California closer to revised broker rule

By Keith Goble, Land Line state legislative editor | Wednesday, August 15, 2012

One step closer to passage at the California statehouse is a bill that is intended to help subcontracted carriers with brokers.

For the past 19 months California law has required a broker of construction trucking services to post a bond to ensure payment to a subcontracted carrier whose services were brokered. The broker also receives certification of the subcontracted company’s permit to operate.

Brokers are required to secure a surety bond of at least $15,000 to ensure payment. Failure to secure a bond is a misdemeanor and could result in as much as a $5,000 fine.

The California Construction Trucking Association, formerly the California Dump Truck Owners Association, was instrumental in getting the existing rules in place. However, concern about crooked brokers who try to skirt the new rules led the CCTA to call on lawmakers to revisit the rule

In recent weeks two Assembly panels have endorsed a bill to require construction trucking brokers to disclose a copy of his or her surety bond. The bill – SB1092 – now awaits further consideration before the full Assembly. If approved there, the Senate would need to sign off on changes before it could advance to the governor’s desk.

Sen. Kevin de Leon, D-Los Angeles, has said the change would improve transparency in notification requirements.

“There still are very unscrupulous brokers out there that continue to dodge their bonding responsibilities under the law by either never attaining a bond or refusing to provide access to the bond to subhaulers,” de Leon previously testified at the statehouse.

He also noted that existing law does not include the requirement that brokers notify others of the bond information.

This year’s bill addresses that problem by adding notification requirements to the existing broker bond.

Supporters say that by creating easier access to a copy of the bond, a subcontracted carrier will know up front if in fact they are contracting with a bonded broker. In addition, if the work has already been completed and the broker has not made payment, the dump truck operator can easily access the bond information to file a claim.

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

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