Colorado makes truck contract rule change

By Keith Goble, Land Line state legislative editor | 3/31/2014

A new law in Colorado addresses unfair clauses in trucking contracts. Similar efforts are on the move in Kentucky and Louisiana.

Colorado Gov. John Hickenlooper signed a bill into law to forbid indemnification clauses in trucking contracts. The clauses are set up to protect shippers or hold them harmless from anything that happens with a shipment.

Previously HB1065, the new rule outlaws provisions in contracts that provide for shippers to be indemnified for losses caused by their own negligence and would invalidate them.

Sen. Mary Hodge, D-Brighton, said the change will make it easier to assign liability for any damages to a load to the responsible party.

“These lopsided indemnity clauses in contracts eliminate the incentive for shippers and facility operators to meet their responsibilities and duties for safety, as well as their accountability for their own actions,” Hodge testified at a recent hearing.

State lawmakers across the country have been active the past few years in changing rules on indemnity clauses. Colorado is the 40th state to forbid the unfair provisions from contracts.

A full list of states, and the laws, where protections are in place is available. States yet to adopt protections are Delaware, Kentucky, Mississippi, New Hampshire, New Jersey, New York, Ohio, Rhode Island and Vermont.

Owner-operator and OOIDA Life Member Jack McComb of Littleton, Colo., said that truck drivers doing business in states that have yet to take action have little or no choice but to accept the unfair terms. He told Land Line a change forbidding the clauses is “a no brainer.”

Affected contracts in Colorado are defined as “a contract, agreement, or understanding, whether written or oral, express or implied,” between a motor carrier and a shipper covering the transportation of property for hire by the motor carrier, entry on property to load, unload, or transport property.

The protection would not apply to intermodal chassis, or other intermodal equipment.

A nearly identical effort in Kentucky is on the governor’s desk.

Kentucky state Sen. Stan Humphries, R-Cadiz, said the change sought in SB59 would prevent truck drivers from being obligated to pay any claim that may arise from a contract, regardless of fault.

“This would protect motor carriers from clauses in shipping contracts that require them to assume liability for all accidents even if they’re not at fault,” Humphries wrote in a statement.

A Louisiana state lawmaker is also addressing the issue.

Since 2010, Louisiana law has forbidden the clauses in motor carrier and construction contracts. However, Sen. Danny Martiny, R-Metairie, said the issue needs to be revisited because the clause remains in contracts.

“People are being told if they don’t sign the contract they don’t get the work, which puts us in the same position we were in when we passed the original bill,” Martiny told a House committee discussing his bill. “The bill says that if you want to keep the clause in contracts you can be sued under the Unfair Trade Practice and Consumer Protection Law.”

The stiffer punishment would take effect Jan. 1, 2015.

SB518 is awaiting consideration on the Senate floor. If approved there, it would move to the House.

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