New California law puts retailers on the hook for driver misclassification

Dive Brief:

California Gov. Jerry Brown signed a bill Saturday that seeks to end the ongoing disputes between truck drivers and logistics firms over the way the drivers are classified at the ports of Los Angeles, Long Beach and Oakland, reported the Los Angeles Times.
Senate Bill 1402 creates a public list of companies found to have violated rules regarding wages and expenses for drivers by a court. If retailers hire these companies, they will be held jointly liable for violations and misconduct when the law takes effect in January 2019.
Retailers will have 90 days to react when a new company is added to the list before liability kicks in. Those who hire companies with union drivers, which are a small minority, will be exempt.

Dive Insight:

This law changes the dynamics of an issue that has plagued California's ports for years.

Multiple judgments in favor of drivers, and roughly 16 driver strikes amid claims of modern-day slavery, have been the norm at California's ports. Those in favor of the new law agree that putting liability for drivers' working conditions, pay and treatment in the hands of a powerful link in the supply chain — the retailer — is a smart move.

Almost 90% of the drayage workers at the ports of Los Angeles, Long Beach and Oakland are classified by their employers as independent contractors, according to the Los Angeles Times, which is why lawsuits over the classification of drayage workers have been fairly common.

Contractors frequently do not receive benefits from employers such as paid time off and health coverage, despite working full-time hours or more. Drivers are also often left on the hook for the expenses associated with their vehicles (on top of the lease which sometimes comes from the employer), including fuel, repairs, insurance and permits. Also, drivers are not granted the break time during the workday required for full-time employees, according to the LA Times.

This law is a victory for the drivers, said Fred Potter, vice president of the International Brotherhood of Teamsters, in a statement:

"The 25,000 men and women who haul cargo containers on and off the docks have some of the hardest and most dangerous jobs in America. More than a decade of court rulings, media stories, and independent reports have revealed rampant labor violations in the port trucking industry, and the State Labor Commissioner has awarded tens of millions of dollars to hundreds of drivers for wage theft due to misclassification as independent contractors. Nevertheless, drivers are still suffering and it is past time for justice."

The new law is a far cry from a proposal considered by the LA City Council last year that would have banned trucking companies known to violate misclassification laws from doing business on city-owned property at the city's port.

"This bill will help us hold bad actors accountable for wage theft, and I’m pleased that our legislature has passed it today," said Los Angeles mayor Eric Garcetti in a statement.