Capital & Main: California Attempts to Rein in Exploitation of Truck Drivers

September 07, 2021

By Larry Buhl 

Like many truck drivers delivering goods from the ports of Long Beach and Los Angeles to big retailers throughout Southern California, Juan Carlos Giraldo has a contract job, and it looks decent at first glance. His primary employer, Container Connection, pays a flat fee of $300 for a round trip from a port to a Walmart warehouse in Mira Loma. With no traffic or wait times, the trip takes four hours, which means Giraldo can make 10 round trips a week. In the best case scenario, he earns $3,000.

But the best case scenario usually doesn’t happen. Long waits at the port are routine, because his dispatcher doesn’t let him know when a shipment is ready to load. If Walmart doesn’t have an empty container ready to bring to the port, he earns half of his round-trip fee: $150. As a contract worker, Giraldo is responsible for insurance on the company truck and goods, which is $180 per week. Fuel averages $300-$400 a week, also out of his pocket. He has to cover health insurance for himself and his family and fund his own retirement. He has no disability benefits, which is risky in a job requiring manual labor. He is essentially paying to work, and if the company doesn’t give him any assignments, “I will have negative income that week,” Giraldo told Capital & Main through an interpreter.
Giraldo, a father of four, wants to be an employee, and says Container Connection has misclassified him and other drivers as independent contractors. The California Employment Development Department (EDD) also determined that Giraldo should be an employee. As for why he doesn’t go to another company, Giraldo says it wouldn’t make a difference. “Most companies operate on the contractor model and not many opportunities to be an employee. They have rigged the system for themselves.”
Container Connection, which delivers goods to Southern California retailers including Walmart, Ross Dress for Less and for brands Toyota, Whirlpool and Hanes, has a long record of worker misclassification judgments and findings of labor rights violations. It is also the object of an April 14 strike honored by ILWU dockworkers. Giraldo himself was part of a Cal OSHA complaint in March, saying the company failed to protect its workers from COVID-19. Neither Container Connection, nor its parent company, Universal Logistics Holdings, responded to requests for comment.
Container Connection is not the only company in drayage (ship-to-warehouse) trucking accused of routinely skirting labor laws at ports in California and elsewhere in the U.S. A 2017 USA Today series and a short video documented misclassification that resulted after the ports implemented new clean truck requirements, leading the truckers to become what the reporters call “modern-day indentured servant[s].” A report on the trucking workforce by the UC Berkeley Labor Center estimated that nearly a quarter of California truck drivers are misclassified as independent contractors, a practice that deprives the state of tax revenue and threatens California’s ambitious climate goals. And a white paper by the BLS Monthly Labor Review  earlier this year highlighted significant variations in wages among all truckers and declared the trucking market “broken.”
By classifying workers as independent contractors, rather than employees, companies can avoid the cost of unemployment and other taxes, as well as workers’ compensation insurance. Trucking companies also don’t have to pay contract truckers for lost time waiting at the ports for shipments, or cover their insurance for lost or damaged cargo. Companies can be fined by the state for misclassification, but they factor penalties into the cost of doing business, critics say.
Three bills up for a vote this week in the California Legislature aim to prevent three aspects of what advocates call exploitation of port drivers. Sponsored by the BlueGreen Alliance, Teamsters, the Los Angeles Alliance for a New Economy (LAANE) and other workers’ rights groups, the bills would give trucking companies less incentive to misclassify full-time drivers as contractors. (Disclosure: The Teamsters are a financial supporter of this website.)
The first bill, SB 338, introduced by state Sen. Lena Gonzalez (D-Long Beach), was created to strengthen a 2018 law that created a blacklist of trucking companies accused of misclassifying employees. That law made retailers contracting with these companies liable for classifying their drivers like Giraldo as independent contractors rather than employees. But it also allowed alleged violators ample time to appeal before appearing on the blacklist, according to Scott Cummings, a law professor at UCLA with a specialty in local government law.
“Courts take up the matter, but the trucking industry has the money to play the long game,” Cummings says. “Proving misclassification is time consuming and backward looking. Lawsuits don’t transform the industry.”
Cummings, who authored a book on the L.A. ports campaign, says SB 338 is designed to place legal responsibility on the “most powerful economic actors in the retail chain,” the retailers who are receiving the goods. The reason, he and other industry critics say, is that many smaller trucking companies have a habit of going out of business and returning under another structure before they’re hit with fines. And, if they’re ultimately fined for violations, they keep doing business as usual.
“Small (trucking) companies go out of business and regroup,” Cummings says. “Walmart and other big retailers won’t go out of business. They ultimately control the system.”