BILL NUMBER: AB 621 AMENDED
BILL TEXT
AMENDED IN SENATE SEPTEMBER 4, 2015
AMENDED IN SENATE AUGUST 31, 2015
AMENDED IN SENATE JUNE 25, 2015
AMENDED IN ASSEMBLY JUNE 1, 2015
INTRODUCED BY Assembly Member Roger Hernández
FEBRUARY 24, 2015
An act to add Section 2750.8 to the Labor Code, and to add Article
8.6 (commencing with Section 1160) to Chapter 4 of Part 1 of
Division 1 of the Unemployment Insurance Code, relating to
employment.
LEGISLATIVE COUNSEL'S DIGEST
AB 621, as amended, Roger Hernández. Drayage truck operators:
Motor Carrier Employer Amnesty Program.
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 would establish the Motor Carrier Employer Amnesty
Program pursuant to which, notwithstanding any law, a motor carrier
performing drayage services may be relieved 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, with
the cooperation and consent of the Employment Development
Department, 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
and the Employment Development Department to recover from the motor
carrier 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.
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) The Labor Commissioner and the Department of
Employment Development shall administer the Motor Carrier Employer
Amnesty Program pursuant to which, notwithstanding any law, an
eligible motor carrier performing drayage services at any port shall
be relieved of liability for statutory or civil penalties associated
with the misclassification of commercial drivers as independent
contractors, as provided by this program, if the eligible motor
carrier executes a settlement agreement with the Labor Commissioner
whereby the eligible motor carrier agrees to, among other things,
properly classify all of its commercial drivers as employees.
(b) As used in this section, the following terms shall have the
following meanings:
(1) "Commercial driver" means a person who holds a valid
commercial driver's license who is hired or contracted to provide
port drayage services.
(2) "Department" means the Employment Development Department.
(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:
(A) A civil lawsuit that was filed on or before January
1, December 31, 2015, pending against it in a
state or federal court that alleges or involves a
misclassification of a commercial driver.
(B) A penalty assessed by the department pursuant to Section 1128
that is final imposition of that penalty.
(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.
(5) "Port" means any sea or river port located in this state.
(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.
(c) (1) A motor carrier shall only apply to participate in the
program by doing all of the following:
(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.
(B) Report on the results of a self-audit in accordance with the
guidelines provided by the Labor Commissioner.
(2) A motor carrier that voluntarily or as a result of a final
disposition in a civil proceeding reclassified its commercial drivers
as employees on or before January 1, 2016, shall, in addition to
other information requested by the Labor Commissioner, also submit
with its application all of the following:
(A) Documentation demonstrating that the motor carrier
reclassified its commercial drivers as employees, including the
commencement period applicable to the reclassification.
(B) The identification of each commercial driver reclassified in
the documents provided in subparagraph (A), the amounts paid to each
commercial driver to compensate for the previous misclassification,
and the time period applicable to the amount paid to each commercial
driver prior to reclassification.
(C) A report of a self-audit for all commercial drivers
reclassified by the motor carrier identified in subparagraphs (A) and
(B), and also include a separate self-audit report for any
commercial driver who is subject to reclassification, but is not
identified in subparagraph (B).
(2)
(3) 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.
(3)
(4) 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.
(d) The Labor Commissioner shall analyze the information provided
pursuant to paragraph (2) of subdivision (c) for the purpose of
evaluating the scope of a prior reclassification of an eligible motor
carrier's commercial drivers to employees and has discretionary
authority to determine whether the scope was sufficient to afford
relief to the misclassified commercial drivers.
(d)
( e) Before January 1, 2017, the Labor
Commissioner, in cooperation and with the
cooperation and 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.
(e)
(f) 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.
(f)
(g) A settlement agreement executed by the Labor
Commissioner and an eligible motor carrier pursuant to the program
shall require an eligible motor carrier to do all of the following:
(1) Pay all wages, benefits, and taxes owed, if any, to or in
relation to all of its commercial drivers reclassified from
independent contractors to employees for the period of time from the
first date of misclassification to the date the settlement agreement
is executed, but not exceeding the applicable statute of limitations.
(2) Maintain any converted commercial driver positions as employee
positions.
(3) Consent that any future commercial drivers hired to perform
the same or similar duties as those employees converted pursuant to
the settlement agreement shall be presumed to have employee status
and that the eligible 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.
(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.
(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.
(6) Pay the costs authorized by subdivision (g),
(h), if required.
(7) Perform any other requirements or provisions the Labor
Commissioner and the department deem necessary to carry out the
intent of this section, the program, or to enforce the settlement
agreement.
(g)
(h) 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.
(h)
(i) 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)
(g) 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.
(i)
(j) 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.
(j)
(k) (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:
(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.
(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.
(C) A penalty based on a violation of this division or Division 6
(commencing with Section 13000) and either of the following:
(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.
(ii) A criminal court proceeding has already been initiated
against the eligible motor carrier.
(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.
(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.
(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.
(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.
(k)
( l) 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.
(l)
( m) 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.
(m)
(n) (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.
(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.
(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.
(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.
SEC. 2. Article 8.6 (commencing with Section 1160) is added to
Chapter 4 of Part 1 of Division 1 of the Unemployment Insurance Code,
to read:
Article 8.6. Motor Carrier Employer Amnesty Program
1160. (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.
1162. 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.
1164. The department may promulgate regulations and take any
other actions necessary or appropriate to implement this article and
further its participation in the program.