Three port truck companies exploited drivers, L.A. city attorney says in lawsuits

Los Angeles City Atty. Mike Feuer sued three port trucking companies Monday, alleging the firms exploit their drivers by misclassifying them as independent contractors, an arrangement that can result in take-home pay of only pennies.

In lawsuits filed in Los Angeles County Superior Court, Feuer alleged CMI Transportation, K&R Transportation California and Cal Cartage Transportation Express have engaged in schemes to avoid paying minimum wage and employee benefits by classifying hundreds of workers as independent contractors even though the companies “exert near complete control” over the drivers’ schedule.

“This abuse, this disgraceful exploitation has to stop,” Feuer said at a press conference. He said drivers are forced to “absorb tens of thousands of dollars in costs” that should be borne by employers, including fuel and insurance. “These drivers deserve to be treated like the employees we allege they are.”

All three companies are owned by NFI Industries, a New Jersey-based logistics firm. NFI purchased the businesses from Long Beach-based California Cartage in October.

NFI did not respond to requests for comment.

The suits are the latest in a long-running dispute at the twin ports of Los Angeles and Long Beach, where many port truck drivers say they are improperly classified as independent contractors and must lease their rigs under unfair terms.

The terms, they say, are so onerous that for some pay periods they make nothing and actually end up owing the trucking company money.

In a press release, Feuer’s office said drivers at CMI, K&R and Cal Cartage “may take home as little as a few cents in a work period.”

The companies “make assignments, unilaterally set the rates they pay drivers and retain and exercise the right to terminate drivers without cause,” according to the city attorney.

A large part of the problem, the lawsuits say, are lease programs the companies established to comply with 2008 city rules mandating low-emission trucks be used to deliver goods to and from the ports of Los Angeles and Long Beach.

The city attorney alleged the leases place strict requirements on how many loads must be undertaken for the company, essentially chaining a so-called independent contractor to one firm.

At the end of the leases, the lawsuits allege drivers do not own their truck but are given an opportunity to purchase it for a “significant lump sum.” That leads many drivers to refinance the lease, once again binding the worker to one company.

Last decade, the Port of Los Angeles tried to mandate truckers be employees of companies, fearful that workers couldn’t afford the newer, cleaner rigs. But that mandate was struck down by federal courts, a decision that driver advocates blame for exacerbating an existing problem of abusive leases.

Though ongoing for years, the issue received renewed attention following a series of stories last year in USA Today.

In December, the Los Angeles City Council approved a plan to investigate claims of wage theft by port truck companies and look into whether the city could deny port access to companies in violation of labor laws.

The council also directed the city attorney to look into mandating “fair wages and working conditions for employees working for companies operating on property owned by the City.”

At a news conference, Feuer said his office’s investigation into the NFI companies was separate from those directives and was “well underway” at the time of the council vote.

Asked why the suit was filed against the three NFI companies when drivers allege misclassification among many operators, Feuer said his office is investigating “additional companies as well.”

In a statement Monday, Los Angeles Mayor Eric Garcetti said he supported the city attorney’s actions.

“The Port of Los Angeles is one of America’s most powerful economic engines, and the workers who keep it running every day deserve better than to be deprived of basic employment protections,” Garcetti said.

Since 2011, the California labor commissioner’s office has awarded port truck drivers more than $46 million in cases where they contended they were misclassified as contractors.

Drivers and the Teamsters union have also organized numerous strikes to put pressure on trucking companies, as well as politicians.

The California Trucking Assn. declined to comment on the lawsuits filed Monday. Its CEO Shawn Yadon called independent contractors “a vital component of the trucking industry.”

“Drivers choose to be independent contractors for many reasons, including because of the flexibility and freedom it provides,” he said in a statement. “Tens of thousands of drivers have decided to be their own bosses, run their own businesses and not be employees of trucking companies, despite the countless opportunities to do so.”

andrew.khouri@latimes.com

Follow me @khouriandrew on Twitter

UPDATES:

2:20 p.m.: This article was updated to include information about the ports’ clean-energy program, as well as additional analysis and comment.

12:05 p.m.: This article was updated with information about the ownership of the three companies, as well as additional comments from Feuer.

This article was originally published at 11 a.m.