The City of Los Angeles sued three port trucking companies Monday, alleging the firms exploit their drivers by misclassifying them as independent contractors.
The City alleged that CMI Transportation, K&R Transportation California and Cal Cartage Transportation Express have engaged in schemes to avoid paying minimum wage and employee benefits by classifying hundreds of workers as independent contractors even though the companies “exert near complete control” over the drivers’ schedule.
According to the report in the Los Angeles Times, all three companies are owned by NFI Industries, a New Jersey-based logistics firm. NFI purchased the businesses from Long Beach-based California Cartage in October.
The suits are the latest in a long-running dispute at the twin ports of Los Angeles and Long Beach, where many port truck drivers say they are improperly classified as independent contractors and must lease their rigs under unfair terms.
The terms, they say, are so onerous that for some pay periods they make nothing and actually end up owing the trucking company money.
A large part of the problem, the lawsuits say, are lease programs the companies established to comply with 2008 city rules mandating low-emission trucks be used to deliver goods to and from the ports of Los Angeles and Long Beach.
The city attorney alleged the leases place strict requirements on how many loads must be undertaken for the company, essentially chaining a so-called independent contractor to one firm.
At the end of the leases, the lawsuits allege drivers do not own their truck but are given an opportunity to purchase it for a “significant lump sum.” That leads many drivers to refinance the lease, once again binding the worker to one company.
Last decade, the Port of Los Angeles tried to mandate truckers be employees of companies, fearful that workers couldn’t afford the newer, cleaner rigs. But that mandate was struck down by federal courts, a decision that driver advocates blame for exacerbating an existing problem of abusive leases.
Though ongoing for years, the issue received renewed attention following a series of stories last year in USA Today.
In December, the Los Angeles City Council approved a plan to investigate claims of wage theft by port truck companies and look into whether the city could deny port access to companies in violation of labor laws.
Asked why the suit was filed against the three NFI companies when drivers allege misclassification among many operators, the City Attorney said his office is investigating “additional companies as well.”
Since 2011, the California labor commissioner’s office has awarded port truck drivers more than $46 million in cases where they contended they were misclassified as contractors.
Drivers and the Teamsters union have also organized numerous strikes to put pressure on trucking companies, as well as politicians.