Kentucky one step closer to prohibiting unfair trucking clauses

By Keith Goble, Land Line state legislative editor | Thursday, February 20, 2014

A bill halfway through the Kentucky statehouse covers unfair clauses in trucking contracts.

The Senate voted unanimously to send a bill to the House 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.

Provisions in contracts would be outlawed that provide for shippers to be indemnified for losses caused by their own negligence and make them “void and unenforceable.”

States lawmakers across the country have been active the past few years changing rules on indemnity clauses. There are 40 states that have acted to forbid 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 Colorado, Delaware, Kentucky, Mississippi, New Hampshire, New Jersey, New York, Ohio, Rhode Island and Vermont. Colorado lawmakers are considering a bill that would remove their state from the short list.

Advocates for the rule change say that truck drivers doing business in states that have yet to act have little or no choice but to accept the unfair terms.

Supporters say that indemnification clauses can 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.

They say the contract clauses are bad for the trucking industry. Another complaint is they create a safety issue because the shipper’s incentive to perform its duties in a prudent and reasonably safe manner is eliminated.

Affected contracts in Kentucky would be 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, or other intermodal equipment.

The bill, SB59, awaits consideration in the House Transportation Committee.

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