Opposes Port Drayage Owner Op Ban
NASSTRAC Opposes Port Drayage Owner-Operator Ban
NASSTRAC has joined nearly 30 other industry associations in expressing its opposition to the AB 950 (Perez and Swanson) Port Drayage Owner-Operator Ban. The concern is that this ban would eliminate the jobs and rights of owner-operators to conduct business at California's ports. This opposition was expressed in a joint letter to the Assembly Labor & Employment Committee on May 3, 2011.
NASSTRAC and other associations claim that AB950 declares that any drayage truck operator is an employee of the company who arranges for or engages their services. The practical effect of this bill is to ban all independent contractors, also known as owner-operators, from California ports and negatively impact activity at West Coast ports.
"Today, thousands of independent owner-operators provide critical goods movement services at each of California's ports. Container activity at the ports varies daily by as much as 30 percent and annually such activity is closely tied to state, national and international economic conditions. Owner-operators provide necessary capacity and flexibility to meet the varying demands of port drayage. To impose an employee drive mandate on the companies who arrange for drayage services is simply not consistent with reality of port activity and places California ports at another financial disadvantage to other North American ports," said the letter. "Under AB 950, owner-operators would be left with the choice of finding work outside the port or become an employee of a company if a job is available. These owner-operators have chosen not to be an employee for their own economic reasons and AB 950 goes against their free will to choose where they work. Choosing when to work or spend time with their families gives owner-operators flexibility that employee drivers lack. The opportunity to work for another company that pays a better rate or whose route keeps the driver closer to home are also important personal considerations."
Additionally, no practical public or driver safety argument has been made for outright banning owner-operators from California ports, said John Cutler, NASSTRAC's legal counsel. In fact, California leads the nation in safety with less than one fatality per 100 million miles, more than 20 percent below the national average. Currently, commercial drivers undergo stringent and federal inspections of their trucks and driving records. Companies cannot afford to contract with or employ unsafe or unreliable drivers due to liability and profitability concerns.
Mandating employee drivers will not eliminate the need for trucks to haul cargo out of the ports to railheads or distribution centers, nor does it affect the routes used by drivers to accomplish their deliveries, continues the letter. Existing law provides the DOT and local municipalities with the authority to set certain restrictions on routes for various reasons. AB 950 proves unnecessary under both driver and public safety arguments.
Some industry observers are concerned that this is also a significant overreach by the government. If the main concern is misclassification, as the proponents of AB 950 claim, then California should focus on existing and established enforcement mechanisms, said Cutler. Rather than address potential misclassification, this bill reaches too far in eliminating a class of drivers and small businesses that represent the dominate model for the drayage industry. Clear and uniform criteria for classifying independent contractors serve the interests of all parties. Elimination is a one-size-fits-all approach in a highly variable industry.
There would also be a negative impact on California Port Activity, according to the letter. California already faces numerous challenges in maintaining its dominance in world trade with threats coming from other states and nations. The Gulf Region and East Coast states actively promote their ports as a cost-effective alternative to California ports. The widening of the Panama Canal and increased facility construction in Florida, Texas, Virginia, Washington and other coastal states along with Canada and Mexico provide cargo interests with a number of options. In addition, an anticipated drayage truck shortage in the coming years will be exacerbated by mandates like AB 950 that force a specific business model that results in higher, uncompetitive costs. According to a report by Dr. John Husing on the employee mandate in the San Pedro Bay ports, the cost of drayage would increase 167 percent over the current use of owner-operators. A second report by the Boston Consulting Group on the same mandate stated that annual drayage costs would rise by at least $500 million. Increased California costs and easier access to out-of-state ports will draw cargo from California ports resulting in lost jobs and tax revenue.
The fact of the matter is that an employee driver mandate proposed in AB 950 is preempted by federal law, stated Cutler. Federal law prohibits states from taking actions that impact the rates, routes, or services of trucking companies absent qualification under a specified 'safety exception.'" In August 2010, the U.S. District Court for the Central District of California reaffirmed its earlier finding in a case regarding the Port of Los Angeles Clean Trucks Program that the employee mandate does not meet the safety exception and is preempted by federal law. The same facts that led the District and Ninth Circuit Courts to reject that employee mandate would apply to AB 950. To view the letter, click here: