A number of groups – from civil rights organizations to unions and labor lawyers – are seeking to reclassify drayage truck drivers serving major ocean ports here as “employees” instead of “independent contractors” and plan to use results of a new study to bolster their arguments at both the federal and state level.
“The conditions under which these [port] truckers work have virtually nothing in common with a true independent business,” said Rebecca Smith, an attorney with the National Employment Law Project (NELP) and co-author of the new study, “The Big Rig: Poverty, Pollution and Misclassification of Truck Drivers at America’s Ports.”
“[Port] trucking companies dictate how, when and where drivers do their work – leaving the drivers financially and operationally dependent on their employers day-in and day-out,” Smith said during a conference call with reporters.. “Labeling them ‘independent’ is just a way for companies to sneak out the back door and skirt their responsibilities.”
NLRP, along with the advocacy groups Change to Win and the Leadership Conference on Civil and Human Rights, surveyed port truck drivers at 39 companies in Seattle, Oakland, Los Angeles, Long Beach, New York and New Jersey and reviewed hundreds of employment documents, including truck leases, pay stubs, insurance provisions, safety policies, drug and alcohol policies, meeting agendas, log books, and job applications.
It then combined that research with an aggregation of 10 prior surveys of 2,183 workers at seven major ports and a review of the industry’s structure and economics since its deregulation 30 years ago.
According to NELP’s research, approximately 82% of the estimated 110,000 truckers working at U.S. ports are treated as independent contractors, making it the dominant business model. Yet co-author Dr. David Bensman, a professor with the School of Management and Labor Relations at Rutgers University, said this structure has resulted in a deterioration of wages for drivers, dropping from $20 an hour plus benefits such as health care coverage, worker’s compensation, and pension plans to $10 per hour today with no benefits.
The group found the average work week among surveyed drivers totaled 59 hours, with average net earnings before FICA, income, and other taxes pegged at $28,783 per year for contractors and $35,000 per year for employees.
The drivers in NELP’s study classified as independent contractors reported average net incomes 18% lower than employee drivers. In addition, the independent contractors were found to be two-and-a-half times less likely than employee drivers to have health insurance and almost three times less likely to have retirement benefits.
However, Robert Digges, chief counsel for the American Trucking Assns. (ATA) said, according to a report in The Wall Street Journal, that most port truck drivers are indeed independent contractors, and legally so. “This gives drivers flexibility,” he noted.
ATA addressed this point in memos sent to the Dept. of Labor last year. That agency with the help of the Internal Revenue Service is currently undertaking a broad review of the “worker classification” issue.
“The owner-operator business model is deeply engrained in the trucking industry, with benefits to both the owner-operators and the motor carriers with which they contract,” ATA said in its written remarks to the Labor Dept. in 2009. “The interstate nature of the trucking industry makes it vulnerable to inconsistent state regulation in terms of worker classification and the uniformity needed by the industry can only be achieved through consistent application of a consistent legal standard.”
The lobbying group added, however, that while use of the traditional common law agency test for differentiating between employees and independent contractors in the trucking industry generally works well, it has not always led to entirely consistent results.
“Consequently, the trucking industry supports the enactment of trucking-specific independent contractor definitions that may be more easily and consistently applied,” ATA said.
NELP and its allies, however, see the issue differently and want Congress, as well as state governments, to take more direct action.
“Misclassification drains public coffers through uncollected taxes, it puts law-abiding businesses at a competitive disadvantage, and it leaves workers vulnerable without basic protections – not to mention the safety and environmental hazards it creates,” said Paul Marvy of Change to Win during the media briefing.
“We need lawmakers, federal agencies and the ports to come together to tackle these pervasive and illegal business tactics that undermine the economy and the workers who help make it run,” he added.