These two seemingly minor provisions were part of a series of concession agreements that the Port of Los Angeles had sought to impose on local drayage operators under its Clean Truck Program. The larger initiative was launched in 2008, in partnership with the neighboring Port of Long Beach, to replace the old, dirty trucks that were fouling the air around the harbor area.
The main part of the program - requiring the swapping out of older drayage trucks for models that met the 2007 emissions guidelines of the U.S. Environmental Protection Agency - was implemented by both Southern California ports with relatively little fuss. In fact, the initiative is credited with contributing to a dramatic drop in air pollution levels in the Los Angeles Basin.
More controversial was an attempt by the Port of Los Angeles to tack on a series of operating restrictions for providers of drayage service within the harbor area - restrictions that had nothing to do with promoting clean air. Backed by the Teamsters Union, the port sought to limit local operators to those who were employed by trucking companies with concessions to serve the port. The effect would have been to cut independent owner-operators out of the picture entirely.
A panel of judges on the U.S. Court of Appeals for the Ninth Circuit stopped that aspect of the Clean Truck Program cold. The court ruled that the Port of Los Angeles was in violation of the Federal Aviation Administration Authorization Act of 1994, known familiarly as F4A, which bans state and local governments from promulgating laws that affect the pricing, routing or service of any motor carrier.
But when the dust settled, there were still a few measures at issue - specifically, the placarding, parking and financial-stability requirements that the port wanted to impose on harbor trucks. The American Trucking Associations appealed those elements of the Clean Truck Program to the Supreme Court, which ended up rejecting the port's contention that it wasn't subject to interstate commerce restrictions because it was a "market participant." (An odd contention for a landlord port, which asserts no direct control over any aspect of harbor operations.)
The court tossed out the placarding and parking elements of the port's program, but declined to rule on the financial capability and truck-maintenance requirements, because the port had never attempted to enforce them.
The big shadow hanging over the whole issue is, of course, that of the Teamsters, who are forbidden by law from organizing owner-operators. So does this latest court ruling put an end to the union's attempts to kick independent drivers out of the harbor? Not entirely.
At first blush, the court actions look to be a near-fatal blow for the Teamsters' plan. "What we got from the appeals court were two clear, unanimous decisions that attempts by the port to ban owner-operators was indeed preempted [by F4A]," says Curtis Whalen, executive director of ATA's Intermodal Conference. "That law is clear, and has been clear for some time."
ATA believes it won a similar victory at the Supreme Court level. "We are gratified that, at the conclusion of many years of litigation, the highest court in the land unanimously agreed with ATA on these rules," ATA president and chief executive officer Bill Graves said in a statement when the ruling was issued. "The decision is sure to send a signal to any other cities who may have been considering similar programs which would impermissibly regulate the port trucking industry."
In fact, a number of other ports have been watching the developments in Los Angeles closely. Some were reported to be considering similar restrictions on owner-operators, pending court decisions on the Clean Truck Program in general. But none has so far come out with an initiative as draconian as that attempted by the Port of Los Angeles.
There has been some action at the state and federal levels. A bill that was introduced in the House of Representatives to give local authorities greater control over trucking went nowhere. The New Jersey legislature passed a bill to reclassify independent truckers as employees, but it's likely to be vetoed by Governor Chris Christie, Whalen says.
The contents of the New Jersey measure offer a hint to the Teamsters' strategy in the wake of its recent court defeats. The idea now is to hit at the "misclassification" of owner-operators, many of whom the union and its supporters claim are really employees of trucking companies.
How the Internal Revenue Service defines an employee versus an independent contractor is "as clear as day," says Barbara Maynard, spokesperson for the new labor advocacy group known as Justice for Port Drivers. (So new that it doesn't even have a website yet - only a Facebook page.) Maynard argues that most "independent" truckers actually report to work for one company, which dictates which loads they will haul and how much they'll be paid. In the process, those employees avoid paying benefits and payroll taxes - and drivers end up making as little as $12 a week.
"A real owner-operator who is legitimately an independent contractor has the ability to set his own rates," says Maynard. That's not the case with the great majority of truckers who provide drayage services at the Port of Los Angeles and elsewhere, she claims. "The problem is, the whole industry is a broken system and needs to be modernized."
Backers of the new coalition are attacking the issue on two fronts: in the form of legislation, such as that passed (but apparently doomed) in New Jersey, and in individual claims before state departments of labor. Groups of drivers are suing for millions of dollars in back wages, claiming that they should have been treated as full employees. One such class action was recently filed in Los Angeles Superior Court by the Wage Justice Center, on behalf of an estimated 100 port truck drivers. They're targeting a number of intertwined companies, charging that they were paid below minimum wage due to illegal paycheck deductions, and the misclassification of employees.
A successful campaign by Justice for Port Drivers would have the effect of eliminating most of the owner-operators serving the harbor area. Whether it would kill the category outright is another question. Maynard's group says they're only out to make employers pay truckers what they're owed, and treat them fairly. "If somebody is legitimately an independent owner-operator, then certainly they can continue to be such," she says.
There could be room for compromise on the issue. "Our lawyers think we can work within the new definition to protect the owner-operator status," Whalen said, referring to recent negotiations with the Teamsters in New York.
But don't be surprised if the union continues to wage war by other means against owner-operators throughout the country. "The Teamsters are a very dogged group," says Whalen. "They're not going to give up in terms of what their view is."
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Keywords: supply chain, supply chain management, supply chain jobs, Clean Truck Program, transportation management, port drayage services, Port of Los Angeles