An amendment to a California labor statute exposes shippers to liability if they use certain “blacklisted” drayage carriers. The new law went into effect in January 2019, and it applies to any business entity that engages a blacklisted port drayage motor carrier (PDMC) in California. Of note, this applies to companies that indirectly use PDMCs through an agent, such as a forwarder or broker.

By the fifth of each month, the California Division of Labor Standards Enforcement will publish an updated blacklist identifying PDMCs that have been found guilty of certain labor violations. These judgments may include failure to pay wages, remit payroll taxes, or provide workers’ compensation insurance, as well as misclassification of employees as independent contractors or other infractions. According to Labor Code section 2810.4, any business that hires a blacklisted PDMC, “shall share with the motor carrier or the motor carrier’s successor all civil legal responsibility and civil liability owed to a port drayage driver for port drayage services obtained after the date the motor carrier appeared on the list.”

The law provides exemptions for certain entities, such as state and local governments, businesses with fewer than 25 employees, and marine terminal operators. Deringer recommends that shippers have a thorough and documented vetting process in place for all of their shipping partners. For additional information about this law or Deringer’s vetting processes, please contact us.