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Port Trucking Companies Take Bold Stance: Above California Law

by Jana Ritter - Published: 12/18/2013

Several leading port trucking companies have taken a bold new position in the ongoing battle over whether or not they are misclassifying drivers as independent contractors. In recent filings with the U.S. District Court, they have attempted to position themselves as beyond the reach of California’s employee protection laws. In effect, they are saying that whether or not they are misclassifying drivers there is nothing the State of California can do about it.

Port strike

Of the approximately 12,000 port truck drivers in Southern California – about 110,000 nationwide – the overwhelming majority are improperly classified as “independent contractors.” The repercussions, for these low-income, mostly immigrant drivers are denied basic workplace rights and protections: no minimum wage or overtime or OSHA protections, no disability or workers comp or unemployment insurance, no legal right to organize a union. Instead, drivers are saddled with payments for the trucks they drive, leaving them to sometimes make pennies per hour for a 60+ hour work week.

Recently, various levels of government have taken notice and begun to address a scheme that deprives the public of millions in unpaid taxes. In recent years, both the federal and state governments have filed lawsuits against California port trucking companies over their misclassification of drivers, and the state Labor Commissioner has begun to hear some of the hundreds of driver claims seeking redress. Unsurprisingly, once the facts come to light drivers: Of the 19 identified Labor Commissioner rulings in the past year or so, all 19 have found drivers to be illegally misclassified, and owed an average of about $66,000 each. (The Labor Commissioner uses a stringent, multi-factor test.)

From the industry’s perspective, this is an existential battle. Just at the Ports of L.A. and Long Beach, trucking companies may be looking at well over $1 billion in liability for past wage theft. And in addition to the financial hit, if trucking companies were to recognize drivers as the employees they actually are then it would mean granting drivers some degree of rights on the job, and possibly a voice in their working conditions.

In the fall of 2012, several industry leaders went on the offense, filing a novel lawsuit asking the court for “a Temporary Restraining Order prohibiting the Labor Commissioner… from investigating, processing, or proceeding to hearing on any claim” brought by drivers against these companies. These companies were asking a federal court to order the California Labor Commissioner to stop doing her job. Earlier this year, the complaint was dismissed.

But these companies came back in August with a different complaint, and the same request. This time, they spelled out their argument more fully. Because drivers are involved in interstate commerce, the companies argue, this “exempts Plaintiff [trucking companies] from complying with California’s wage and hour and employee-related laws.”

These trucking companies seem to realize that they have been caught engaging in a massive fraud. Most responsible companies would either change their practices or argue that the Labor Commissioner is wrong. These companies instead chose to take a third path: arguing the laws don’t even apply to them.