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  • OTVI.USA
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  • TLT.USA
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American ShipperIntermodalShippingTrade and Compliance

Court orders two drayage drivers reinstated

The Teamsters continues drayge organizing drive and sees Hub settlement as game changer.

   A federal court judge has ordered Green Fleet Systems to reinstate two drayage drivers who were filing wage claims against the company, asserting they were employees and not independent owner-operators.
   The Teamster-affiliated group Justice for Port Drivers said called the decision “a tremendous victory.”
  
In a case brought by the National Labor Relations Board, Judge Philip Gutierrez at the U.S. District Court for Central California last week ordered the two drivers, Amilcar Cardona and Mateo Mares, reinstated to positions they had before they were fired earlier this year.
   The judge also granted a temporary injunction ordering the company to cease and desist from engaging in unlawful acts such as threatening employees with job loss or other types of reprisals if they engaged in union activities.
   Green Fleet has about 100 company drivers and 35 independent owner operators, according to Gutierrez’s decision.
   “This is a great victory not just for me and Mateo,” said Amilcar Cardona. “It is a great victory for all drivers serving the Ports of Los Angeles and Long Beach and across the country. The majority of U.S. port drivers are misclassified as ‘independent contractors,’ and with this decision, we are beginning to see that the law is on our side and that we all have rights as employees to form our union.”
   Justice for Port Drivers said last year the California Division of Labor Standards Enforcement (DLSE) determined four former GFS drivers had been illegally misclassified as independent contractors and ordered GFS to pay $280,822 in back wages and penalties. Six GFS drivers, including Mares and  Cardona, have since filed DLSE claims.
   Barbara Maynard, spokesman for the port driver group said that she is aware of 48 “order decisions and awards” issued by the California Labor Commissioner in favor of drivers, totaling $5.75 million
   “Additionally, nearly all market-leading companies have a class-action lawsuit pending, and we are aware of 17 pending class-action lawsuits.
   The Teamsters have been trying to organize workers at Green Fleet and other drayage companies around the Port of Los Angeles and Port of Long Beach.
   But the court also refused to grant some of the NLRB’s requests, such as asking the company to provide the union with the names and addresses of employees, saying it would “provide the union with an unwarranted advantage.”
   According to Kathleen Hennessy, director of communications in the California Department of Industrial Relations, over the last two years, there have been 593 wage claim cases filed by drivers in the port industry in California. She said port driver claims first started coming in December 2011, regularly in 2012 and then in high volume in 2013.
   She said of these, 344 are still currently pending, and 249 have been closed, which means that the claim was settled, dismissed or that there was a decision rendered.
   A decision last month by another company, the Hub Group, to make settlement offers to drayage drivers who claim that they were misclassified as independent drivers and make its draymen in California employee drivers, is being seen as a watershed event by the Teamsters affiliate Justice for Port Drivers.
   The announcement by the intermodal company Hub earlier this month “has really shaken up the driver pool, not just the drivers who have been actively looking to form a union with the teamsters at their shop. It has been a real game change,” said Maynard. “On the Teamster side, we are very busy as so many drivers are coming to us and looking for change.”
   Justice for Port Drivers has complained that several drayage companies have continued retaliatory activity against drivers trying to organize.
   The group said drayage companies were violating terms of a “cooling off” agreement that was brokered by the mayor of Los Angeles Eric Garcetti during a five-day strike from July 7-11 that disrupted activity at some terminals in the Ports of Los Angeles and Long Beach.
   The group said the agreement worked out by Garcetti “critically included an agreement by trucking companies Total Transportations Services, Inc., Pacific 9 Transportation, and Green Fleet Systems to accept all drivers back to work without retaliation and without being forced to sign away all future rights in new truck leases. Despite commitments to Mayor Garcetti, the companies have continued — and even escalated — retaliatory activity, clearly violating the terms of the cooling off period.”
   Hub said in a filing with the Securities and Exchange Commission on Sept. 9 that it believed the independent contractor truck drivers it employs were properly classified as independent contractors.
   “Nevertheless because lawsuits are expensive, time-consuming and could interrupt our business operations, we have decided to make settlement offers to individual drivers with respect to the claims alleged in the lawsuits, without admitting liability,” it said.
   Hub estimated in the September filing that the total settlement amount, if all drivers in California accepted the offers, would be approximately $9.5 million. It said a substantial number of the independent contractors have decided to accept the settlement offer.”
   Hub also said it was “changing our business model in California from independent contractor truck drivers to employee drivers.”
   A Hub spokesman told American Shipper that “across its network, it has over 2,800 drivers of which around 64 percent are independent contractors and 36 percent are company drivers.” She said all of Hub’s drivers in California are now company drivers, around 300.
   In its Sept. 9 filing with the SEC, Hub said, “In the Los Angeles and Stockton markets, the cost of the employee driver model will initially be higher than the independent contractor model and will fluctuate depending on the cost of various factors, including claims, repairs and fuel. We estimate that the impact of the change in the model for the remainder of the year would be between two and four cents per share. In addition, we expect a total of approximately $1 million (or about two cents per share) of one-time costs in the last half of 2014 for legal, travel and communication costs related to the settlements and model change implementation.”
   Both David Yeager, the chief executive officer of Hub Group, and his brother, Mark Yeager, president, both addressed the issue at last month’s meeting of the Intermodal Association of North America.
   “Owner-operators is the model that we have always preferred; unfortunately, the law is changing in California. The law is not a static thing; it moves, and right now, in California, it is moving in a direction that is unfavorable for the owner-operator model,” said Mark.
   “There have been a series of decisions — and it is not just the Fed Ex case — a series of decisions at very high state and federal levels that are placing a new test to determine whether there is a proper classification of owner operators, and that is creating an environment in which we had significant exposure if we were going to continue down the path of an owner operator network in California,” he continued. “So we thought the most prudent thing to do was to transform our model to company drivers in California because it really is a situation right now that is all about legislation, and 9th Circuit and California Supreme Court cases that are driving a different test for making that determination.”
   He added, “Right now, there are not other jurisdictions that have that legislation or any precedent that would indicate courts are moving in that direction, but it is something we are going to have to keep our eye on. “[The company’s model today is] company driver in California and a hybrid model of company drivers and owner-operators in different markets, depending on driver availability and whether we are are able to recruit and attract owner-operators as our primary driver base.”
   He said that Hub has found it easier in the past couple of years attract company drivers as opposed to owner-operators, even though it has been actively recruiting owner-operators.
   Yeager said hiring drivers in California does raise concerns that they will be organized by the Teamsters, but he said “we have had company drivers for 20 years as some component of our business, and what we have found is if you treat the drivers fairly and treat them with respect and you allow them to make a living wage, the odds are they are not going to gravitate toward organization. We certainly have structured our organization in a way that is driver friendly and is designed to make sure that we are in tune with the issues that they are facing. I think that if we do those things and do them right we won’t have tremendous exposure to unionization.”
   Speaking on the same panel at IANA, Ken Kellaway, the president and chief executive officer of RoadOne IntermodaLogistics, said, “The whole key is that you have to treat the drivers fairly, give them a fair wage, make it a good place to work for them, and treat them like family — that is really how we operate our business. We have used company drivers for a long, long time. Our attitude is that there is really nothing we cannot resolve internally together by sitting down and having a conversation, and making sure we are providing for their needs, and helping them with what they need as a driver. There is no need to have to pay 7-10 percent of your wages to an outside party in order to have a collective bargaining process when we can do that internally right at the table.”

Chris Dupin

Chris Dupin has written about trade and transportation and other business subjects for a variety of publications before joining American Shipper and Freightwaves.