[ Three bills would give trucking companies less incentive to
misclassify full-time drivers as contractors.] [[link removed]]


CALIFORNIA ATTEMPTS TO REIN IN EXPLOITATION OF TRUCK DRIVERS  
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Larry Buhl
September 7, 2021
Capital and Main
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_ Three bills would give trucking companies less incentive to
misclassify full-time drivers as contractors. _

The Port of Long Beach, California. , Hal Bergman.

 

LIKE MANY TRUCK DRIVERS DELIVERING GOODS from the ports of Long Beach
and Los Angeles to big retailers throughout Southern California, Juan
Carlos Giraldo has a contract job, and it looks decent at first
glance. His primary employer, Container Connection
[[link removed]], pays a flat fee of $300 for a
round trip from a port to a Walmart warehouse in Mira Loma. With no
traffic or wait times, the trip takes four hours, which means Giraldo
can make 10 round trips a week. In the best case scenario, he earns
$3,000.

But the best case scenario usually doesn’t happen. Long waits at the
port are routine, because his dispatcher doesn’t let him know when a
shipment is ready to load. If Walmart doesn’t have an empty
container ready to bring to the port, he earns half of his round-trip
fee: $150. As a contract worker, Giraldo is responsible for insurance
on the company truck and goods, which is $180 per week. Fuel averages
$300-$400 a week, also out of his pocket. He has to cover health
insurance for himself and his family and fund his own retirement. He
has no disability benefits, which is risky in a job requiring manual
labor. He is essentially paying to work, and if the company doesn’t
give him any assignments, “I will have negative income that week,”
Giraldo told Capital & Main through an interpreter.

Giraldo, a father of four, wants to be an employee, and says Container
Connection has misclassified him and other drivers as independent
contractors. The California Employment Development Department (EDD)
also determined that Giraldo should be an employee. As for why he
doesn’t go to another company, Giraldo says it wouldn’t make a
difference. “Most companies operate on the contractor model and not
many opportunities to be an employee. They have rigged the system for
themselves.”

Container Connection, which delivers goods to Southern California
retailers including Walmart, Ross Dress for Less and for brands
Toyota, Whirlpool and Hanes, has a long record of worker
misclassification judgments and findings of labor rights violations.
It is also the object of an April 14 strike honored by ILWU
dockworkers. Giraldo himself was part of a Cal OSHA complaint in
March, saying the company failed to protect its workers from COVID-19.
Neither Container Connection, nor its parent company, Universal
Logistics Holdings [[link removed]], responded to
requests for comment.
 

By classifying workers as independent contractors, rather than
employees, companies can avoid the cost of unemployment and other
taxes, as well as workers’ compensation insurance.

 
Container Connection is not the only company in drayage
(ship-to-warehouse) trucking accused of routinely skirting labor laws
at ports in California and elsewhere in the U.S. A 2017 _USA Today_
series
[[link removed]] and
a short video
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documented misclassification that resulted after the ports implemented
new clean truck requirements, leading the truckers to become what the
reporters call “modern-day indentured servant[s].” A report on
the trucking workforce
[[link removed]] by
the UC Berkeley Labor Center estimated that nearly a quarter of
California truck drivers are misclassified as independent contractors,
a practice that deprives the state of tax revenue and threatens
California’s ambitious climate goals. And a white paper
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by the _BLS __Monthly Labor Review_  earlier this year highlighted
significant variations in wages among all truckers and declared the
trucking market “broken.”

By classifying workers as independent contractors, rather than
employees, companies can avoid the cost of unemployment and other
taxes, as well as workers’ compensation insurance. Trucking
companies also don’t have to pay contract truckers for lost time
waiting at the ports for shipments, or cover their insurance for lost
or damaged cargo. Companies can be fined by the state for
misclassification, but they factor penalties into the cost of doing
business, critics say.

Three bills up for a vote this week in the California Legislature aim
to prevent three aspects of what advocates call exploitation of port
drivers. Sponsored by the BlueGreen Alliance, Teamsters, the Los
Angeles Alliance for a New Economy (LAANE) and other workers’ rights
groups, the bills would give trucking companies less incentive to
misclassify full-time drivers as contractors. (Disclosure: The
Teamsters are a financial supporter of this website.)

The first bill, SB 338
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introduced by state Sen. Lena Gonzalez (D-Long Beach), was created to
strengthen a 2018 law
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that created a blacklist of trucking companies accused of
misclassifying employees. That law made retailers contracting with
these companies liable for classifying their drivers like Giraldo as
independent contractors rather than employees. But it also allowed
alleged violators ample time to appeal before appearing on the
blacklist, according to Scott Cummings, a law professor at UCLA with a
specialty in local government law.

“Courts take up the matter, but the trucking industry has the money
to play the long game,” Cummings says. “Proving misclassification
is time consuming and backward looking. Lawsuits don’t transform the
industry.”

Cummings, who authored a book
[[link removed]] on the L.A. ports
campaign, says SB 338 is designed to place legal responsibility on the
“most powerful economic actors in the retail chain,” the retailers
who are receiving the goods. The reason, he and other industry critics
say, is that many smaller trucking companies have a habit of going out
of business and returning under another structure before they’re hit
with fines. And, if they’re ultimately fined for violations, they
keep doing business as usual.

