A Superior Court judge on Thursday ruled that truck drivers in the ports of Los Angeles and Long Beach are employees, not independent contractors, and that seven of them are owed more than $2 million in damages.
The ruling, which comes after two years of legal wrangling and five strikes by drivers and their supporters, is a coup for labor activists and the International Brotherhood of Teamsters, which in recent months has helped bring several labor disputes to court.
Earlier this month, drivers for a port trucking company in Carson unionized under the Teamster banner.
Judge Jay M. Bloom ruled that Pacer Cartage, a trucking company, should have given the independent drivers the same benefits and protections as employees, such as health care, overtime pay and sick leave. Companies also pay less taxes on independent contractors than full employees.
He ordered Pacer to pay the seven drivers damages ranging from $387,936 to $85,632.
“This case sets the stage for all the other cases that are pending,” the drivers’ attorney, Alvin Gomez, said at a news conference Thursday. “Now, every truck company is put on notice that if they have a similar scheme in place, (they) are in willing violation of California law.”
The key indicator in any employment relationship is whether the worker has control over their activities, profits and losses.
“From the evidence, it appears that Pacer had the control,” the judge’s decision states.
XPO Logistics Inc., the parent company of Pacer Cartage, and Harbor Rail Transport, another local drayage unit, said they would appeal the ruling.
“We believe the drivers in question are properly classified as contractors, and that this case is without merit,” the company in an emailed statement.
The independent contractor issue has flared in the port trucking world, which was rattled in 2009 after environmental regulations required that all drayage trucks meet more stringent emissions requirements.
The newer, cleaner trucks — which cost upward of $100,000 — were out of reach for most independent owner-operators. As a solution, some trucking companies purchased large numbers of trucks that they then leased to these drivers.
Pacer set up a separate company that leased the trucks through Bank of America, then subleased the same trucks back to their workers, who never saw the terms of the original lease. Pacer drivers also were required to purchase insurance through the company.
The “complex” leasing agreement, the decision reads, was only available in English, even though the seven Latino drivers “spoke virtually no English,” and only two had graduated from high school.
The drivers’ contracts were more akin to a traditional employer-employee relationship, the judge said, because the drivers had limited control over the vehicles that, in theory, belonged to them.
They could only park the trucks in certain areas, could not move freight for other companies, and were punished if they received moving violations.
“This hardly sounds like treatment of independent contractors,” the judge said in the report.
The judge cited other evidence that Pacer drivers actually were employees. The truckers, he said:
• Had to file a job application.
• Had identification cards with the Pacer logo.
• Could not bill their customers, or set prices or rates.
• Had to complete log books and other forms of bookkeeping.
• Were required to follow rules laid down by Pacer.
