A report issued by several pro-labor organizations concluded that about 49,000 of the nation’s 75,000 port truck drivers are misclassified as independent contractors. Organizations issuing the report were the National Employment Law Project, the Los Angeles Alliance for a New Economy, and the Change to Win Strategic Organizing Center, which is an alliance of several major labor unions, including the Teamsters.
Extrapolating from existing claims made to the California Division of Labor Standards, the groups estimate that port trucking companies operating in California are annually liable for wage and hour violations of $787 million to $998 million each year. The industry’s total federal and state liability for unemployment insurance fund contributions, workers’ compensation premiums, and income tax payments is about $563 million a year they say.
“Total quantifiable costs of misclassification nationally – tax losses plus wage and hour violations – run to $1.4 billion annually with non-quantified costs likely exceeding the figure significantly,” the report concludes.
The groups want state and federal labor and tax enforcement agencies to prioritize investigations into misclassifications in port trucking and other industries and call on states to use legal tests of employee status that account for what they say is a lack of independence among port drivers. They also called on Congress to enact several pending bills addressing misclassification, including the Payroll Fraud Prevention Act of 2013, the Clean Ports Act of 2013 and the Fair Playing Field Act of 2013.
As part of its clean ports efforts, the Port of Los Angeles several years ago attempted to end the practice of using independent contractors to serve the port. The American Trucking Assns. Successfully challenged that requirement in court along with a number of other provisions aimed at dictating carriers’ business practices.
The California Trucking Assn. says the report paints a false picture of independent contractors in trucking.
“Attacks on independent contractors from select interests are, unfortunately, nothing new,” CTA CEO Shawn Yadon told Fleet Owner. “Far from the caricature of these small businesses in the report, owner-operators in California are running the nation’s cleanest trucks, meeting the nation’s strictest safety standards and paying their taxes.”