“Small (trucking) companies go out of business and regroup,”
Cummings says. “Walmart and other big retailers won’t go out of
business. They ultimately control the system.”
 

“Widespread worker misclassification has left drivers without a
safety net. It is not enough to just say we value essential workers
— our legislation must match our rhetoric.”

~ California State Senator María Elena Durazo

 
A second bill, AB 794
[[link removed]],
introduced by Assemblymember Wendy Carrillo (D-Los Angeles), directs
the California Air Resources Board (CARB) to develop workforce
standards that trucking companies must meet if they want state
incentives for buying low emission vehicles.  A third bill, SB 700
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would, as its author, state Sen. María Elena Durazo (D-Los Angeles)
says, minimize the incentive to misclassify drivers by making trucking
companies cover payroll taxes for unemployment insurance, not the
driver. Bringing up the havoc wreaked on truckers by COVID-19, Durazo
said
[[link removed]],
“Widespread worker misclassification has left drivers without a
safety net. It is not enough to just say we value essential workers
— our legislation must match our rhetoric.” SB 700 makes trucking
companies, rather than the drivers, pay for payroll taxes for
unemployment insurance.

Capital & Main reached out to industry groups, including the
California Trucking Association and the Harbor Trucking Association,
but did not receive a response.

 
DEREGULATION LED TO A “SEA OF SHARKS”

The trucking industry generally and the drayage industry specifically
has run on an “independent owner-operator” system for decades. A
white paper
[[link removed]]
written by the Los Angeles Alliance for a New Economy (LAANE)
concludes that, even when courts side with drivers in worker
misclassification claims — which they routinely do — trucking
companies rarely change their practices.

“Trucking (companies) factor fines into the cost of doing
business,” says Jessica Durrum, director of LAANE’s Our People Our
Port campaign. Durrum points out that misclassifying drivers as
independent contractors hurts taxpayers, too, “because some
companies are not paying payroll taxes, and it hurts good companies
swimming in a sea of sharks.”

The industry didn’t always treat drivers this way. Through the 1970s
most truckers were unionized, and most companies that employed them
were Fortune 500 companies. The industry functioned like a utility,
according to Steve Viscelli, a lecturer in economic sociology at the
University of Pennsylvania.

Viscelli, who embedded himself in the industry and actually drove a
truck, published his experiences in a book
[[link removed]]. He says the industry has, for
decades, been in a race to the bottom. “We saw big turnover in
drivers, like 100% in a year,” he said. “Companies have average
stays of six months.

“In the 1970s drivers went home every night. Now they live out of
the truck.”
 

Not every trucking company takes the low road in classifying truckers.
Some are voluntarily hiring drivers as employees, possibly responding
to an industry-wide labor shortage.

 
What changed was deregulation, starting with the Motor Carrier Act of
1980 [[link removed]].
The Federal Aviation Administration Authorization Act of 1994, or
AAAA, mandated that no state can pass laws affecting the pricing of
any motor carrier, effectively tying the hands of state and local
lawmakers across the country wishing to change wage and labor laws
affecting truckers. The Ninth Circuit Court of Appeals has temporarily
stopped the state’s sweeping employment law, AB 5, from applying to
California truckers, citing federal laws prohibiting wage changes.
Part of the Port of Los Angeles’ Clean Truck Program
[[link removed]]
— the part mandating that trucking companies make all their drivers
employees — was struck down
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by the Ninth Circuit Court of Appeals in 2011, saying AAAA prohibited
changing worker classification.

According to Viscelli, industry deregulation increased volatility and
inefficiency.

“We hear the big lie that deregulation results in more efficient use
of labor,” he says. “No, it shifts costs of inefficiency onto
workers, because there is no incentive for schedulers to be
efficient.” An example of that is when drivers like Giraldo wait for
hours — unpaid — at the port for a shipment to be ready.

Both Viscelli and Cummings believe the trio of bills making their way
through the Legislature, especially the one strengthening
accountability for retailers using trucking companies that violate the
law, will help curb worker misclassification. But they agree that
tweaking AAAA at the federal level is necessary for widespread
industry change. Viscelli advocates a federal floor for trucking wages
and the ability for states to go above it. Cummings said that the
three trucking bills in Sacramento would help, but the best solution
would be to amend AAAA to let cities and states set labor standards
for truckers.

Unfortunately, there’s no effort in Congress to change federal
regulations affecting trucking employment and wages. Meanwhile, state
courts — and, possibly, the Supreme Court — will continue
clarifying the line between federal law and efforts by states and
cities to pass new laws. California’s AB 5, which, ironically, was
written after the state Supreme Court determined that a trucking
company had misclassified its workers
[[link removed]],
cannot be enforced until the U.S. Supreme Court
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weighs in.

Even critics of the industry point out that not every trucking company
takes the low road in classifying truckers. Some are voluntarily
hiring drivers
[[link removed]]
as employees, with benefits, possibly responding to an industry-wide
labor shortage
[[link removed]],
which Viscelli says is more of a retention shortage. “We have three
times the number of workers we need, but they have been burned. After
decades of treating (truckers) badly, the industry is surprised that
they aren’t eager to come back to work.”

 
_Copyright 2021 Capital & Main_

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