California Attorney General Edmund G. Brown Jr. announced a crackdown on trucking companies operating at the Ports of Long Beach and Los Angeles that misclassify their drivers as independent contractors.
Beginning in February, the attorney general's office authorized a task force to investigate trucking companies at Long Beach and Los Angeles Ports. The investigation uncovered numerous state labor law violations committed by several trucking companies operating at the ports, according to Brown. Two of the lawsuits were filed in Los Angeles Superior Court Friday and several more will be filed in the coming weeks.
The lawsuits allege that the trucking companies named in the suits have an unfair advantage over their competitors in violation of California Business and Professions Code 17200 by depriving employees of benefits and protections entitled to them under California law. These companies are also accused of cheating the State of California out of thousands of dollars in state payroll taxes.
Jose Maria Lira, a fleet operator responsible for transporting cargo from the Ports of Los Angeles and Long Beach, controlled all aspects of his drivers' work, yet classified his employees as independent contractors and made them sign documents stating that they were independent, according to the attorney general's office. Lira leased his trucks to drivers, requiring them to sign a lease agreement stating that the driver would pay Lira 50 percent of his gross earnings each month in return for use of the truck, plus an additional 10 percent for management fees.
The drivers worked exclusively for Lira, working 60 hours or more per week, delivering cargo in Lira company trucks. Under these conditions, the drivers should have employee status with its legal protections and benefits under the law, argues the attorney general's office.
The second lawsuit is against the Pac Anchor Transportation Inc. ("Pac Anchor") and Alfredo Barajas. Brown accused Pac Anchor and Barajas of engaging in a shell game in which Alfredo Barajas supplied Pac Anchor with 38 trucks and drivers. Pac Anchor directly paid Barajas' truck drivers, providing them with 1099 tax forms at the end of the year. Barajas and Pac Anchor said the drivers were independent contractors.
The investigation found that the drivers should be classified as employees because they do not own the trucks they drive, do not have a business independent of Pac Anchor or Barajas, have no real opportunity for "profit" other than compensation on a piecework basis delivering loads, and can be terminated at will.
The Teamsters Union applauded the move.
"By unlawfully labeling the port drivers independent contractors, these trucking companies exploit the system to deny workers and their families their right to benefits and fair compensation," said Jim Santangelo, Teamsters Western Region International Vice President. "Attorney General Brown is doing the right thing by standing up against these trucking companies who cheat the harbor communities out of good middle-class jobs."
The Teamsters cited a recent study by Greenberg Quinlan Rosner Research that found that only 9 percent of the 16,800 drivers that work out of the Ports of LA and Long Beach are directly employed by a trucking company. Nearly 88 percent are called independent contractors, but are often denied the freedom to haul for more than one company. Truly independent contractors might be expected to have multiple clients; however, five out of six drivers only work for one trucking company at a time (84 percent), Greenberg found.
"This is an exploitive practice that exists in every port across the country," said Chuck Mack, international vice president and director of the Teamsters Union Port Division. "It is our hope that these lawsuits will be the beginning of the end of this independent contractor scheme."
Beginning in February, the attorney general's office authorized a task force to investigate trucking companies at Long Beach and Los Angeles Ports. The investigation uncovered numerous state labor law violations committed by several trucking companies operating at the ports, according to Brown. Two of the lawsuits were filed in Los Angeles Superior Court Friday and several more will be filed in the coming weeks.
The lawsuits allege that the trucking companies named in the suits have an unfair advantage over their competitors in violation of California Business and Professions Code 17200 by depriving employees of benefits and protections entitled to them under California law. These companies are also accused of cheating the State of California out of thousands of dollars in state payroll taxes.
Jose Maria Lira, a fleet operator responsible for transporting cargo from the Ports of Los Angeles and Long Beach, controlled all aspects of his drivers' work, yet classified his employees as independent contractors and made them sign documents stating that they were independent, according to the attorney general's office. Lira leased his trucks to drivers, requiring them to sign a lease agreement stating that the driver would pay Lira 50 percent of his gross earnings each month in return for use of the truck, plus an additional 10 percent for management fees.
The drivers worked exclusively for Lira, working 60 hours or more per week, delivering cargo in Lira company trucks. Under these conditions, the drivers should have employee status with its legal protections and benefits under the law, argues the attorney general's office.
The second lawsuit is against the Pac Anchor Transportation Inc. ("Pac Anchor") and Alfredo Barajas. Brown accused Pac Anchor and Barajas of engaging in a shell game in which Alfredo Barajas supplied Pac Anchor with 38 trucks and drivers. Pac Anchor directly paid Barajas' truck drivers, providing them with 1099 tax forms at the end of the year. Barajas and Pac Anchor said the drivers were independent contractors.
The investigation found that the drivers should be classified as employees because they do not own the trucks they drive, do not have a business independent of Pac Anchor or Barajas, have no real opportunity for "profit" other than compensation on a piecework basis delivering loads, and can be terminated at will.
The Teamsters Union applauded the move.
"By unlawfully labeling the port drivers independent contractors, these trucking companies exploit the system to deny workers and their families their right to benefits and fair compensation," said Jim Santangelo, Teamsters Western Region International Vice President. "Attorney General Brown is doing the right thing by standing up against these trucking companies who cheat the harbor communities out of good middle-class jobs."
The Teamsters cited a recent study by Greenberg Quinlan Rosner Research that found that only 9 percent of the 16,800 drivers that work out of the Ports of LA and Long Beach are directly employed by a trucking company. Nearly 88 percent are called independent contractors, but are often denied the freedom to haul for more than one company. Truly independent contractors might be expected to have multiple clients; however, five out of six drivers only work for one trucking company at a time (84 percent), Greenberg found.
"This is an exploitive practice that exists in every port across the country," said Chuck Mack, international vice president and director of the Teamsters Union Port Division. "It is our hope that these lawsuits will be the beginning of the end of this independent contractor scheme."
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