BILL ANALYSIS Ó SENATE COMMITTEE ON APPROPRIATIONS Senator Ricardo Lara, Chair 2015 - 2016 Regular Session AB 621 (Roger Hernández) - Drayage truck operators. ----------------------------------------------------------------- | | | | | | ----------------------------------------------------------------- |--------------------------------+--------------------------------| | | | |Version: June 25, 2015 |Policy Vote: L. & I.R. 4 - 1, | | | JUD. 6 - 0 | | | | |--------------------------------+--------------------------------| | | | |Urgency: No |Mandate: No | | | | |--------------------------------+--------------------------------| | | | |Hearing Date: August 17, 2015 |Consultant: Robert Ingenito | | | | ----------------------------------------------------------------- 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 AB 621 (Roger Hernández) Page 1 of ? 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 AB 621 (Roger Hernández) Page 2 of ? 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. AB 621 (Roger Hernández) Page 3 of ? -- END --