Amended in Senate August 31, 2015

Amended in Senate June 25, 2015

Amended in Assembly June 1, 2015

California Legislature—2015–16 Regular Session

Assembly Bill No. 621

Introduced by Assembly Member Roger Hernández

February 24, 2015

An act to add Section 2750.8 to the Labor Code, begin insert and to add Article 8.6 (commencing with Section 1160) to Chapter 4 of Part 1 of Division 1 of the Unemployment Insurance Code, end insert relating to employment.

LEGISLATIVE COUNSEL’S DIGEST

AB 621, as amended, Roger Hernández. Drayage truck begin delete operators. end delete begin insert operators: Motor Carrier Employer Amnesty Program. end insert

Existing law governs the relationship between an employer and an employee with regard to hiring, promotion, discipline, wages and hours, working conditions, and administrative and judicial remedies. Existing law sets forth guidelines for determining whether a person who performs work for another pursuant to a contract is an employee or an independent contractor. Existing law authorizes the Labor Commissioner to investigate employee complaints and to conduct a hearing in any action to recover wages, penalties, and other demands for compensation.

This bill begin delete would, end delete begin insert would establish the Motor Carrier Employer Amnesty Program pursuant to which, end insert notwithstanding any law, begin delete relieve end delete a motor carrier performing drayage services begin insert may be relieved end insert of liability for statutory or civil penalties associated with misclassification of commercial drivers as independent contractors if the motor carrier enters into a settlement agreement with the Labor Commissioner begin insert , with the consent of the Employment Development Department, end insert prior to January 1, 2017, whereby the motor carrier agrees to convert all of its commercial drivers to employees, and the settlement agreement contains prescribed components, including, but not limited to, an agreement by the motor carrier to pay all wages, benefits, and taxes owed, if any. The bill would permit a settlement agreement to contain a provision authorizing the Labor Commissioner begin insert and the Employment Development Department end insert to recover from the begin insert motor end insert carrier begin delete specified costs associated with the settlement agreement. end delete begin insert the reasonable, actual costs of the Labor Commissioner and the Employment Development Department for their respective review, approval, and compliance monitoring of that settlement agreement. end insert

Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: no.

The people of the State of California do enact as follows:

SECTION 1.  

Section 2750.8 is added to the Labor Code, to
read:

2750.8.  

(a)  begin delete Notwithstanding end delete begin insert The Labor Commissioner and
the Department of Employment Development shall administer the
Motor Carrier Employer Amnesty Program pursuant to which,
notwithstanding end insert any law, begin delete a end delete begin insert an eligible end insert motor carrier performing
drayage services at begin delete one or more ports in this state end delete begin insert any port end insert shall
be relieved of liability for statutory or civil penalties associated
with begin insert the end insert misclassification of commercial drivers as independent
begin delete contractors end delete begin insert contractors, as provided by this program, end insert if the begin insert eligible end insert
motor carrier begin delete enters into end delete begin insert executes end insert a settlement agreement with the
Labor Commissioner whereby the begin insert eligible end insert motor carrier agrees begin delete to
convert end delete begin insert to, among other things, properly classify end insert all of its
commercial drivers begin delete to end delete begin insert as end insert employees.

begin insert

(b) As used in this section, the following terms shall have the
following meanings:

end insert begin insert

(1) “Commercial driver” means a person who holds a valid
commercial driver’s license who is hired or contracted to provide
port drayage services.

end insert begin insert

(2) “Department” means the Employment Development
Department.

end insert begin insert

(3) “Eligible motor carrier” means a motor carrier that shall
not have any of the following on the date it applies to participate
in the program:

end insert begin insert

(A) A civil lawsuit that was filed on or before January 1, 2015,
pending against it in a state or federal court that alleges a
misclassification of a commercial driver.

end insert begin insert

(B) A penalty assessed by the department pursuant to Section
1128 that is final imposition of that penalty.

end insert begin insert

(4) “Motor carrier” means a registered owner, lessee, licensee,
or bailee of a commercial motor vehicle, as set forth in subdivision
(b) of Section 15210 of the Vehicle Code, that operates or directs
the operation of a commercial motor vehicle on a for-hire or
not-for-hire basis to perform port drayage services.

end insert begin insert

(5) “Port” means any sea or river port located in this state.

end insert begin insert

(6) “Program” means the Motor Carrier Employer Amnesty
Program established by this section and as provided by Article
8.6 (commencing with Section 1160) of Chapter 4 of Part 1 of
Division 1 of the Unemployment Insurance Code.

