After months of negotiations with the Los Angeles Board of Harbor Commissioners, California Transload Services, LLC, which encompasses the operations of Long Beach-based California Cartage and its parent company NFI Industries at the Port of Los Angeles, announced that it will be leaving the port.
On January 24, a vote by the board of harbor commissioners finalized a settlement with the company requiring it to vacate its Wilmington facility within six months. “This is a very sad day for Cal Cartage, our employees, our customers and the Wilmington community,” Sid Brown, CEO of NFI, said in a press statement released a week prior to the board’s final vote.
The company has been under pressure from labor unions and local politicians to address questions about the classification of workers, especially truck drivers, as contractors rather than employees. In January 2018, the Los Angeles City Attorney announced that his office had filed lawsuits against three subsidiaries of NFI – California Cartage, K&R Transportations and CMI – alleging they had misclassified truckers as independent contractors “in order to evade their obligations to provide benefits and pay relevant taxes, and shift operating costs.”
One day after Los Angeles City Attorney Mike Feuer filed his complaints, Long Beach Mayor Robert Garcia commented on the misclassification of truck drivers during his State of the City address. “While there are some great trucking companies, hundreds of employees have been misclassified and too many drivers are working for poverty wages. We need to ensure that labor laws are followed and that truckers earn a living wage,” Garcia said. He also noted that the current trucking system was not sustainable.
While the city attorney’s case is still pending, NFI and its subsidiaries have been hit with several orders from the state and federal level to back pay benefits and wages as a result of misclassifying truck drivers.
In September 2018, the U.S. Labor Department announced that it had concluded an investigation of California Cartage’s employee classifications and ordered the company pay $3.6 million in back wages and benefits to 1,416 workers, whom the department considered misclassified. In January 2019, the California Labor Commissioner awarded 24 NFI truck drivers a total of nearly $6 million dollars on the same grounds.
In the meantime, a Los Angeles Superior Court ruling, which sided with a former employee of courier service provider Dynamex and set a new standard for classifying workers as independent contractors rather than employees, continues to be litigated in court. The superior court’s decision, which embraced a standard that presumes workers are employees unless they fulfill a list of newly instated criteria, is being challenged by the California Trucking Association and two independent truck drivers, who say it would unfairly restrict their freedom to work independently.
In a statement announcing NFI’s departure from the Port of Los Angeles, the company’s PR firm said NFI’s failure to negotiate a renewal of its permit to operate on port property was “a direct result of the strategy undertaken by the Teamsters to spread misinformation and untrue statements about Cal Cartage as part of its continued effort to organize Cal Cartage’s Wilmington employees, despite the employees overwhelmingly voting against unionization.”
In its agreement with the board of harbor commissioners, the company agreed to fully vacate the property within 180 days, during which time it would not be required to pay rent. NFI also agreed to disburse approximately $1.34 million to workers who will lose employment as a result of the firm’s departure from the port.
The company’s troubles come amidst an increased focus on the employment conditions of truck drivers, especially those operating on the ports of Los Angeles and Long Beach, sparked by a 2017 investigation of employment contracts and real wages by USA Today.
In April 2018, less than a year after the investigation’s first installment was published, State Sen. Ricardo Lara, who has since been elected to the position of insurance commissioner, introduced State Bill 1402, which was signed into law by Gov. Jerry Brown in September 2018. The bill makes retailers jointly liable for certain wage and labor violations incurred by the trucking firms they hire, if the firm in question has been placed on a blacklist for unpaid final judgements for labor violations.
“Port truckers are driving the global economy and delivering for the biggest brands, but they can barely afford to buy clothes for their families,” Lara said in a statement released in April 2018. “These used to be good jobs, and they can be good jobs again if retailers join us in improving labor conditions here in California and putting dignity back in the driver’s seat.”