The lawsuits allege that the companies purposely classify their drivers as independent contractors to avoid obligations to pay employee benefits, including unemployment insurance, workers’ compensation and a minimum wage.
The office of Los Angeles City Attorney Mike Feuer has filed lawsuits against three Port of Los Angeles drayage trucking companies, alleging that each has engaged in “a scheme to misclassify truckers working in their employ as independent contractors instead of employees” so that the companies can dodge obligations to provide workers benefits, pay relevant taxes, and shift operating costs.
The city attorney’s office announced the litigation against CMI Transportation, K & R Transportation California and Cal Cartage Transportation Express on Jan. 8. The companies, which are each named in three separate lawsuits, rely on fleets of truck drivers to provide short distance transit of cargo between the ports, railyards and warehouses.
The lawsuits allege that the companies purposely classify their drivers as independent contractors rather than employees to avoid obligations to pay employee benefits, including unemployment insurance, workers’ compensation, minimum wage, and reimbursement for thousands of dollars of business expenses.
“Allegedly misclassifying drivers also allows each company to avoid paying applicable California taxes, instead shifting this responsibility to the drivers,” the city attorney’s office explained in a statement. “While these companies increase their profits, drivers may take home as little as a few cents in a work period.”
CMI, K&R and Cal Cartage each allegedly exert “near complete control” over their drivers’ assignments and details of their work – the most significant factor in determining if a worker is an independent contractor or an employee under California law, the city attorney’s office alleges.
“The companies allegedly make assignments, unilaterally set the rates they pay drivers and retain and exercise the right to terminate drivers without cause,” the city attorney’s office said in a statement. Each of the companies exert further control over their drivers by allegedly utilizing a leasing scheme for trucks, which pushes their associated costs to the drivers.”
The terms of the leases allegedly place strict quotas on drivers’ workloads and, in practice, substantially restrict the ability of drivers to take the truck with them if they are terminated or want to pursue other opportunities. Thus, Feuer’s office has said, drivers are essentially forced to continue working for these companies or risk losing their significant investment in their trucks.
The lawsuit seeks to enjoin each of the trucking companies from continuing to engage in their current business practices and to adopt measures that immediately remedy violations. It also seeks restitution of any money or property the companies acquired or retained as a result of the alleged business practices, as well as civil penalties of up to $2,500 for each violation.
“We allege these port trucking companies take advantage of hundreds of hard-working drivers, requiring them to pay onerous expenses just to do their jobs, while leaving them without basic benefits and protections–all to boost the companies’ profits,” Feuer said. “It’s wrong and we’re fighting to stop it.”
Los Angeles City Councilman Joe Buscaino, who represents the district that includes the port applauded the city attorney’s actions.
“I commend the City Attorney for dedicating the resources of his office to addressing this problem, filing this lawsuit and fighting on behalf of the people of California, who deserve a fair competitive marketplace where no company is allowed to gain an unfair advantage by exploiting human beings for the sake of corporate profits,” he said in a statement.
The three trucking companies being sued by the city have yet to publicly issue any comments on the litigation, but the Harbor Trucking Association.