What is AB 2754?

Update: AB 2754 was signed into law on September 27, 2024.

AB 2754 is newly passed legislation that, if signed by Governor Gavin Newsom, would impact employment contracts and agreements in the port drayage motor carrier’s industry. This new law builds on existing law that prohibits a person or entity from entering into an employment contract or agreement with a construction, farm labor, garment, janitorial, security guard, or warehouse contractor if the person or entity knows or should know that the contract or agreement does not include sufficient funds for the contractor to comply with all applicable local, state, and federal laws or regulations related to the job specified in the contract.

A person or entity—the customer—can take steps to limit their exposure in these situations if the contract they sign contains nine specific pieces of information including the number of workers (including independent contractors) who will perform work under the agreement, the amounts those workers are to be paid and when they will be paid. A copy of this contract must be provided to the Labor Commissioner upon request. These contract requirements, which will certainly alter the bargaining position of the contractor and the customer, only provide a rebuttable presumption that the customer did not violate the law. A violation can still be established if the facts show that the customer knew or shown have known that the contract did not provide sufficient funds.

A customer who violates this law can be sued by the employees of the contractor the customer hired for actual or statutory damages plus attorney’s fees.

AB 2754 now extends this law to the customers of port drayage motor carriers.

What now?

If this law is signed, then effective January 1, 2025, customers of port drayage services may share civil legal responsibility and civil liability to port drayage drivers wage & hour claims including a motor carrier’s misclassification of drivers as independent contractors. Under the “ABC Test” now used in California, it is very difficult for motor a carrier’s truck drivers to qualify as independent contractors.

At this time, we believe it is likely that Governor Newsome will sign this bill into law. Preparation is of the utmost importance. Revising existing contracts and preparing new contracts may prevent and mitigate costly lawsuits and fines. Port drayage motor carriers may seek to review their treatment of drivers (and other workers) to ensure compliance with California’s Labor Code. Doing so will put them in a stronger position to compete in a market where customers will become increasingly cautious about which motor carriers they hire.

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