The word is out, dump truck operators have simply had enough and they are starting to band together to implement or maybe even force change in the industry. The impromptu plant strike in Corona last month was noticed by everyone in the materials industry; contractors, producers, brokers and subhaulers. Since that April 7th plant stoppage, I would like to reiterate some of the complaints, comments and recommended solutions to the Slow Pay and No Pay broker problems many seem to now face in our industry.
- When someone contracts your services on an hourly basis, they should not be able to change the rate to "by the ton" or "by the load" at the end of the day, unless the sub-hauler approves it or it is equivalent to or in the sub-hauler's favor.
- Standby time needs to be paid to all workers, including truckers. No one should work for free. Equipment operators and paving crews do not – why should a trucker?
- Negotiated rates should be confirmed with the broker prior to taking a dispatch or, for sure, a load. Ask for a fax or text message confirmation (this protects you with a traceable record).
- The time worked should be accurately reflected on the freight bill by the contracted sub-hauler. Blank freight bills should not be an acceptable business practice.
- Fuel surcharges should reflect the daily current price, not 60-90 days after the fact. There aren’t very many members who can take a 10,000-gallon fuel drop at their yard today, and fuel is by far the most costly aspect of a trucker's operation. Keep good accounting records.
- Each job is different; sub-haulers should know their costs, at least on a per-hour basis and should not work for less than their direct costs, wages, and overhead.
- All brokers must be bonded for $15,000.
- Lastly, don't sign a sub-haul agreement in which you agree to be "paid when paid" or "paid if paid," or paid some 2, 3, 4, 5, 6 months in the future. If you do something like that, don't be "sorprendido," surprised, when you don't get paid on time.
The entire construction economy of California will be affected by continued poor business practices in the material transportation industry.
Although we’ve seen a compression of truck rates, both hourly and tonnage, the realistic fact remains no one can operate below their cost and sustain a viable business. Buying a job just to rob Peter to pay Paul is crazy. Lee Brown coined a phrase, “we are in a race to the bottom”, reflecting on the deflationary or below cost pricing bids now prevalent within the states construction industry. Sad but true, as one broker chooses to accept work below what the minimum cost to operate a truck should be, that broker is ruining our way of living and pushing the industry further and further to the gates of hell.
Members and non-members I have spoken with have no “delusions of financial grandeur” only the expectation of making a fair and honest living being paid for the work they perform on time, in full, without a fight for their check.
Two members of our CDTOA family who have been individually singled out and “blackballed” from one of the material producers and their many plant locations in Southern California, because they said “NO MORE” in their attempts to collect monies owed them by the broker that mainly contracted with that plant.
After hearing of this blackballing, which in and of itself maybe illegal, many of the brokers who conduct their business in a professional manner and pay their subhaulers on time and in full, with no games, started calling these members every day, to make sure that these guys who had the “guts” to stand up on behalf of themselves and everyone, had their trucks out every day.
I would like to thank Fred ReCupido who has really tried to help these members by calling other brokers and asking them to help these guys. Fred did not have to strong-arm anyone, there are very few secrets in this industry, and these brokers stepped right up to help out.
The problems in our industry still exist, but the word about what these members have done is also resonating through the CB airwaves. This is just the beginning. I love it when I hear stories that dump operators are standing together and calling out the bad players in our industry.
Agree or Disagree: The “energy of discontent and change is gaining momentum”. We hope you review the list of actions and potential modifications; we have set a long-term course if need be to address these ideas of change. This problem has been years in the making and will require some time to influence the changes, but we have the resolve and willpower to see it through. The question is: does everyone else in the industry large and small also have that resolve?
Your direct input and suggestions are always encouraged and welcomed. You either have to be in or out. You can no longer sit the fence and hope someone else makes all the tough decisions for you. While CDTOA can help you, to a large degree, you have to help yourself!
Below is a list of ideas and concepts that we are working on to help this industry get straightened-away in the near future:
- Consider adding language to the broker statute which clarifies that general bonding information shall be shared by the surety company/industry with third parties such as public agencies and trade associations like CDTOA when requested or not. CDTOA would provide this information to the industry from a link on its website at no charge.
- What legal strategies can we take to finalize the compliance and enforcement aspects of this Broker Bond legislation?
- Reach out to the construction trade associations with effort to better educate this group concerning the Broker Bond requirement. Talk with the Contractor Licensing Board and determine what we can do to work more closely with this group.
- Research and consider modifying the Contractor’s License Code to reflect the new Broker Bond requirements. Suggest that, especially for public work, contractors and subcontractors can only utilize truck brokers that have a truck broker bond ($15,000). Contractors should be required to make sure they have a copy of the broker's bond on file before utilizing a broker on a quote or project.
- Add language in the special provisions of a Caltrans contract that the Broker Bond requirements will be met and all truckers, when asked, will be provided a copy of the bond.
- Evaluate the potential of "listing" truckers and/or brokers as public works vendors or giving motor carrier’s similar subcontractor standing on contracts. We would like to eliminate the unfair and undesirable business practice of bid peddling and bid shopping by entities with whom the trucking company or broker contracts with. See footnote 1 below.
- Investigate joint signature check requirements with the contractor. This is typically driven by the owner to make sure everyone is paid. This may help solve many problems.
- Research the “pay if paid” or “paid when paid” clauses and report on just what California law allows.
- Determine who has standing to sue if not paid under existing statutes. Can these laws, if flexible, be applied to work in our industry?
- Senate Bill 856 was chaptered on October 19, 2010 and impacts California Government Code 927, known as the California Prompt Payment Act. The Department of General Services (DGS) is in the process of determining the effects of the chaptered legislation and details are scheduled to be forthcoming. We are in the process of researching the DGS’s analysis and references to determine how they interrelate with the Broker Bond; they are just now developing policies and correspondence to define the changes to the Act.
- Research CDTOA’s standing to sue on behalf of members concerning civil or criminal activity and particularly concerning the broker bond requirement.
Yes, these are some of the ideas we will be analyzing this year and determining whether or not we will need legislation or other changes in the industry to implement. We have over 70 years of industry knowledge and a statewide network committed to improving every aspect of our industry. While we can do many things, CDTOA cannot do it all alone.
You still need to understand how to run your own business and that may entail doing things you don’t know how to do or even may not want to do, but that is the difference between an employee and a independent business person. You need to first decide which one you are. If you are an independent business person we can help you.
As the old saying goes, The willingness to accept responsibility for one's own life is the source from which self-respect springs!
There is Strength in NUmber
Greg Wallace (909) 578-8595