Dive Brief:

• The battle over truckers' labor classification is heating up in California, this time over a bill in the state senate that would hold shippers partly liable for labor violations committed by the trucking companies they use.
• The bill, SB 1402, faced immediate criticism when it was introduced two weeks ago. Weston Labar, CEO of the Harbor Trucking Association, told USA Today, "This is another example of a California politician who doesn’t understand the drayage (port trucking) industry."
• Opposing groups took their views to Sacramento on Tuesday, as drivers and Teamsters rallied outside the state capitol, where a Senate Judiciary Committee was considering testimony for and against the bill, American Shipper reports.

Dive Insight:

The California port trucking industry has been under heavy fire since a USA Today exposé revealed more than 1,100 labor complaints had been filed by drayage drivers since 2008.

At issue is the industry's operating model. Many companies in the industry classify drivers as independent contractors, not employees, due to lease-purchase agreements — where a driver may work to pay off a truck, with the promise of eventually owning it. The promise is grand, but in many cases, according to the USA Today report, truckers fail to receive the benefits and instead enter into a form of modern slavery.

The piece has had severe implications for the industry. Within months of its publication, Costco and other retailers dropped the trucking company questioned by USA Today, and a group of federal Senators sent a letter to 16 retailers asking them to reconsider their logistics procurement practices. 

Now, the California Senate is considering legislation that would force them to do just that. The industry, however, is fighting avidly against the bill — arguing its lack of nuance could end up damaging supply chains.

"This USA Today investigative report cannot go unchallenged. It provides a misleading depiction of a vital industry based on a few bad actors," the Intermodal Association of North America (IANA) wrote in an opinion piece for Transport Topics. "There is a reason that more than 80% of the companies engaged in port drayage use owner-operators: It is an efficient and effective business model for motor carriers and contractors, and affords people the ability to be an independent businessman/woman, owning and operating their own assets and deciding with whom, when and where they do business."

In the piece, IANA challenges the piece's conclusion the industry's operating model is broken, noting driver shortages, safety concerns and regulations on hours-of-service and environmental compliance limit trucking companies' options.

When asked for comment on the California bill, and whether such concerns had credence, the Owner Operator Independent Drivers Association (OOIDA) told Supply Chain Dive they were still reviewing the legislation's language. 

"However, I will say that we typically discourage lease purchase agreements as they rarely, if ever, benefit truck drivers," said Norita Taylor, director of public relations at the OOIDA, in an e-mail.

The hearing on Tuesday may be but another milestone in the battle over port drivers' classification. But controversy over the bill shows just how consequential the legislation could be for supply chains.