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At Southern Calif. Ports, the Battle Over Independent Truckers Rages

Just when you thought it was safe to move a container through the ports of Los Angeles and Long Beach, another labor dispute boils up.

At Southern Calif. Ports, the Battle Over Independent Truckers Rages

This time it comes from port truckers, who charge that employers are illegally classifying them as independent contractors, when they are really direct employees of the trucking companies.

Last week, the International Brotherhood of Teamsters  initiated pickets at the Southern California ports against four drayage companies: Intermodal Bridge Transport, Pacific 9 Transportation, Pacer Cartage and Harbor Rail Transport. (The Teamsters have come to terms with a fifth company, Green Fleet Systems.) "We are here to make sure that these companies stop their lawless behavior," the union quoted Hector Flores, a driver for IBT. "They cannot keep engaging in wage theft. We demand reclassification to employees."

The issue has been winding its way through the courts and regulatory bodies over the past few months. The U.S. Department of Labor and National Labor Relations Board are among those to find that some drivers are being improperly classified as independent contractors, causing them to be underpaid and ineligible for full-time benefits.

The last time the dispute affected the region was when the Port of Los Angeles attempted to impose, as part of its Clean Truck Program, a requirement that all drivers hauling containers to and from the docks be employees of companies that were granted concessions to operate at the port. That rule, which would have spelled an end to independent truckers serving the port, was struck down by the U.S. Court of Appeals for the Ninth Circuit.

Yet the issue is far from dead. Emotional arguments continue to be made on both sides. Stung by the Court of Appeals decision, which ruled that a port ban on independent truckers amounted to illegal interference with interstate commerce, the Teamsters are now relying on the classification issue as a means of reducing, if not eliminating, the presence of independents on the docks. (By law, those drivers can't be recruited or organized by a union.)

Arguments pro and con were heard at the most recent Transpacific Maritime Conference in Long Beach, hosted by the Journal of Commerce. Julie Gutman Dickinson is a partner with the pro-union law firm of Bush Gottlieb. She insisted that "court after court," as well as multiple government agencies, have found the independent drayage driver model to be illegal and unsustainable. What’s more, she charged, the practice is at odds with the interests of the business community. She said liability issues are "costing the drayage industry millions," in the form of penalties for unpaid taxes, workers’ compensation, healthcare costs, unemployment insurance and back pay.

Of the estimated 75,000 port truckers operating nationwide, around 80 percent are misclassified as independent contractors, Dickinson claimed. The issue is especially acute at the ports of Los Angeles and Long Beach, where the drayage industry "looks like the wild, wild west."

Some 25,000 drivers service the two ports, accounting for 40 percent of U.S. incoming container cargo. But last year, only around 10,000 trucks were active, with the top 25 drayage companies doing 40 percent of the work at the Port of Los Angeles, and the top 50 handling half of the load.

Drayage companies claim they have an arm's-length relationship with their drivers, Dickinson said, when in fact they assert direct influence over those individuals, controlling the dispatch of loads and closely supervising drivers' work.

"Drayage companies need a consistent workforce," she said. "They can't achieve that through a true model of independent contracting, which [means] a fluid workforce that is not under their direct control."

Litigation over the issue is "exploding," said Dickinson. "Agencies and courts are clamping down. State agencies are aggressively investigating [drayage] companies." Driver claims in some cases can approach $1m.

Drivers "are increasingly fed up," she said, adding that "the independent contractor model is obsolete. The writing is on the wall."

Arguing for retention of the independent contractor model was Greg Stefflre, chief executive officer of intermodal trucker Rail Delivery Services. He implied that the issue is largely political in nature, with California regulators and lawmakers favoring driver reclassification because of the state's control by the Democratic Party.

"There’s something about Democrats that’s paternalistic," Stefflre said. "This is all about not wanting the independent contractor to exist."

He allowed that some companies might be misclassifying their workers. "But to suggest that the harbor in Los Angeles and Long Beach has a corner on the market of misclassification is nuts."

The law dictates that drivers be allowed to maintain independent status if they prefer it that way, Stefflre said. He called the presence of independent drivers at the ports a natural outgrowth of deregulation, which opened up the transportation market and removed "artificial constraints" that were making regulated, unionized trucking companies uncompetitive.

A 2008 study found the largest over-the-road fleets to consist of 60 percent independents and 40 percent employees. Stefflre said the mixed model has given carriers a combination of flexibility and continuity that would be impossible in a purely unionized environment.

"It has been proven time and time again that the independent contractor model has worked just fine," he said. Non-affiliated drivers have managed to find the money to buy new and cleaner trucks, as mandated by state law – often with the help of the trucking companies that employ their services.

Rulings in favor of driver reclassification by California's U.S. Court of Appeals for the Ninth Circuit are in direct violation of decisions by the U.S. Supreme Court, Stefflre said. "At some point in the near future, the Supreme Court will slap the Ninth Circuit down."

The argument goes on ... and on. There might indeed be some drayage companies that are illegally classifying their drivers as independents, and that practice needs to be corrected. But the underlying issue is a bid by unions for more power on the waterfront. And the growing presence of the Teamsters at the ports, combined with the recent work slowdowns initiated by the International Longshore and Warehouse Union, suggests that labor peace will be a long time coming.

