BILL ANALYSIS AB 145 Page 1 CONCURRENCE IN SENATE AMENDMENTS AB 145 (De Leon) As Amended August 3, 2010 Majority vote ----------------------------------------------------------------- |ASSEMBLY: |79-0 |(May 4, 2009) |SENATE: |34-0 |(August 9, | | | | | | |2010) | ----------------------------------------------------------------- Original Committee Reference: TRANS. SUMMARY : Prohibits a construction transportation broker from furnishing construction transportation services to a construction project unless it has secured a security bond of at least $15,000 or from contracting or engaging the services of a motor carrier of property that is out of compliance with existing law. The Senate amendments add the provisions that: 1)Require a broker to secure a surety bond of at least $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. 2)Provide 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. EXISTING LAW : 1)Prohibits a motor carrier from operating on the highway unless it complies with systematic inspection and maintenance at least every 90 days. 2)Requires a motor carrier to register its carrier identification number with the Department of Motor Vehicles (DMV). AB 145 Page 2 3)Prohibits a motor carrier permit from being granted to any motor carrier of property until proof of insurance, workers' compensation coverage, and payment of required fees is provided. 4)Prohibits a motor carrier of property from subcontracting with or engaging the services of a motor carrier unless that motor carrier holds a valid permit issued by DMV. 5)Requires a contracted motor carrier to provide notification to the person with whom they are under contract, if its permit has been suspended or revoked. AS PASSED BY THE ASSEMBLY , this bill was substantially similar to the version passed by the Senate. FISCAL EFFECT : Unknown COMMENTS : Under existing law, a motor carrier is prohibited from subcontracting with or engaging the services of another motor carrier until the contracted motor carrier provides certification of compliance with existing law and regulations. A contracted motor carrier is required to provide notification to the person with whom they are under contract if its permit has been suspended or revoked. Every motor carrier of property must also obtain a carrier identification number and hold a valid motor carrier permit from DMV. Adequate liability insurance, workers' compensation coverage, and completion of controlled substance and alcohol testing program are also required. Currently, a construction transportation broker can subcontract or engage the services of a motor carrier without having to verify that the subcontractor complies with all the requirements of existing law, as is required of a motor carrier when they subcontract work. This bill seeks to address that gap in current law by requiring that construction truck brokers also verify that a subcontractor complies with existing law, as is required of a motor carrier. The author of this bill points out that an increasing trend is taking place in the motor carrier industry that may be jeopardizing road safety. A growing number of construction AB 145 Page 3 truck brokers that do not have a motor carrier permit or may not be acting as a motor carrier when they are brokering or subcontracting work are not verifying that a subcontractor has complied with existing law requirements. The sponsor of this bill, the California Dump Truck Owners Association, adds that the "emerging growth of construction truck brokers subcontracting work without having to legally abide by existing law, clearly undermines the intent of statute in ensuring safety and proper licensure." The sponsor also notes that in recent years an increasing number of construction trucking brokers have engaged in unscrupulous practices that include delayed or lack of complete payment, filing bankruptcy or fleeing California to avoid paying amounts due, encouraging non-compliance with safety requirements, and coercing dump truck owners into accepting lesser payment amounts after the dump truck owner has provided services. This bill is intended to assist in encouraging 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. Analysis Prepared by : Janet Dawson / TRANS. / (916) 319-2093 FN: 0005572