California ‘level playing field’ law effective Jan. 1

| 12/21/2010

California dump truck operators will soon get some help with brokers.

On Jan. 1, 2011, a new law takes effect that requires a broker of construction trucking services to post a bond to ensure payment to a dump truck operator whose services were brokered. The broker also receives certification of the dump truck operator’s permit to operate.

The California Dump Truck Owners Association, which was influential in getting the bill signed into law, welcomes the protection from unscrupulous brokers who have a history in the state of absconding with people’s money.

“While our industry has been battered recently by the economy and disastrous CARB truck regulations, this bill is finally a positive step forward for those involved in California’s construction trucking community,” stated Lee Brown, executive director for the CDTOA.

Lawmakers were given a clear picture of the practices of some brokers while the legislation winded its way through the statehouse. A legislative analysis on the bill showed that in recent years there has been an increase in the frequency of construction trucking brokers that “have engaged in unscrupulous practices toward the dump truck operators whose services they broker.”

Accusations were made that the practices have included delayed or lack of complete payment; filing bankruptcy or fleeing the state to avoid paying amounts due; encouraging noncompliance with safety requirements; and coercing dump truck owners into accepting lesser payment amounts after the dump truck owner has provided services.

The new law requires brokers to secure a surety bond of at least $15,000 to ensure payment. Failure to secure a bond would be a misdemeanor and result in as much as a $5,000 fine.

In addition, a rebuttable presumption would be created in favor of the dump truck operator if there is a civil action filed due to lack of payment. A rebuttable presumption is an assumption of fact unless the broker, in this instance, comes forward in court to contest it and prove otherwise.

Motor carriers are also responsible for immediately notifying the broker if the Department of Motor Vehicles suspends or revokes their motor carrier permit.

Brown said that while much more needs to be done to address rogue brokers, the new law is a good start.

“This will help create an atmosphere that is fair for everyone and create a level playing field,” he said.

A related effort was addressed this summer in Washington, DC. Sens. Olympia Snowe, R-ME, and Sen. Amy Klobuchar, D-MN, offered a bill to raise the bar for brokers and increase the broker bond from $10,000 to $100,000.

The Owner-Operator Independent Drivers Association and the Transportation Intermediaries Association, the trade association that represents brokers, worked closely with the senators to develop the legislation. The issue can be brought up again when Congress convenes in January.

To view other legislative activities of interest for California, click here.

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