Under California Labor Code Section 2810.4, effective Jan. 1, 2019, any customer of a port drayage carrier will be jointly and severally liable for unpaid wages, unreimbursed expenses, damages and penalties due to the commercial truck driver after the date the carrier is listed on the California Division of Labor Standards Enforcement (DLSE) website.
On Jan. 2, the California DLSE published the list of port drayage companies with unsatisfied final court judgments, tax assessments or tax liens. Customers of the port drayage carrier may be liable for the following:
- unpaid minimum, regular or premium wages;
- unlawful deductions by the motor carrier from wages;
- out-of-pocket business expenses incurred by the commercial driver that are not reimbursed by the motor carrier;
- civil penalties for failure to secure valid workers’ compensation coverage; and
- damages or penalties, as provided for by law, that are due to the commercial driver or the state based upon the failure of the motor carrier to pay wages owed.
The type of customer that may be jointly and severally under this new law is broadly defined as “a business entity, regardless of its form, that engages or uses a port drayage motor carrier to perform port drayage services on the customer’s behalf, whether the customer directly engages or uses a port drayage motor carrier or indirectly engages or uses a port drayage motor carrier through the use of an agent, including, but not limited to, a freight forwarder, motor transportation broker, ocean carrier, or other motor carrier.”
The customer is liable prospectively, not retroactively, for unpaid wages, unreimbursed expenses, damages and penalties incurred after the carrier is listed on the California DLSE website. If the customer and the carrier have a contract and the customer wishes to terminate the contract, the customer will not be liable until the earlier of the contract’s expiration date or 90 business days after the carrier is listed on the website.
Any company that engages California port drayage carriers, directly or indirectly, should take steps to protect itself from liability, including:
- monitoring the California DLSE list, which must be updated by the fifth day of every month, to determine whether any of its existing or prospective port drayage carriers are on the list;
- considering whether to cease engaging a port drayage carrier while that carrier appears on the list and whether to terminate contracts with listed carriers;
- verifying that its ocean carriers, freight forwarders, brokers and other transportation providers are not engaging any listed port drayage carriers; and
- considering amendments to its contracts with these transportation providers to require them to monitor the California DLSE list and to address any liabilities that might arise from engaging any port drayage carrier while that carrier appears on the list.