a civil action that a dump truck operator
brings against a broker with whom it contracted during any
period of time in which the broker did not maintain a surety
bond, the failure to have the bond shall create a rebuttable
presumption that the broker failed to pay the motor carrier
the amount due, thus favoring the dump truck operator in any
civil law suit.
COMMENTS:
1.Purpose . The sponsor notes that in recent years an increasing
number of construction trucking brokers have engaged in
unscrupulous practices toward the dump truck operators whose
AB 145 (DE LEON) Page 3
services they broker. The sponsor reports that the practices
include delayed or lack of complete payment, filing bankruptcy
or fleeing California to avoid paying amounts due, encouraging
noncompliance with safety requirements, and coercing dump
truck owners into accepting lesser payment amounts after the
dump truck owner has provided services.
The author introduced this bill to assist in the timely
payment of dump truck operators who are hired by construction
trucking brokers. Because these dump trucker owners are not
subcontractors on the construction job, they do not have lien
rights and have little recourse when they are underpaid or not
paid at all. This bill requires brokers of construction
trucking services to obtain a $15,000 surety bond to ensure
they are adequately solvent to meet their contractual
obligations, and it also creates a rebuttable presumption in
favor of the dump truck operator if there is a civil action
filed due to lack of payment.
In addition, the bill addresses a loophole in existing law
under which motor carriers of property must obtain written
certification that their subcontractors hold valid motor
carrier permits. This requirement does not, however, apply to
brokers of construction trucking services if they do not own
dump trucks or are not acting in a motor carrier capacity when
brokering these services. The author introduced this bill to
address this loophole by extending the same mandate to
construction trucking brokers. Proponents assert that holding
brokers to the exact same standards as motor carriers is
important for public safety as it assures that dump trucks are
permitted and have passed the related inspection.
2.Double penalty ? Under this bill, a broker who fails to possess
a surety bond is both guilty of a misdemeanor penalty and
faces in a civil lawsuit a rebuttable presumption that the
broker did not pay the dump truck owner for work performed. (A
rebuttable presumption is an assumption that is made in the
law that will stand as a fact unless someone [the broker]
comes forward in court to contest it and prove otherwise.) The
proponents note several other instances in law where a person
can be guilty of a crime and then the evidence of guilt
constitutes a rebuttable presumption of responsibility in a
related civil trial. It appears as though this "double
penalty" is appropriate for this industry.
Assembly Votes:
AB 145 (DE LEON) Page 4
Floor: 79 - 0
Appr: 16 - 0
Trans: 14 - 0
POSITIONS: (Communicated to the Committee before noon on
Wednesday,
June 9, 2010)
SUPPORT: California Dump Truck Association (sponsor)
OPPOSED: None received.