By Paul Rosenberg, Senior Editor
After five years of strikes and a series of small victories at individual firms, there are signs of a major shift in the struggle for justice by port truck drivers, along with allied warehouse workers.
The root of the injustice is the “big lie” that they’re “independent owner-operators,” said Jose Portillo, a driver for Intermodal Bridge Transport. His testimony in a May 31 hearing before the Long Beach City Council Tidelands and Harbor Committee was emblematic of how once-marginalized voices are finally getting the attention and respect they deserve.
“Year after year they’ve been violating laws, like misclassifying us, saying that we’re supposedly independent contractors,” Portillo said. “The truth is, that’s not true. Companies tell us what to do, where to go and none of the drivers have the opportunity to negotiate with the customers of the trucking companies. That’s not an independent contractor. That’s an employee.”
That conforms with an April 30 decision by the California Supreme Court in the Dynamex case, affirming use of the “ABC test,” that is utilized in other jurisdictions in a variety of contexts [such as the Internal Revenue Service] to distinguish employees from independent contractors. Being free from the control and direction of the hirer in connection with the performance of the work is the heart of the first, “A” requirement. All three of must be met in order for someone to not be employee.
“While port truckers have won many individual battles for wage theft and related claims rooted in misclassification, massive violations continue due to companies who continue to flagrantly violate the law,” said Fred Potter, Director of the International Brotherhood of Teamsters Port Division. But that could be about to change as a result of actions at both the state and local levels. The Long Beach hearings are part of a search for local strategies, while the City of Los Angeles has already initiated a set of lawsuits against three Cal Cartage companies (taken over by NFI Industries this past October).
New State Bill Would Hold Retailers Accountable
The most promising new approach comes from Senate Bill 1204, drafted by Bell Gardens state Sen. Ricardo Lara. The bill would make large retailers jointly responsible for labor law and related violations by the logistics companies they contract with.
“California has tried for more than a decade to address misclassification and exploitation of port truckers, but these vulnerable drivers still lack the appropriate protections,” Lara told Random Lengths News. “By letting California hold retailers jointly liable when they employ companies that break the law, Senate Bill 1402 will clean up our port trucking industry once and for all.”
The bill passed the Senate 22-12 on May 30, and is going through Assembly hearings, with a floor vote expected in mid-August, Lara’s staff said.
The bill’s findings note that “California’s port drayage drivers are the last American sharecroppers, held in debt servitude and working dangerously long hours for little pay.”
It points out that more than $45 million has been awarded to more than 400 drivers by the state’s Division of Labor Standards Enforcement, but “Drivers have seen little of those awards while misclassification remains endemic, as companies that commit violations go out of business and are replaced by others that repeat the pattern.”
Holding retailers accountable would drastically improve compliance, according to Teamsters spokeswoman Barbara Maynard.
“We anticipate that this will be a game changer in the industry … coupled with the California Supreme Court decision on the Dynamex case, which clarified rules around using independent contractors,” Maynard told Random Lengths News.
One employment law firm report called it the “Contractor Apocalypse,” saying the standard will make it much more difficult for businesses to [mis]classify workers as independent contractors.
Lara’s involvement started about two years ago, when he met with a group of drivers and a couple of warehouse workers.
“The senator began looking at what he could do and that was a complex question because trucking is tricky,” Maynard said. “There’s federal preemption [which struck down the truckers’ employee protection in the original Clean Trucks Program] and there’s local laws, there’s state laws, there’s federal laws, and there’s all kinds of things that make it complicated….. He came up with a piece of legislation is really very elegant and simple…. What Sen. Lara’s bill does is publish a list of those companies that have been found guilty of violating the law for misclassification.”
Retailers that go ahead and use companies on the list then become jointly liable for their violations.
“We think that it’s a creative approach to the problems in this industry that have been here for decades,” said a Lara staffer, on background.
“We’re really excited about this legislation,” said Jessica Durrum, a spokeswoman with the Our People Our Port Coalition, which includes labor, environmental, faith-based and immigration advocates who work closely with port truckers and warehouse workers.
“We’ve seen the lengths to which companies will go to avoid accountability — creating shell companies, ignoring labor commission decisions that become final judgments; they continued to avoid and flout the law,” Durrum said, “So, as many enforcement mechanisms that we have, the better.”
A Handful of Companies Embrace Responsibility, Employee Model
Years of struggle by misclassified port workers are starting to pay off. A handful of companies have abandoned the independent owner-operator model and are now valuable allies, since they, too, are hurt by companies that gain a competitive advantage by continuing to break the law. Toll, EcoFlow and Shippers Transport Express all submitted letters of support for SB 1204.
“We provide fair wages, medical and we make pension contributions for our drivers. But we do so at great competitive disadvantage,” Eco Flow President and CEO Bill Allen wrote. “We fight for survival.”
Allen noted that it is 25 to 30 percent more expensive to use employee drivers. There are a variety of reasons for that. Companies using the independent owner-operator model do not pay for workman’s compensation policies, unemployment insurance fund taxes, medical benefits, pensions, profit sharing or employer payroll taxes or other statutory employment-related programs.
“There is simply insufficient profit margin available to sustain wages and benefits at current levels in an employee context unless everyone plays by the same rules,” Allen said.