end insert begin insert

(c) (1) A motor carrier shall only apply to participate in the
program by doing all of the following:

end insert begin insert

(A) Submit an application to the Labor Commissioner, on a
form provided by the Labor Commissioner. The application shall,
at a minimum, require the motor carrier to establish it qualifies
as an eligible motor carrier.

end insert begin insert

(B) Report on the results of a self-audit in accordance with the
guidelines provided by the Labor Commissioner.

end insert begin insert

(2) A proceeding or action against a motor carrier pursuant to
Sections 2698 to 2699.5, inclusive, shall not be initiated after the
motor carrier has submitted an application for participation in
the program, but may be initiated if the motor carrier’s application
is denied.

end insert begin insert

(3) If a motor carrier’s application to participate the program
is denied by the Labor Commissioner, the application or its
submission shall not be considered an acknowledgment or
admission by the motor carrier that it misclassified its commercial
drivers as independent contractors, and the application or its
submission shall not be construed in any way to support an
evidentiary inference that the motor carrier failed to properly
classify its commercial drivers as employees.

end insert begin insert

(d) Before January 1, 2017, the Labor Commissioner, in
cooperation and with the consent of the department, may negotiate
and execute a settlement agreement with an eligible motor carrier
pursuant to the program that applied to participate in the program.
The Labor Commissioner shall not execute a settlement agreement
on or after January 1, 2017.

end insert begin insert

(e) Prior to the Labor Commissioner executing a settlement
agreement, an eligible motor carrier shall file its contribution
returns and report unreported wages and taxes for the time period
it seeks relief under the settlement agreement.

end insert begin delete

(b)

end delete

begin insert (f) end insert  A settlement agreement begin delete entered into end delete begin insert executed by the Labor
Commissioner and an eligible motor carrier end insert pursuant to
begin delete subdivision (a) end delete begin insert the program end insert shall begin delete contain end delete begin insert require an eligible motor
carrier to do end insert all of the following:

(1)  begin delete An agreement by the motor carrier to pay end delete begin insert Pay end insert all wages,
benefits, and taxes owed, if any, to or in relation to all of its
begin delete converted end delete commercial drivers begin delete covering end delete begin insert reclassified from
independent contractors to employees for end insert the period of time from
the first date of misclassification to the date the settlement
agreement is begin delete entered into, end delete begin insert executed, end insert but not exceeding the
applicable statute of limitations.

(2)  begin delete An agreement by the motor carrier to maintain end delete begin insert Maintain end insert
any converted commercial driver positions as employee positions.

(3)  begin delete An agreement by the motor carrier end delete begin insert Consent end insert that any future
commercial drivers hired to perform the same or similar duties as
those employees converted pursuant to begin delete subdivision (a) end delete begin insert the
settlement agreement end insert shall be presumed to have employee status
and that the begin insert eligible end insert motor carrier shall have the burden to prove
by clear and convincing evidence that they are not employees in
any administrative or judicial proceeding in which their
employment status is an issue.

begin insert

(4) Immediately after the execution of the settlement agreement,
secure the workers’ compensation coverage that is legally required
for the commercial drivers who were reclassified as employees,
effective on or before the date the settlement agreement is executed.

end insert begin insert

(5) Provide the Labor Commissioner and the department with
proof of workers’ compensation insurance coverage in compliance
with paragraph (4) within five days of securing the coverage.

end insert begin insert

(6) Pay the costs authorized by subdivision (g), if required.

end insert begin delete

(4) Any

end delete

begin insert (7) end insert begin insert   end insert begin insert Perform any end insert other begin insert requirements or end insert provisions the Labor
Commissioner begin delete deems end delete begin insert and the department end insert begin insert deem end insert necessary to carry
out the intent of this begin delete section end delete begin insert section, the program, end insert or to enforce
the settlement agreement.

begin delete

(c) As used in this section, the following terms have the
following meanings:

(1) “Commercial driver” means a person who holds a valid
commercial driver’s license hired or contracted with to provide
port drayage services.

(2) “Motor carrier” means a registered owner, lessee, licensee,
or bailee of a commercial motor vehicle as set forth in subdivision
(b) of Section 15210 of the Vehicle Code, who operates or directs
the operation of any such vehicle on a for-hire or not-for-hire basis
to perform port drayage services.

(3) “Port” means any sea or river port in this state.

