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Law Puts Big Retailers on the Hook for Pay Owed to Truckers

For years, truck drivers hauling billions of dollars of clothing, appliances and other consumer goods from the ports of Los Angeles and Long Beach have complained about rampant wage law violations by the trucking firms that hire them. The alleged abuses include failing to pay minimum wages and overtime.

But even when truckers’ claims have been upheld by state authorities, often they have found it nearly impossible to collect back wages from recalcitrant employers.

Now a new law designed to put muscle into wage enforcement efforts is putting the likes of Walmart, Costco and Target on the hook when they do business with unscrupulous trucking firms.

A truck heading through a shipping yard in Long Beach, California. (iStock photo)

Under the law, known as SB 1402, California’s Labor Commissioner published a blacklist of 19 companies that have failed to pay their drivers court-ordered awards for wage violations.

The law, however, is intended to do more than just shame violators. It calls for any business that hires a company on the list to share joint civil legal liability and responsibility for any unpaid judgments. In other words, if a big retailer hires a listed trucking company to transport its goods and the trucking firm is found in violation, the retailer can be forced to pay the judgment.

“This new law incentivizes trucking companies to pay up on judgments and put earned wages into drivers pockets,” said Labor Commissioner Julie A. Su in a press release issued last week.

The blacklist will be updated monthly under the law, and the amount of money owed to workers overall could swell beyond the current level of $1.6 million.  The legislation was introduced last year by former State Sen. Ricardo Lara, a Democrat whose old legislative district covers the Port of Long Beach and who in November was elected California’s insurance commissioner.

“It’s the only statute of its kind in America,” said Barry Broad, an attorney who helped craft the law and has worked as a lobbyist for the Teamsters union in California.

Broad said holding major retailers accountable for the labor violations committed by the trucking companies they rely on will help authorities crack down on offenders.  “The existing labor laws are being vigorously enforced and they’re still not changing behavior,” he said.

Labor violations are commonplace at California ports, several of which are major hubs for goods from China and other Asian countries. The neighboring ports of Los Angeles and Long Beach together are the nation’s busiest, and they see some of the worst wage theft cases.

Domingo Avalos, a port truck driver in the area, said his employer, XPO Logistics, illegally underpaid him by making him work 11 hours a day for a low piece rate. He also alleged that XPO illegally deducted business expenses from his earnings. In 2017, before the law took effect, Avalos successfully recovered $171,938 through a judgment ordered by the Labor Commissioner, but it took months of litigation.

Avalos said he’s happy there’s a new law to hold companies accountable for stealing money from their employees.  “We’re pushing them from every angle,” he said.

Domingo Avalos, a port truck driver in the Los Angeles-Long Beach area who won a $171,938 judgment against his employer, XPO Logistics, after alleging that he was illegally underpaid while working 11 hours a day.

Since 2011, the California Labor Commissioner’s Office has issued 448 decisions in favor of port truck drivers, with more than $50 million in wages owed. But enforcing final judgments is tricky, according to Barbara Maynard, communications director for the advocacy group Justice for Port Drivers. Many so-called “chameleon companies” declare bankruptcy and reemerge under different names to avoid paying claimants.

But Maynard cautioned that there is also concern that the new law won’t affect larger companies like XPO Logistics and NFI, which have frequently been accused of stealing wages by misclassifying drivers as contractors, denying them benefits guaranteed to regular employees.

“If a company hasn’t exhausted its appeals, it doesn’t go on the list,” Maynard said. She said multinationals can afford to litigate a wage theft case for years until the claim is dropped or settled out of court, while smaller companies that can’t pay end up on the list.

As an example, she pointed to a misclassification case filed against an XPO subsidiary that dragged on for four years before drivers won a final judgment of $2.3 million in March 2018. Last year XPO paid that award to the drivers.

UCLA professor Scott Cummings, who has studied port labor issues, agreed with Maynard that even with the new law, some awards could take years to enforce. But he stressed that this legislation still represents an important advance.

“The amount of money drivers would require to make a living wage, for these shipping companies it’s a rounding error on their profits,” Cummings said. “If that message gets communicated, and customers start to view themselves as partners in a process to improve conditions for the people who transport their goods, that would be a very positive step forward.”

The port trucking industry, which played a role in revising the original statutory language, is cautiously optimistic about the new law.

“From our perspective, the way the law was written, it will be very hard for a company that has the intention of doing things the proper way of ending up on that list,” said Weston LaBar, CEO of the Harbor Trucking Association, noting that only one member on his organization’s roster of “hundreds” of companies was included on the current list.

“Obviously we can’t control how individual companies operate, but we can control how we as an association define best practices, and who we allow to be part of that association,” he added.