Jan. 17–Since 2011, trucking companies at the ports of Los Angeles and Long Beach have been ordered by the state to pay drivers more than $45 million in wages and restitution for illegally classifying the workers as “independent contractors” instead of employees — a move that allowed the companies to avoid paying payroll taxes, benefits and even the minimum wage.
Yet despite more than 400 decisions in favor of individual drivers, trucking companies and the industry at large continue to treat port truckers as contractors. As a result, truckers can work full-time hauling cargo between the ports, railyards and warehouses and wind up with just pennies after paying their truck lease, fuel costs and other expenses.
Now, the city of Los Angeles is attempting a more systematic crackdown on the misclassification and abuse. That’s appropriate because vitally important city environmental policies helped fuel the inequities of the logistics industry.
The ports of Los Angeles and Long Beach are the single largest source of air pollution in Southern California. A decade ago, the ports sought to cut toxic emissions by barring old, dirty trucks from the complex. Most drivers could not afford newer, cleaner models, however, so they leased new vehicles from trucking companies. A USA Today investigation last year found the leases often heavily favored the companies and effectively forced drivers to continue working in unfair conditions or risk losing their investment.
City Attorney Mike Feuer last week filed unfair competition lawsuits against three companies that operate at the ports. The lawsuits allege that CMI Transportation, K&R Transportation California and Cal Cartage Transportation Express have increased their profits and evaded paying employment taxes by illegally classifying drivers as independent contractors.
In reality, the lawsuits contend, the drivers are “plainly employees” under California law because the companies exert near complete control over their work. The companies make the assignments, set the rates, schedule delivery times and often own the trucks. As a result of the misclassification, the lawsuits allege, drivers are forced to absorb tens of thousands of dollars in costs that an employer would typically cover, such as fuel and truck maintenance. The ruse also gives the companies an unfair cost advantage over rivals who rightly classify drivers as employees, the complaints assert.
Until now, drivers’ claims have been considered individually by the state Labor Commissioner’s Office, so even when a company loses, it’s not ordered to change how it treats other drivers. (And many companies avoid paying the penalties by declaring bankruptcy or changing legal ownership.) Feuer’s lawsuit is significant because it’s the first attempt by a prosecutor to go after companies for the practice of misclassification.
The Los Angeles City Council is also looking for ways to block companies from operating at the city-owned port if they violate labor laws. The council has asked the city attorney to investigate whether L.A. could require “fair wages and working conditions for employees” as a condition of operating on city property. It’s heartening to see city leaders finally step in; this is an unjust system that cannot be allowed to continue.
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