(d) A settlement agreement entered into pursuant to subdivision
(a) may contain a provision authorizing the Labor Commissioner
to recover from the motor carrier an amount necessary to cover
the Labor Commissioner’s reasonable costs associated with the
review, approval, and compliance with the settlement agreement.

(e) This section shall not apply to a motor carrier that has a
pending civil lawsuit against it in state or federal court alleging
misclassification of commercial drivers where the lawsuit was
filed prior to January 1, 2015.

(f) This section shall apply only to settlement agreements entered
into by the Labor Commissioner prior to January 1, 2017.

end delete begin insert

(g) A settlement agreement may require an eligible motor carrier
to pay the reasonable, actual costs of the Labor Commissioner
and the department for their respective review, approval, and
compliance monitoring of the settlement agreement. The costs
shall be deposited into the Labor Enforcement and Compliance
Fund. The portion of the costs attributable to the department shall
be transferred to the department upon appropriation by the
Legislature.

end insert begin insert

(h) The settlement agreement may include provisions for an
eligible motor carrier to make installment payments of amounts
due pursuant to paragraphs (1) and (6) of subdivision (f) in lieu
of a full payment. An installment payment agreement shall be
included within the settlement agreement and charge interest on
the outstanding amounts due at the rate prescribed in Sections
1113 and 1129 of the Unemployment Insurance Code. Interest on
amounts due shall be charged from the day after the date the
settlement agreement is executed. The settlement agreement shall
contain a provision that if a motor carrier fails, without good
cause, to fully comply with terms of the settlement agreement
authorizing installment payments, the settlement agreement shall
be null and void and the total amount of tax, interest, and penalties
for the time period covered by the settlement agreement shall be
immediately due and payable.

end insert begin insert

(i) The Labor Commissioner and the department may share any
information necessary to carry out the program. Sharing
information pursuant to this subdivision shall not constitute a
waiver of any applicable confidentiality requirements and the party
receiving the information shall be subject to any existing
confidentiality requirements for that information.

end insert begin insert

(j) (1) Notwithstanding any other law and pursuant to the
program, an eligible motor carrier that executed and performed
its obligations pursuant to a settlement agreement shall not be
liable, and the Labor Commissioner or the department shall not
enforce, any civil or statutory penalties, including, but not limited
to, remedies available under subdivision (e) of Section 226, that
might have become due and payable for the time period covered
by the settlement agreement, except for the following penalties:

end insert begin insert

(A) A penalty charged under Section 1128 of the Unemployment
Insurance Code that is final on the date of the settlement agreement
is executed, unless the penalty is reversed by the California
Unemployment Insurance Appeals Board.

end insert begin insert

(B) A penalty for an amount an eligible motor carrier admitted
was based on fraud or made with the intent to evade the reporting
requirements set forth in this division or authorized regulations.

end insert begin insert

(C) A penalty based on a violation of this division or Division
6 (commencing with Section 13000) and either of the following:

end insert begin insert

(i) The eligible motor carrier was on notice of a criminal
investigation due to a complaint having been filed or by written
notice having been mailed to the eligible motor carrier informing
the motor carrier that it is under criminal investigation.

end insert begin insert

(ii) A criminal court proceeding has already been initiated
against the eligible motor carrier.

end insert begin insert

(2) (A) Notwithstanding any other law and pursuant to the
program, an eligible motor carrier that executed and performed
its obligations pursuant to a settlement agreement shall not be
liable, and the Labor Commissioner or the department shall not
enforce, any unpaid penalties, and interest owed on unpaid
penalties, on or before the date the settlement agreement was
executed, pursuant to Sections 1112.5, 1126, and 1127 of the
Unemployment Insurance Code for the tax reporting periods for
which the settlement agreement is applicable, that are owed as a
result of the nonpayment of tax liabilities due to the
misclassification of one or more commercial drivers as independent
contractors and the reclassification of these commercial drivers
as employees, except that penalties, and interest owed on penalties,
established as a result of an assessment issued by the department
before the date the settlement agreement was executed shall not
be waived pursuant to the program.

end insert begin insert

(B) For purposes of paragraph (1), state personal income taxes
required to be withheld by Section 13020 of the Unemployment
Insurance Code and owed by the motor carrier pursuant to Section
13070 of the Unemployment Insurance Code shall not be collected,
if the eligible motor carrier issued an information return pursuant
to Section 6041A of the Internal Revenue Code reporting payment
or if the commercial driver certifies that the state personal tax has
been paid or that he or she has reported to the Franchise Tax
Board the payment against which the state personal income tax
would have been imposed.

