For nearly seven years, Hector Zelaya has worked for K&R Transportation as a truck driver in the ports of Los Angeles and Long Beach. The company makes clear to Zelaya that he can’t work for anyone else, and it tightly controls his daily schedule. Yet it classifies him as an independent contractor.
“The company is the only one who benefits,” Zelaya told me. “It’s my truck, but they put a GPS on it, they tell me what to do, and if I want to work for another company, they retaliate against me.”
Zelaya pays for all the diesel fuel, insurance, parking fees, and truck maintenance. In all, he said these expenses add up to about $2,600 a month. He is also not paid for the time that he waits in the long queues at the port to receive loads. Port employees, on the other hand, receive hourly pay, vacation days, paid holidays, and sick time.
Among truck drivers, Zelaya’s situation is typical, and it’s indicative of a larger industry shift toward classifying workers as independent contractors. Between 1997 to 2016, the number of independently contracted long-haul freight-truck drivers increased by more than 90 percent. But that trend may finally be ending for California’s port-truck drivers, who make up about one-third of such workers in the country.
Earlier this year, State Senator Ricardo Lara, who represents the Port of Long Beach, proposed a bill, SB 1402, that would create a public list of trucking companies that have committed labor violations and failed to pay up. Retailers who continue to use one of these trucking companies could then be held liable for any future state labor or employment violations. That puts companies like Amazon on the hook for the wage theft that’s endemic to California’s port drayage industry.
Since 2011, the California Labor Commissioner’s Office has awarded more than $46 million to port-truck drivers in cases where they were misclassified as independent contractors. But faced with financial penalties, many companies officially close down, reopen with new names, and never square their fees. This bill also tries to close this loophole by holding any successor companies financially liable for their previous violations.
“Port-trucking companies that rip off their workers and are caught in the act often go out of business then pop up under a new name to avoid paying what they owe,” Lara told me. “It’s a cycle of exploitation that is driving down wages for many of the 25,000 California drivers who haul for some of America’s biggest retailers.”
Though the California Trucking Association is officially neutral on the bill, the organization representing trucking companies defended the classification of truck drivers working as independent contractors. “Of about 3.5 million total drivers there are approximately 350,000 truckers who choose to work as independent truck drivers because it allows them to set their own schedules, manage their workloads, make more money, and have the freedom and flexibility that comes with working as an independent contractor,” Chris Shimoda, vice president of government affairs at the California Trucking Association, wrote in an e-mail.
Lara’s bill passed the state Senate in May, and his office expects it to be voted on by the Assembly at the end of August. “Right now we have a system at the ports that rewards companies who shortchange drivers, break the law and undercut fair competition for legitimate trucking companies that play by the rules. SB 1402 will change that,” Lara said.
By classifying their truck drivers as independent contractors rather than employees, companies avoid payroll taxes, shift many of the overhead fees onto the drivers, and steer clear of unions. This classification has lowered wages of port-truck drivers, in some cases far below minimum wage. According to the National Employment Law Project (NELP), an estimated 30 percent of payroll costs are diverted from employers to drivers. This reduces median wages by more than $6,000 per year, a number that doesn’t even include the employee benefits they miss out on. A 2014 NELP report noted that around 49,000 of the 75,000 port-truck drivers in the United States are misclassified as independent contractors, costing drivers in California about $850 million a year.
Additionally, a USA Today investigation last year revealed that trucking companies routinely coerce drivers to take on debt to finance their own trucks, and use that debt as leverage to obtain forced labor and trap drivers in low-paying jobs. If drivers are unable to work or afford repairs, companies can seize their trucks and leave them destitute. The text of Lara’s bill goes as far as to call port-truck drivers “the last American sharecroppers.”
Fred Potter, the director of the Teamsters’ port division, told me, “As you look around the country, especially in Southern California, the drivers lease the equipment. Many of the drivers work for years at these companies, paying weekly or monthly payments, only to find if they’re let go, all those payments don’t buy the truck.”
Potter said bad press and financial penalties haven’t stopped trucking companies from breaking labor laws and that it remains difficult to unionize truck drivers because of their status as independent contractors. “It’s a national disgrace. Here you have drivers haul all the goods this country needs from electronics to clothes, yet these drivers can’t afford to buy the things they haul,” he said.
Organizing efforts combined with lawsuits, however, have had made some progress. In 2016, the California Labor Commissioner’s Office ordered Pacific 9 Transportation to pay nearly $7 million in back wages to misclassified drivers.
As a result, in July 2017, Fidel Gonzalez became a full-time Pacific 9 employee at the Port of Los Angeles after working 10 years as an independent contractor. “It was hard to depend on the paychecks because I didn’t have one specific number as pay from the week’s work,” said Gonzalez. “Now I receive two checks regularly, one as an employee and another as a reimbursement for mileage and use of my truck.”
The Los Angeles City Attorney’s Office hasn’t given up on the issue either. In January 2018, the LA City Attorney sued three port-trucking companies over employment misclassification, with the next hearing date scheduled for August 16.
In April, the California Supreme Court issued an opinion narrowing the definition of an independent contractor, making it more difficult for employers to pay workers under this distinction. Though the California Supreme Court ruling sided in favor of port-truck drivers, the United States Supreme Court is expected to decide soon on whether transportation workers, including port-truck drivers, are exempt from forced- arbitration clauses. These clauses waive workers’ rights to band together to resolve disputes and would make it even more difficult for port-truck drivers and other transportation workers to unionize. NELP filed an amicus brief in the case arguing a ruling that binds port-truck drivers to forced-arbitration clauses will further incentivize trucking companies to misclassify their drivers as independent contractors.
This a crucial fight. For workers, full employee status can make all the difference. Gonzalez told me, “As an independent contractor, some of the weeks were very short. In cases the work was slow, we received the only days or hours we worked, even if we stayed at the company all day sitting there waiting for the work. These days, I have all the benefits of being an employee and am living better.”