By Chris Dupin / www.americanshipper.com / February 27th, 2018
The class-action lawsuit filed in California on Monday alleged that the port drayage arm of XPO Logistics is misclassifying truck drivers as independent contractors.
A class-action lawsuit filed against XPO Logistics on Monday claims that the company’s port drayage arm is misclassifying truck drivers as independent contractors.
The lawsuit comes less than a week after the Long Beach City Council said it would seek to “support legislation that improves working conditions for port truck drivers.”
The lawsuit, filed in Superior Court of California, County of Los Angeles, Central Division, says that because drivers who perform work for XPO Logistics Cartage and XPO Cartage are classified as independent contractors instead of employees, they are denied “fundamental protections due to employees under California law.”
It asks for “restitution of unpaid wages and unlawful deductions made from truck drivers’ pay, and to prosecute a private enforcement action to collect civil penalties under California’s Private Attorneys General Act.
C. Joe Sayas Jr., one of the attorneys for the three truck drivers who filed the suit, said in a press conference that while “employees are protected under California law to the extent that fundamental rights are guaranteed to them, those rights disappear when employees are not accorded their employee or employment status or they become classified as independent contractors.
“They have lesser rights,” he said, "but it’s more profits to these companies.”
According to a summary of regulatory action and litigation against XPO Logistics and predecessor companies such as Pacer Cartage compiled by the Teamster-led group Justice for Port Drivers, millions of dollars have been awarded to drivers under misclassification complaints filed with the California Labor Commissioner, the National Labor Relations Board, and through private litigation. Some of those awards are being appealed.
In its annual 10K report for 2017, filed earlier this month with the Securities and Exchange Commission, XPO said, “While we believe that our contract carriers and owner-operators and their drivers are properly classified as independent contractors rather than as employees, adverse decisions have been rendered recently in certain cases pending against us, including with respect to class certification of certain contract carriers and determinations that certain of our contract carriers and owner-operators are improperly classified.
“Certain of these decisions are subject to appeal, but we cannot provide assurance that we will determine to pursue any appeal or that any such appeal will be successful,” XPO told shareholders.
“Adverse final outcomes in these matters or changes to state laws could cause us to change our business model, which could have a material adverse effect on our business strategies, financial condition, results of operations or cash flows,” the company said, adding that since thousands of workers are involved, “unfavorable resolution of one or more of these matters could have a material adverse effect on our financial condition, results of operations or cash flows."
He said prior lawsuits against XPO have not been able to deter it from classifying workers as independent contractors, which he said results in them not being compensated, for example, while waiting for truck inspections, when they wait for assignments, or when they generate paperwork. As independent contractors, he said drivers are deprived of meal breaks and rest breaks, and that XPO does not pay for workers compensation coverage.
“What is new in this case is that we not only seek to recover those wages, those penalties or monetary claims that the drivers have…what we seek to do is to end the unlawful conduct through an injunction that we are seeking in this case," he said.
Sayas said a similar approach was taken in a lawsuit against Shippers Transport Express and its parent company SSA Marine, which was able to not only “recover significant amounts of back wage, but also put an end to this misclassification.
"These drivers who are actually employees of the biggest marine terminal operator in the country, now are classified as employees, now are having health care coverage, retirement coverage and they are being paid for each and every hour that they worked," he said.
A spokesperson for XPO said, “We haven’t received a copy of the filed complaint. But, we know the vast majority of port drivers want to maintain their independence as contractors. We’ll continue to defend this business model.”
Weston LaBar, the chief executive officer of the Harbor Trucking Association, said his organization also supports drivers having a choice of whether they want to be independent contractors or employees, and says with a shortage of truck drivers, there are ample opportunities for workers to become employee drivers if that is their wish.
He said about 16,000 truck drivers are registered to work in the Port of Los Angeles and Port of Long Beach, but that about 10,000-11,000 move freight on a regular basis in and out of the ports. He estimates only about 1,000-1,500 are employees.
Louie Diaz, vice president of Teamsters Local 848, said his local now represents more than 500 truck drivers who haul cargo on and off the docks of the Port of Long Beach. LaBar said two larger drayage companies doing business in the ports - Shippers Transport and Sea-Logix - have drivers represented by the Teamsters.
The Long Beach Council resolution directed the city attorney to work with the offices of the California Labor Commissioner and the state’s Attorney General to “explore options to support regulatory enforcement efforts.”
Long Beach Mayor Robert Garcia said that while the port handled record cargo volumes in 2017 and is spending billions of dollars on infrastructure improvements, a major unresolved issue is what he called an “unsustainable” trucking system.
“We have long wait times that force truckers to work long hours and limits their ability to make adequate numbers of trips per day to make a living, and that also hurts those that are trying to get their goods from here across the country and certainly those trucking companies as well,” he said.
While there are “a lot of great trucking companies working at the port,” Garcia said there are other trucking companies "taking advantage of workers."
"It is important that good firms have the ability to pay appropriate wages and not be undercut by others who are not paying their employees properly," Garcia said.
He accused other drayage companies of undercutting companies with Teamster drivers. He also complained that large retailers are “aiding and abetting these lawbreakers by continuing to contract with them for drayage when they know, without a question, that they are illegally exploiting these drivers…often in violation of their own Code of Conduct.”
For many years, the Teamsters and other community groups have been seeking to have port draymen reclassified as employees of trucking companies instead of independent contractors. As employees, the Teamsters or other unions would have the ability to unionize those workers.
Garcia said in a statement earlier this month that, “The California Labor Commissioner has received more than 900 complaints regarding misclassification of truckers at the ports and upheld more than 500 claims while awarding millions in fines and restitution.”
Poor working conditions “cause hardships for the truckers’ families and put the public at risk. The State Labor Commission has fined dozens of companies millions of dollars for misclassifying and underpaying truckers working at the ports,” said Garcia.
Last October, two bills - Port Drivers’ Bill of Rights Act (H.R. 4144) and the Clean Ports Act of 2017 (H.R. 4147) - were introduced in the U.S. House of Representatives that aimed to improve working conditions for truckers and the environment around ports.
The Teamster-backed group, Justice for Port Drivers, said the first proposed bill would “create a taskforce to review the broken system and crack down on bad actors,” while the second would “modernize federal trucking rules to empower local ports to require ports address truck pollution and congestion at such facilities.”
Legislation is also expected to be introduced in the California legislature.
LaBar said he has seen a draft of a bill being proposed by State Senator Ricardo Lara that would create a “shame list” for companies that have been “found guilty in the realm of misclassification,” as well as other violations of employment law, including infractions having to do with violations of rules regarding meal and rest breaks. He said the draft he has seen could also make beneficial cargo owners jointly and severally liable for penalties, but there would be an exception for companies that have employees working under a collective bargaining agreement.
A spokesman for Lara said he hasn’t introduced any legislation of harbor trucking, and could not “comment on legislation until it is introduced or confirm that Senator Lara is working on such a proposal.”
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