For affiliates for transportation, it is important to understand the nature of their business. They usually have a fleet of trucks, coaches or buses, and they often lease or sublease space to accommodate all of these vehicles. The typical agreement includes the leasing of a warehouse, vehicle, gate and loading dock. Other services may be available as part of the package, such as warehousing, transportation management and storage.
Many companies offer a broad range of services that allow them to handle a variety of functions, but at the same time, they must retain and rely on limited control over specific areas. A common example is warehousing. Warehousing requires the management of inventory, receiving, picking, packing and transporting goods. Some of these functions are performed by independent contractors, while other functions are performed by the company’s in-house employees. In either case, companies have sole discretion to hire or fire subcontracted personnel, hire or dismiss their own warehouse employees, and determine who will perform the warehousing responsibilities.
Under most warehousing arrangements, the affiliate is responsible for providing the warehouse, receiving, picking and packing. If a customer fails to provide the required services, the company has no choice but to charge the affiliate a fee to provide these services. Most agreements specify that the customer must pay for the actual cost of goods being picked, packed and shipped. The company then reserves the right to bill the affiliate for handling services, which include compensation for goods that are damaged, delayed and returned.
There are a number of potential concerns that arise from the fact that affiliates for transportation are responsible for maintaining warehouse inventory, warehousing requirements and distribution handling services performed by third party subcontractors. In addition to the potential cost issues, there is the inherent risk that information obtained through the use of third party subcontractors may fall into the wrong hands. Affiliates must implement policies that are designed to prevent and detect the transmission of confidential information. They must ensure that their system is adequately firewalled to prevent unauthorized access and transfer of sensitive information. They must have a dedicated staff that monitors all information to make certain that it is not misused.
The cost of the warehouse, receiving and shipping facilities and third party subcontractors are considered the cost of doing business. Therefore, an affiliate is responsible for meeting those costs. All material and funds received by the fulfillment house are kept confidential and are only released under very specific circumstances, including customer approvals and completion of specific sale agreements. There are some distribution warehouses that impose additional liability limitations that are generally found in employment contracts, commonly referred to as venue liability. This type of limitation generally provides the employer with increased recourse if they are sued by an employee or member of the public.
Some warehousing and distribution handling services agreements specify that the company will be liable for damages sustained by any third party as a result of negligence or improper work practices. In such cases, the employee will need to prove that the employer was aware of the dangerous work practices and failed to provide proper safeguards against them. If the employee is unable to do so, they may recover lost wages and medical expenses. Under the California Uniform Commercial Code, all employers are required to provide appropriate warnings and instruction for employees concerning hazards associated with their jobs.
The employer may require that the work place be designed to make it physically difficult for a person to become injured or fall ill while at work. They are also expected to provide safety equipment like fire extinguishers, clear signs of working places and emergency phones. In addition, they must ensure that employees are trained in safely handling hazardous materials, including the use of non-reactive personal protective equipment like gowns and gloves. All warehouse and handling services agreements will specify the minimum number of personnel that may be employed to keep the warehouse and work place safe, unless otherwise specified in the written agreement.
Some of the other main components that will be addressed by a warehousing and handling services agreement are third party subcontractors, minimum levels of liability, insurance and liability limitations. The third party subcontractors will generally have a lower level of liability than the actual warehouse or handling services provider, unless otherwise stated in the agreement. The minimum levels of liability may be determined by looking at the scope of services that are being offered and the actual expenses that were incurred in the servicing of the agreement. If the contract is for a long period of time and there are no additional terms or conditions related to the indemnification of the employee, then the employee will not be responsible for anything beyond their own negligence.