BILL ANALYSIS                                                                                                                                                                                                    Ó



          SENATE COMMITTEE ON APPROPRIATIONS
                             Senator Ricardo Lara, Chair
                            2015 - 2016  Regular  Session

          AB 621 (Roger Hernández) - Drayage truck operators.
          
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          |Version: June 25, 2015          |Policy Vote: L. & I.R. 4 - 1,   |
          |                                |          JUD. 6 - 0            |
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          |Urgency: No                     |Mandate: No                     |
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          |Hearing Date: August 17, 2015   |Consultant: Robert Ingenito     |
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          This bill meets the criteria for referral to the Suspense File.




          


          Bill  
          Summary: AB 621 would create a limited amnesty program for port  
          drayage companies that voluntarily enter into a consent decree  
          with the Labor Commissioner related to misclassification of  
          employees.


          Fiscal  
          Impact: The Department of Industrial Relations (DIR) indicates  
          that it would incur initial administrative costs of $900,000 and  
          ongoing costs of $850,000 (special fund) to review new  
          settlement agreements. To the extent the consent decree process  
          reduces individual wage claim cases, these costs could be  
          somewhat offset. The bill could also result in additional  







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          collections to the wage funds (such as disability insurance)  
          administered by EDD, the extent to which is unknown.


          Background: Drayage services involve transporting goods a short distance  
          via ground freight. Drayage is typically used to describe the  
          trucking service from an ocean port to a rail ramp, warehouse,  
          or other destination. By some estimates, there are approximately  
          20,000 port drivers in California.
          Since the trucking industry was deregulated in the 1980s, the  
          industry has increasingly relied on independent contractors or  
          "owner operator" port truck drivers, rather than recognizing  
          drivers as employees. There has been much debate concerning the  
          lawfulness of this practice. The determination of whether a  
          worker is an employee or independent contractor is important for  
          a number of reasons, including (1) what rights and remedies the  
          worker is afforded under state and federal law, (2) federal and  
          state tax consequences for the employer, and (3) the level of  
          tax revenues for the state and federal government. 


          In general, independent contractors need not be covered by  
          workers' compensation, do not have employment taxes deducted  
          from their earnings, are not covered by many state and federal  
          anti-discrimination laws, are not included under Cal-OSHA and  
          federal OSHA in an employer's duty to provide a safe and healthy  
          work environment, are not covered by state and federal wage and  
          hour laws, are not entitled to unemployment insurance benefits  
          from an employer's account, and are excluded from coverage under  
          the National Labor Relations Act (NLRA). 




          Proposed Law:  
          This bill would relieve a motor carrier performing drayage  
          services at one or more ports in California from liability for  
          statutory or civil penalties associated with misclassification  
          of commercial drivers as independent contractors if the motor  
          carrier enters into a settlement agreement before January 1,  
          2017, with the Labor Commissioner whereby the motor carrier  
          agrees to convert all of its commercial drivers to employees.  
          Specifically, the bill would do all of the following:
                 Provide that a settlement agreement entered into  








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               pursuant this bill shall contain all of the following:


               o      An agreement by the motor carrier to pay all wages,  
                 benefits, and taxes owed, if any, to or in relation to  
                 all of its converted commercial drivers covering the  
                 period of time from the first date of misclassification  
                 to the date the consent decree is entered into, but not  
                 exceeding the applicable statute of limitations.


               o      An agreement by the motor carrier to maintain any  
                 converted commercial driver positions as employee  
                 positions.


               o      An agreement by the motor carrier that any future  
                 commercial drivers hired to perform the same or similar  
                 duties shall be presumed to have employee status and that  
                 the 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.


               o      Any other provisions the Labor Commissioner deems  
                 necessary to carry out the intent of this section or to  
                 enforce the provisions of the consent decree.


                 Provide that this bill does 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.


                 Provide that this bill shall apply only to consent  
               decrees entered into by the Labor Commissioner prior to  
               January 1, 2017.












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