BILL ANALYSIS Ó
AB 621
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CONCURRENCE IN SENATE AMENDMENTS
AB
621 (Roger Hernández)
As Amended September 4, 2015
Majority vote
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|ASSEMBLY: | | (June 3, |SENATE: | | (September 9, |
| |47-29 |2015) | |27-13 |2015) |
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Original Committee Reference: L. & E.
SUMMARY: Enacts a limited amnesty program with respect to the
misclassification of port drivers.
The Senate amendments:
1)Replace the term "consent decree" with "settlement agreement"
throughout this bill.
2)Establish the Motor Carrier Employer Amnesty Program, to be
administered by the Labor Commissioner and the Employment
Development Department (EDD).
3)Define "eligible motor carrier" to mean a motor carrier that
shall not have any of the following on the date it applies to
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participate in the program:
a) A civil lawsuit that was filed on or before December 31,
2015, pending against it in a state or federal court that
alleges or involves a misclassification of a commercial
driver.
b) A specified penalty assessed by EDD that is final
disposition of that penalty.
4)Add additional definitions.
5)Provide that a motor carrier shall only apply to participate
in the program by doing all of the following:
a) Submitting an application to the Labor Commissioner
which shall, at a minimum, require the motor carrier to
establish that it qualifies as an eligible motor carrier.
b) Reporting on the results of a self-audit in accordance
with guidelines provided by the Labor Commissioner.
6)Provide that 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 periods applicable to the
reclassification.
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b) The identification of each commercial driver
reclassified in the documents specified above, 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, and also include a
separate self-audit report for any commercial driver who is
subject to reclassification, but is not identified above.
7)Provide that the Labor Commissioner shall analyze the
information provided 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.
8)Provide that if the motor carrier's application is denied, the
application shall not be considered an acknowledgment or
admission by the motor carrier that it misclassified its
drivers, 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.
9)Provide that, before January 1, 2017, the Labor Commissioner
may negotiate and execute a settlement agreement with an
eligible motor carrier pursuant to the program. The Labor
Commissioner shall not execute a settlement agreement on or
after January 1, 2017.
10)Provide that, 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
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the time period it seeks relief under the settlement
agreement.
11)Provide that immediately after the execution of the
settlement agreement, an eligible motor carrier shall the
secure workers' compensation that is legally required for the
commercial drivers who were reclassified as employees,
effective on or before the date the settlement agreement is
executed, and shall provide proof of coverage to the Labor
Commissioner and EDD within five days of securing coverage.
12)Provide that a settlement agreement may require an eligible
motor carrier to pay the reasonable actual costs to the Labor
Commissioner and EDD, as specified.
13)Authorize a settlement agreement to include provisions for an
eligible motor carrier to make installment payments, as
specified.
14)Provide that an eligible motor carrier that executed and
performed its obligations pursuant to a settlement agreement
shall not be liable for specified penalties, except as
provided.
15)Provide that the statute of limitations on any claim or
liability 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.
16)Provide that the recovery obtained by the Labor Commissioner
on behalf of a reclassified driver pursuant to a settlement
agreement shall be tendered to the commercial driver on the
condition that the driver shall execute a release of claims,
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as specified.
17)Provides that a commercial driver shall not be under any
obligation to accept the terms of a settlement agreement.
18)Provides that 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 pursuing a claim for civil penalties or
statutory penalties covered by the period of time covered by
the settlement agreement.
19)Provides that if a commercial driver does not accept the
terms of a settlement agreement, the motor carrier shall be
excused from performing its requirements under the settlement
agreement to pay the amount acknowledged in the settlement
agreement to be due to that commercial driver.
20)Provides processes and procedures for the Labor Commissioner
to pursue enforcement of the settlement agreement, as
specified.
21)Provides that 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.
22)Make other related and technical changes.
FISCAL EFFECT: According to the Senate Appropriations
Committee, the Department of Industrial Relations and EDD would
likely incur annual costs in the hundreds of thousands of
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dollars to implement the provisions of this bill. To the extent
the consent decree process reduces individual wage claim cases,
these costs could be somewhat offset. This bill could also
result in additional collections to the wage funds administered
by EDD, the extent to which is unknown.
COMMENTS: This bill is sponsored by the California Teamsters
Public Affairs Council, who argues that nearly all of the
so-called "owner-operator" truck drivers that haul intermodal
freight to and from the ports of California have been
misclassified. In hundreds of recent cases and class action
lawsuits, the drivers have been determined to be employees.
When a driver has been misclassified, the employer is liable for
back wages, taxes, social security contributions, and
potentially massive penalties.
This bill creates a voluntary program (to be administered by the
Labor Commissioner) which would allow motor carriers who wish to
reclassify their drivers as employees and have the penalties
associated with their past unlawful conduct waived. The sponsor
argues that this bill is a way for port drayage motor carriers
to "come in from the cold" in a way that will save them from
paying financially crippling penalties.
This bill is also supported by Total Transportation Services,
Inc., who states that it will provide welcome relief to port
drayage companies, like it, who wish to reclassify their drivers
from independent contractor to employee status but face
substantial penalties if they do so. They state further: "We
understand that some companies may not wish to avail themselves
of this amnesty program and we respect their decision not to do
so. However, we need this program and appreciate your
willingness to introduce this legislation."
The California Trucking Association writes that while it is
willing to work with the author to
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address the issues raised by this bill, it nevertheless opposes
this bill because it does not address the "key issue" leading to
drayage motor carriers facing this situation in the first place
- "misuse" of the Division of Labor Standards Enforcement's
administrative hearing process.
Analysis Prepared by:
Benjamin Ebbink / L. & E. / (916) 319-2091 FN: 0002223