“Given our companies’ experience and ability to come into compliance with labor laws, we do not see any reason why every other port trucking company cannot do the same,” wrote Kevin Baddeley, general manager of Shippers Transport Express, which made more than 250,000 drayage moves in 2016. This is second only to the California Cartage companies, now owned by MFI industries, which made over 300,000 drayage moves that year, and now faces lawsuits brought by Los Angeles City Attorney Michael Feuer on Jan.8.
Toll Global Logistics operates across 1,200 locations in more than 50 countries, with over 40,000 employees worldwide. “Around the globe Toll recognizes our most valuable asset is our employees and we take the same approach here in the United States,” Tolls Americas President Geoff Terrill wrote. “Our success in delivering excellent service to our customers not only depends on how we treat our people but how we impact the communities we work in and the planet we inhabit. Therefore, we are committed to creating sustainable value in the movement of goods through highly ethical and socially responsible standards for managing our business.”
Unfortunately, such enlightened attitudes are the exception, not the rule, despite the legal consequences — at least, as far as they have been applied to date.
Lara’s bill, making retail cargo owners responsible for how they move their goods, would substantially add to those consequences. After minor adjustments were made—giving more time for retailers to get out of contracts and providing for monthly updates—the trucking association verbally dropped its opposition to the bill.
Los Angeles Still Has a Role to Play
But no single approach, however well-conceived, should be counted on to fix a situation that’s been in place for decades, which is why city-level measures in Los Angeles and Long Beach are important as well, Durrum pointed out.
Following a sub-committee field hearing in San Pedro this past Nov. 28, 2017, the Los Angeles City Council called on the city attorney to investigate what could be done — in turn stirring Long Beach to consider similar action, Durrum said. This process is still under way. One quick result was the Jan. 8 lawsuits against three Cal Cartage companies — CMI Transportation, K & R Transportation and Cal Cartage Transportation Express.
“These port trucking companies take advantage of hundreds of hard-working drivers, requiring them to pay onerous expenses just to do their jobs, while leaving them without basic benefits and protections — all to boost the companies’ profits,” Los Angeles City Attorney Michael Feuer said when announcing the suits. “It’s wrong and we’re fighting to stop it.”
But despite these lawsuits, and numerous previous findings of violations of state and federal laws, the Harbor Commission still approved a one-year Free Trade Zone Operating Agreement with Cal Cartage on April 5. Councilman Joe Buscaino took a leading role in reversing it and the city council voted unanimously to veto the agreement on May 8.
“Time and again I have told the LA Harbor Commission that NFI/Cal Cartage is breaking the law by misclassifying me as an independent contractor yet they continue to give sweetheart deals to the company,” said Gustavo Villa, a misclassified Cal Cartage driver. “I am so grateful that Councilman Buscaino stepped in to block this sweetheart deal for a company that has shown no regard for the laws of the land.”
It was a step in the right direction, but it begs the question: why did the city council have to intervene in the first place? The Harbor Commission still seems to accept criminal behavior as the norm.
Long Beach Moves Forward, Too
In Long Beach, the city council approved a three-pronged approach on Feb. 20. It added port driver issues to its state and federal legislative agendas, requested the city attorney to “explore options to support regulatory enforcement efforts” by the state, and requested hearings to look for solutions by the Harbor and Tidelands Committee and the Long Beach Harbor Commission. The committee hosted two hearings in May, but a third, originally planned for mid-June has yet to be scheduled. But the overall tone of those meetings reflects a fundamental shift in understanding, which is the result of years of seemingly thankless struggle by port drivers.
For example, in the May 31 meeting, Portillo was one of four presenters, along with Durram, who provided an overview of the port truckers’ struggle. Patrick Henning, the director of the California Employment Development Department, spoke to how misclassification weakened the state’s unemployment and disability insurance system. Jonathan Rosenthal, the CEO of Saybrook Management & Chairman of TTSI Transportation, explained why regulation was needed from a systems view of business, based on 30 years of experience in different aspects of the logistics sector.
“Capital has no conscience and so it needs a regulatory framework,” Rosenthal said. “Capital moves towards return and it moves away from risk.”
In 2016, Saybook determined that the independent owner-operator model was too risky.
“We said, ‘Look, we don’t think that’s right model, we think that that’s too unpredictable, the regulatory environment that’s developing is too unpredictable,” he recalled saying. “It’s cheaper to cheat, no question about it…. It’s your job to give us regulatory certainty.”
That will ensure broad compliance by all companies, not just the more far-sighted ones.
The fact that all these different points of view converged on the same bottom line — the need to recognize port truckers as employees and make that recognition universal — epitomized the shift in consciousness that’s necessary in order for justice to finally be achieved. There’s still a great deal of hard work to be done, translating that awareness into laws, regulations, and most importantly, day-to-day practice on the ground. But the growing universality of that awareness signals a true turning point in the struggle.
That’s a hopeful sign for port truckers, but it’s not their only concern, Durrum pointed out. Port drivers are largely an immigrant workforce, with many — like Portillo — from Central America and many of those here in America under Temporary Protected Status.
“Many, many drivers will be affected by this program which is being phased out as we speak,” Durrum said.
So there’s ongoing organizing to combat the threat.
It’s one of the oldest stories in the labor movement. The ILWU’s founding president, Harry Bridges, was an Australian immigrant, who the government spent decades trying to deport — unsuccessfully. Once again, workers can look back at their history to gain strength for their next struggle, even as the current struggle is yet to be won.