Dear Valued Customer,

Please be advised, California Senate Bill 1402 will go into effect on January 1, 2019. Under this legislation, customers can be held jointly liable for labor violations committed by the port trucking companies they hire, either directly or through an agent, broker, freight forwarder, or carrier.

The Division of Labor Standards Enforcement (“DLSE”) will publish a list of port drayage motor carriers that have failed to pay final judgments against them for labor violations such as unpaid wages, unreimbursed expenses, unpaid tax assessments, and misclassification of employees as independent contractors.  The list will be published on the DLSE website prior to January 1, 2019 and be updated monthly. Port trucking companies will be required to provide written notice to a customer of any unsatisfied final judgements against them. Failure to provide notice will not absolve the customer of joint liability under SB1402.

The law defines a “customer” as any company that directly or indirectly hires a port drayage carrier to perform services on their behalf with the following exceptions: a business with fewer than 25 employees (including temporary employees), a public entity (state or local government), or a marine terminal operator with incidental relationships to port motor carriers.

Customers who engage the service of a carrier on this list are subject to joint and several liability for subsequent state labor and employment law violations committed by the carrier.

The new law establishes four scenarios where the joint liability provisions will not apply. These are:

  • To customers who engage or use a port drayage motor carrier whose employees are covered by a bona fide collective bargaining agreement, if the agreement expressly provides for wages, hours of work, working conditions, a process to resolve disputes concerning nonpayment of wages, expenses, damages, and penalties.
  • Where the customer and port drayage motor carrier had an existing contract for port drayage services at the time the carrier is included on the list maintained by DLSE, joint and several liability shall not apply until the expiration of the existing contract or a period of 90 business days following the listing, whichever is shorter.
  • Where a port drayage motor carrier is not included on the DLSE list.
  • Where a port drayage motor carrier satisfied the conditions for removal from the DLSE list prior to the time period for which the joint and several liability is alleged.

Masterpiece International is committed to maintaining a thorough and robust vetting program for current and future vendors and contractors to promote compliance and reduce risk to our clients. We will continue to monitor the developments and implementation California Senate Bill 1402 and will provide updates accordingly. We encourage all our clients that hire port trucking companies in California to familiarize themselves with the new regulations and develop protocols to ensure compliance and identify and potential liabilities under SB-1402.

Thank You,