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NLRB says XPO/STG port drivers in California were employees, orders unionization vote

Drivers had signed independent owner contracts and owned their trucks, but regional director finds level of control more akin to an employee

Photo: Jim Allen/FreightWaves

Drivers for the California-based intermodal operations of STG Logistics — which had been owned by XPO Logistics until a few months ago — will be casting a unionization vote over the next month under an order by the National Labor Relations Board.

The NLRB regional decision could have significant impact, because the agency’s regional director, William Cowen, ruled that a group of ostensibly independent owner-operators driving for XPO were actually employees of the company. The drivers owned their own trucks and leased them back to XPO (NYSE: XPO).

While the sale of XPO’s intermodal operations to STG was announced in March, the effort by a unit of the Teamsters to organize the drivers predated the sale, and the company and driver actions studied by the NLRB took place under XPO management. There are no references in the decision to STG actions.

The unionization drive began with a petition for a unionization vote filed by the Wholesale Delivery Drivers, General Truck Drivers, Chauffeur, Sales, Industrial and Allied Workers from Teamsters Local 848. The response by XPO at the time was that the more than 260 workers were independent contractors and therefore could not unionize.

Of those workers, 213 were owner-operators and 49 were second-seat drivers, who were to be paid out of what XPO paid to the owner-operators. All of them received a 1099 tax document rather than a W-2. A 1099 is the IRS tax form supplied to independent contractors across all industries.

The drivers worked out of the XPO intermodal operations in San Diego and Commerce, California, which mostly transport freight from Southern California ports. The latter was the larger of the two facilities.

Ballots will be mailed to the employees June 23. They will be counted July 15. Employees who are eligible must be employed during the STG payroll period that ended on Saturday.

In determining that the XPO drivers were employees rather than independent owner-operators — despite the fact they signed employment contracts that specifically said they were independent contractors — the NLRB used the multipronged test found in an NLRB decision known as SuperShuttle DFW. There are 10 points in the 2019 SuperShuttle decision that go to the question of an employer’s control over the worker and whether the nature of the relationship means the worker is an employee or an independent contractor.

In the decision handed down Monday, Cowen went through the 10 points one by one, finding in most cases that the position of the drivers made them employees under the SuperShuttle tests.

Cowen’s argument kicks off with the question of control. “The record shows that XPO has almost complete control over the work that owner-operators and second-seat drivers perform for XPO,” the decision said, adding that XPO planners create “movement orders” and dispatchers determine what drivers get what loads. “While XPO dispatchers can consider a driver’s preference, they do not have to,” the decision writes. “XPO dispatchers alone decide when and where to send drivers.” A driver can say he prefers to start working at 4 a.m., but it is up to the dispatcher to determine whether that will actually happen, according to the decision.

“When the drivers perform work for XPO, XPO through technological means maintains strict oversight where they perform the work,” Cowen wrote.

Other key points:

  • Engagement: “There is no doubt that drivers are well integrated into XPO’s business,” Cowen wrote. “While on the job, the XPO drivers must identify themselves as working for XPO and must use XPO’s DOT authority even if they have their own.” Additionally, the drivers have no control over their own vehicles once they’ve been leased to XPO, including selection of an insurance carrier. But elsewhere in the decision, looking at levels of control over the trucks, the NLRB official concluded that offsetting facts regarding the level of vehicle control mean that the balance “neither supports independent contractor status nor employee status.” That was the only place in the Cowen decision where he gave deference to the argument that the workers were employees.
  • Outside work: While there had been testimony that drivers could work outside of XPO, “these testimonies are contradicted by the testimony of other drivers,” Cowen wrote. And even if they were able to do so, there is legal precedent that such ability alone does not automatically establish a worker as independent.
  • Length of employment: Contracts are for 90 days but constantly renew, and some drivers said they had been in their role with XPO for years.
  • The contract: The Independent Contractor Operating Contract was signed by the drivers. But the contract was “unilaterally drafted and promulgated” by XPO, according to the Cowen decision, and many of the drivers and second-seat employees over the years have engaged in activities — such as signing union authorization cards and filing lawsuits — more akin to employee behavior.

“By weighing all relevant legal factors, I conclude that XPO has failed to carry its burden to demonstrate that the drivers (both owner operators and the second seat drivers) are independent contractors” under the definition of the National Labor Relations Act, Cowen wrote.

The NLRB also ruled in favor of the union in its request that the San Diego and Commerce facilities be joined as one bargaining unit.

STG released a statement following the NLRB decision. Although the actions ruled on by the NLRB were not those of STG, it will now be dealing with the unionization vote.

““STG Logistics promotes an environment that focuses on serving customers with effective and efficient delivery through our contracted network of independent owner-operators,” the statement said. “These owner-operators establish when and how they contract with our company and others. We disagree with the NLRB’s decision but will support independent owner-operators’ right to make their own decision of how they manage their business.”

A spokeswoman for XPO referred queries to STG.

In its statement, the national office of the Teamsters called the decision “precedent-setting,” because it “marks the first time an election has been ordered for port truck drivers who are misclassified as independent contractors when they are actual employees.”

“It paves the way not only for other port drivers but for potentially millions of misclassified workers in other industries to be properly classified as employees of the companies that employ them,” the Teamsters said in a prepared statement.

Eric Tate, the secretary treasurer of Local 848, told FreightWaves that the union has not had any contact with STG since the sale.

(Editor’s note: the original article has been amended upon receipt of a statement by STG.)

More articles by John Kingston

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John Kingston

John has an almost 40-year career covering commodities, most of the time at S&P Global Platts. He created the Dated Brent benchmark, now the world’s most important crude oil marker. He was Director of Oil, Director of News, the editor in chief of Platts Oilgram News and the “talking head” for Platts on numerous media outlets, including CNBC, Fox Business and Canada’s BNN. He covered metals before joining Platts and then spent a year running Platts’ metals business as well. He was awarded the International Association of Energy Economics Award for Excellence in Written Journalism in 2015. In 2010, he won two Corporate Achievement Awards from McGraw-Hill, an extremely rare accomplishment, one for steering coverage of the BP Deepwater Horizon disaster and the other for the launch of a public affairs television show, Platts Energy Week.