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This time it comes from port truckers, who charge that employers are illegally classifying them as independent contractors, when they are really direct employees of the trucking companies.

Last week, the International Brotherhood of Teamsters  initiated pickets at the Southern California ports against four drayage companies: Intermodal Bridge Transport, Pacific 9 Transportation, Pacer Cartage and Harbor Rail Transport. (The Teamsters have come to terms with a fifth company, Green Fleet Systems.) "We are here to make sure that these companies stop their lawless behavior," the union quoted Hector Flores, a driver for IBT. "They cannot keep engaging in wage theft. We demand reclassification to employees."

The issue has been winding its way through the courts and regulatory bodies over the past few months. The U.S. Department of Labor and National Labor Relations Board are among those to find that some drivers are being improperly classified as independent contractors, causing them to be underpaid and ineligible for full-time benefits.

The last time the dispute affected the region was when the Port of Los Angeles attempted to impose, as part of its Clean Truck Program, a requirement that all drivers hauling containers to and from the docks be employees of companies that were granted concessions to operate at the port. That rule, which would have spelled an end to independent truckers serving the port, was struck down by the U.S. Court of Appeals for the Ninth Circuit.

Yet the issue is far from dead. Emotional arguments continue to be made on both sides. Stung by the Court of Appeals decision, which ruled that a port ban on independent truckers amounted to illegal interference with interstate commerce, the Teamsters are now relying on the classification issue as a means of reducing, if not eliminating, the presence of independents on the docks. (By law, those drivers can't be recruited or organized by a union.)

Arguments pro and con were heard at the most recent Transpacific Maritime Conference in Long Beach, hosted by the Journal of Commerce. Julie Gutman Dickinson is a partner with the pro-union law firm of Bush Gottlieb. She insisted that "court after court," as well as multiple government agencies, have found the independent drayage driver model to be illegal and unsustainable. What’s more, she charged, the practice is at odds with the interests of the business community. She said liability issues are "costing the drayage industry millions," in the form of penalties for unpaid taxes, workers’ compensation, healthcare costs, unemployment insurance and back pay.

Of the estimated 75,000 port truckers operating nationwide, around 80 percent are misclassified as independent contractors, Dickinson claimed. The issue is especially acute at the ports of Los Angeles and Long Beach, where the drayage industry "looks like the wild, wild west."

Some 25,000 drivers service the two ports, accounting for 40 percent of U.S. incoming container cargo. But last year, only around 10,000 trucks were active, with the top 25 drayage companies doing 40 percent of the work at the Port of Los Angeles, and the top 50 handling half of the load.

Drayage companies claim they have an arm's-length relationship with their drivers, Dickinson said, when in fact they assert direct influence over those individuals, controlling the dispatch of loads and closely supervising drivers' work.

"Drayage companies need a consistent workforce," she said. "They can't achieve that through a true model of independent contracting, which [means] a fluid workforce that is not under their direct control."

Litigation over the issue is "exploding," said Dickinson. "Agencies and courts are clamping down. State agencies are aggressively investigating [drayage] companies." Driver claims in some cases can approach $1m.

Drivers "are increasingly fed up," she said, adding that "the independent contractor model is obsolete. The writing is on the wall."

Arguing for retention of the independent contractor model was Greg Stefflre, chief executive officer of intermodal trucker Rail Delivery Services. He implied that the issue is largely political in nature, with California regulators and lawmakers favoring driver reclassification because of the state's control by the Democratic Party.

"There’s something about Democrats that’s paternalistic," Stefflre said. "This is all about not wanting the independent contractor to exist."

He allowed that some companies might be misclassifying their workers. "But to suggest that the harbor in Los Angeles and Long Beach has a corner on the market of misclassification is nuts."

The law dictates that drivers be allowed to maintain independent status if they prefer it that way, Stefflre said. He called the presence of independent drivers at the ports a natural outgrowth of deregulation, which opened up the transportation market and removed "artificial constraints" that were making regulated, unionized trucking companies uncompetitive.

A 2008 study found the largest over-the-road fleets to consist of 60 percent independents and 40 percent employees. Stefflre said the mixed model has given carriers a combination of flexibility and continuity that would be impossible in a purely unionized environment.

"It has been proven time and time again that the independent contractor model has worked just fine," he said. Non-affiliated drivers have managed to find the money to buy new and cleaner trucks, as mandated by state law – often with the help of the trucking companies that employ their services.

Rulings in favor of driver reclassification by California's U.S. Court of Appeals for the Ninth Circuit are in direct violation of decisions by the U.S. Supreme Court, Stefflre said. "At some point in the near future, the Supreme Court will slap the Ninth Circuit down."

The argument goes on ... and on. There might indeed be some drayage companies that are illegally classifying their drivers as independents, and that practice needs to be corrected. But the underlying issue is a bid by unions for more power on the waterfront. And the growing presence of the Teamsters at the ports, combined with the recent work slowdowns initiated by the International Longshore and Warehouse Union, suggests that labor peace will be a long time coming.

Comment on This Article

At Southern Calif. Ports, the Battle Over Independent Truckers Rages