BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | SB 1092|
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UNFINISHED BUSINESS
Bill No: SB 1092
Author: De León (D)
Amended: 6/13/12
Vote: 21
SENATE TRANSPORTATION & HOUSING COMM : 9-0, 04/10/12
AYES: DeSaulnier, Gaines, Harman, Kehoe, Lowenthal,
Pavley, Rubio, Simitian, Wyland
SENATE APPROPRIATIONS COMMITTEE : Senate Rule 28.8
SENATE FLOOR : 36-0, 5/3/12
AYES: Alquist, Berryhill, Blakeslee, Calderon, Cannella,
Corbett, Correa, De León, DeSaulnier, Dutton, Emmerson,
Evans, Fuller, Gaines, Hancock, Harman, Hernandez, Huff,
Kehoe, La Malfa, Leno, Lieu, Liu, Lowenthal, Negrete
McLeod, Pavley, Price, Rubio, Steinberg, Strickland,
Vargas, Walters, Wolk, Wright, Wyland, Yee
NO VOTE RECORDED: Anderson, Padilla, Runner, Simitian
ASSEMBLY FLOOR : 79-0, 8/16/12 (Consent) - See last page
for vote
SUBJECT : Brokers of construction trucking services:
surety bonds
SOURCE : California Construction Trucking Association
California Teamsters
DIGEST : This bill requires that brokers of construction
CONTINUED
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trucking services provide written evidence to specified
parties and in a specified manner of possession of a valid
surety bond.
Assembly Amendments provide that a third-party nonprofit
organization is not liable for any damages caused by
publishing erroneous or outdated surety bond information
provided by a broker.
ANALYSIS : A broker of construction trucking services
(broker) is someone who arranges services from and is
responsible for paying an independent contractor who
provides dump truck services (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 between the two over the charges. If the broker
does not pay in a timely fashion, state law prescribes a
penalty of two percent per month of withheld charges.
Since 2011, existing law has required a broker to secure a
surety bond of not less than $15,000 to ensure that a
contracted dump truck operator receives payment, even 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 is guilty of a
misdemeanor and subject to a fine of up to $5,000.
This bill:
1.Requires a broker annually to provide written evidence of
a valid surety bond, as defined, to a third-party
nonprofit organization within the industry that regularly
maintains a published database of bonded brokers;
alternatively, the broker may post a current copy of the
surety bond on his or her own Internet web site.
2.If the surety bond is cancelled or expires, requires the
broker either to notify the third-party nonprofit
organization or to remove the bond from his or her own
Internet web site.
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3.Specifically provides that a third-party nonprofit
organization is not liable for any damages caused by
publishing erroneous or outdated surety bond information
provided by a broker and prohibits a third-party
nonprofit organization from charging a broker to post
evidence of a valid surety bond or to limit the posting
of bonds only to the organization's members.
4.Prohibits a broker from hiring, or otherwise engaging the
services of, a motor carrier of property to provide
construction transportation services unless the broker
provides written evidence of his or her valid surety bond
to any person that uses the broker's services or is hired
by the broker as a motor carrier of property.
Comments
The author introduced this bill at the request of the
California Construction Trucking Association (CCTA), which
represents construction-related trucking companies that
operate fleets of dump trucks. In 2010, the author and
sponsor of the bill teamed up on AB 145 (DeLeon), Chapter
429, Statutes of 2010, in response to reports from dump
truck operators that construction trucking brokers were
engaging in unscrupulous practices toward the dump truck
operators whose services they broker. AB 145 requires
brokers of construction trucking services to secure a
surety of bond of $15,000 to ensure payment of contracted
dump truck operators.
CCTA now reports that some unscrupulous, unprofessional
brokers are shirking their bonding responsibilities under
AB 145. Specifically, these brokers have either failed to
obtain a bond or have refused to provide bond information
to the dump truck operators whose services they broker. AB
145 included no affirmative obligation that brokers notify
others of the bond information. This bill addresses that
problem by adding notification requirements to the existing
broker bond. By creating easier access to a copy of the
bond, a contracted dump truck owner will know up front if
in fact he or she is contracting with a bonded broker.
Moreover, if the dump truck operator has already completed
the work for the broker and has not been paid, he or she
can easily access the bond information in order to file a
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claim on the bond.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: Yes
SUPPORT : (Verified 8/16/12)
California Construction Trucking Association (co-source)
California Teamsters (co-source)
Southern California Contractors Association
ARGUMENTS IN SUPPORT : According to the CCTA:
Since January 1, 2011, the new broker bond law has had
considerable success in cleaning up the abuses within
construction trucking industry. While CCTA has no
ability to determine exact figures, it is our
understanding that many reputable construction
trucking brokers have obtained a surety bond as a
result of AB 145.
However, CCTA has been notified by a number of its
member owner-operators that some unscrupulous,
unprofessional brokers have continued to shirk their
bonding responsibilities under the law. Specifically,
these brokers have either failed to obtain a bond at
all, or have refused to provide bond information to
their subhaulers as there is currently no affirmative
obligation to notify others of the bond information.
Without a copy, subhaulers do not have the requisite
information to file on a broker's bond and a broker
can continue to refuse to pay their obligations
without repercussions.
This bill, SB 1092 by Senator De Leon is designed to
resolve this problem by creating transparency and
adding notification requirements to the existing
broker bond. By creating easier access to a copy of
the bond, a subhauler will know up front if in fact
they are contracting with a bonded broker. Moreover,
if they have already completed the work for the broker
and have not been paid, they can easily access the
bond information if they choose to file on the bond.
This is accomplished through a series of strategic
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points of access for a subhauler including from the
broker him- or herself, online from a 3rd party
organization or broker's website, or from a person
that hires the broker. This would provide for
assurance of payments.
ASSEMBLY FLOOR : 79-0, 08/16/12
AYES: Achadjian, Alejo, Allen, Ammiano, Atkins, Beall, Bill
Berryhill, Block, Blumenfield, Bonilla, Bradford,
Brownley, Buchanan, Butler, Charles Calderon, Campos,
Carter, Cedillo, Chesbro, Conway, Cook, Davis, Dickinson,
Donnelly, Eng, Feuer, Fletcher, Fong, Fuentes, Furutani,
Beth Gaines, Galgiani, Garrick, Gatto, Gordon, Gorell,
Grove, Hagman, Halderman, Hall, Harkey, Hayashi, Roger
Hernández, Hill, Huber, Hueso, Huffman, Jeffries, Jones,
Knight, Logue, Bonnie Lowenthal, Ma, Mansoor, Mendoza,
Miller, Mitchell, Monning, Morrell, Nestande, Nielsen,
Norby, Olsen, Pan, Perea, V. Manuel Pérez, Portantino,
Silva, Skinner, Smyth, Solorio, Swanson, Torres, Valadao,
Wagner, Wieckowski, Williams, Yamada, John A. Pérez
NO VOTE RECORDED: Lara
JJA:n 8/17/12 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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