Minnesota moves one step closer to protection from indemnity clauses

By Keith Goble, Land Line state legislative editor | Tuesday, March 27, 2012

An effort to protect truck drivers in Minnesota from an unfair clause in motor carrier contracts continues to advance through the statehouse.

The Senate Judiciary and Public Safety Committee voted unanimously to advance a bill to the Senate floor that would do away with indemnification clauses in trucking contracts. The clauses are set up to protect shippers or hold them harmless from anything that happens with a shipment.

If approved by the full Senate, the bill – SF1687 – would move to the House for further consideration.

There are 31 states that have acted to outlaw the provisions in contracts. All of Minnesota’s neighboring states have adopted the protection for truckers.

Sen. Julianne Ortman, R-Chanhassen, said that Minnesota needs to jump on board. She pointed out that indemnification clauses require freight carriers to take on liability for the negligence of shippers. As a result, truckers are responsible for trailer packing, even though shippers actually do the packing.

“The rules in place make it more difficult for trucking companies in Minnesota to compete with others across the country,” Ortman told committee members before the vote. “We need to update the law.

Ortman’s bill would outlaw provisions in motor carrier contracts that provide for shippers to be indemnified for losses caused by their own negligence and make them “void and unenforceable.”

Affected contracts are defined as “a contract, agreement, or understanding” 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, including the storage of property.

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

Minnesota Trucking Association President John Hausladen testified that 14,000 trucking operations in the state with interstate authority would be affected by the effort. He also pointed out that 97 percent of affected companies operate 20 or fewer trucks.

“The trucking industry is still a small-truck type operation. These are the kind of folks we are here to talk about and represent,” Hausladen said.

He also addressed the argument that truckers should simply avoid signing contracts with the unfair provision.

“Some would say ‘just don’t sign the contract.’ The reality is our members cannot afford not to,” Hausladen testified. “Trucking firms feel that if they balk at these provisions they will lose business. In today’s freight markets smaller companies have absolutely no leverage to negotiate these out of contracts.”

OOIDA leadership says protections from indemnity clauses are good for all truck drivers coping with unreasonable demands from those who contract for transportation.

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

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