end insert begin insert

(3) A refund or credit for any penalty or interest paid prior to
the date an eligible motor carrier applied to participate in the
program shall not be granted.

end insert begin insert

(4) Except for violations described in Section 2119 of the
Unemployment Insurance Code, the department shall not bring a
criminal action for failing to report tax liabilities against an
eligible motor carrier that executed and performed its obligations
pursuant to a settlement agreement for the tax reporting periods
subject to the settlement agreement.

end insert begin insert

(k) The statute of limitations on any claim or liability that might
have been asserted against a motor carrier based on the motor
carrier having misclassified a commercial driver as an independent
contractor shall be tolled from the date a motor carrier applies
for participation in the program through the date the Labor
Commissioner either denies the motor carrier participation in the
program or the motor carrier, as an eligible motor carrier, has
failed to perform an obligation under the settlement agreement,
whichever is later.

end insert begin insert

(l) The recovery obtained by the Labor Commissioner on behalf
of a reclassified commercial driver pursuant to a settlement
agreement shall be tendered to the commercial driver on the
condition that the commercial driver shall execute a release of all
claims the commercial driver may have against the eligible motor
carrier based on the eligible motor carrier’s failure to classify the
commercial driver as an employee. A commercial driver shall not
be under any obligation to accept the terms of a settlement
agreement. If a commercial driver declines to accept the terms of
a settlement agreement, the commercial driver shall not be bound
by the settlement agreement, except that the eligible motor carrier
shall still reclassify the commercial driver as an employee and
that commercial driver shall be precluded from pursing a claim
for civil penalties or statutory penalties covered by the period of
time covered by the settlement agreement. If a commercial driver
does not accept the terms of a settlement agreement, the motor
carrier shall be excused from performing its requirement under
the settlement agreement to pay the amount acknowledged in the
settlement agreement to be due to that commercial driver.

end insert begin insert

(m) (1) If the Labor Commissioner determines an eligible motor
carrier violated or failed to perform any of its obligations under
a settlement agreement, the Labor Commissioner may file a civil
action to enforce the settlement agreement.

end insert begin insert

(2) (A) If the Labor Commissioner files a civil action seeking
only recovery of the amounts due to commercial drivers under the
settlement agreement, the Labor Commissioner may obtain judicial
enforcement by filing a petition for entry of judgment for the
liabilities due and remaining pursuant to the settlement agreement.

end insert begin insert

(B) After filing a petition pursuant to subparagraph (A), the
Labor Commissioner may file an application for an order to show
cause and serve it on the eligible motor carrier. Within 60 days
of the date the Labor Commissioner filed the order to show cause,
the court shall hold a hearing and enter a judgment. The judgment
shall be in amounts which are due and owing to commercial drivers
pursuant to the settlement agreement with credits, if any, for
applicable payments the eligible motor carrier made under the
settlement agreement. A judgment entered pursuant to this
paragraph shall not preclude subsequent action to recover civil
penalties or statutory penalties by the Labor Commissioner, or by
an employee pursuant to Section 2698 to 2699.5, inclusive.

end insert begin insert

(3) If the court determines in any action filed by the Labor
Commissioner that a motor carrier has violated or otherwise failed
to perform any of its obligations under a settlement agreement,
the court shall award the Labor Commissioner costs and
reasonable attorney’s fees.

end insert

begin insert

begin insert SEC. 2. end insert   

end insert

begin insert Article 8.6 (commencing with Section 1160) is added
to Chapter 4 of Part 1 of Division 1 of the end insert begin insert Unemployment
Insurance Code end insert begin insert , to read: end insert

begin insert

 

Article begin insert 8.6. end insert   Motor Carrier Employer Amnesty Program

 

begin insert 1160. end insert   

(a) The department shall collaborate with the Labor
Commissioner to administer the Motor Carrier Employer Amnesty
Program established by Section 2750.8 of the Labor Code and as
provided by this article.

(b) The definitions set forth in Section 2750.8 of the Labor Code
shall apply to this article.

begin insert 1162. end insert   

Commercial drivers who are classified as employees
pursuant to a settlement agreement shall be eligible to receive a
refund of elective coverage contributions pursuant to Section 708
and may submit a claim for refund pursuant to Section 1178.

begin insert 1164. end insert   

The department may promulgate regulations and take
any other actions necessary or appropriate to implement this
article and further its participation in the program.

end insert