Jon Zerolnick is the Research Director at LAANE, the Los Angeles Alliance for a New Economy, where he has authored a number of reports concerning port truck drivers.
Truck drivers in California’s ports have been fighting for decades for rights most workers take for granted: the right to a minimum wage, the right to proper employee classification, and especially the right to form a union. In the wake of the deregulatory wave of the 1980s, downward pressure on trucking companies led to destructive competition, which led first to union-busting, and then to the widespread misclassification of truck drivers as independent contractors. This, despite the fact that legal and factual analyses have shown – theoretically in 2010 and based on a wave of then-recent rulings in 2014 – that these truck drivers are subject to the control and direction of the trucking companies they haul for. (Full disclosure: I was a co-author of the 2014 report.) Under any legal test, these are employee drivers being deprived of their employee rights; their condition has been compared to that of sharecropping and involuntary servitude.
As was recently reported in these pages, the California Supreme Court just ruled (in Iskanian v. CLS Transportation Los Angeles, LLC) that (quoting OnLabor’s analysis) “arbitration agreements with mandatory class action waivers are enforceable within the state.” This is the latest in a line of post-Concepcion cases concerning arbitration. Last year, the California Supreme Court ruled (in Sonic-Calabasas A, Inc. v. Moreno) that the Federal Arbitration Act preempted a state rule prohibiting an employer from requiring an employee to waive her rights before the Labor Commissioner and instead arbitrate wage claims.
These two rulings are a blow to workers who attempt to assert their rights, and may fall hard on port truck drivers, who are regularly required to sign contracts that waive many such rights. In the past few years, truck drivers have attempted to assert their rights by filing hundreds of wage and hour claims with the state Labor Commissioner. (In order to adjudicate a wage claim, the Labor Commissioner’s office must first establish the claimant as a true employee.) Courts in California may allow the putative employers to shift these claims from the agency (the Division of Labor Standards Enforcement) to arbitration.
Yet if the courts are strengthening one of employers’ favorite shields – arbitration – they are also removing another – federal preemption. Two recent rulings – one in Federal Court and one in State Court – have rejected the trucking industry’s arguments based in the Federal Aviation Administration Authorization Act (F4A). The industry has claimed that California wage and hour laws (including potentially laws around minimum wage, meal and rest breaks, and proper employee classification, among other protections) are preempted because truck drivers are engaged in interstate commerce. If upheld, this argument would have exempted hundreds of thousands of California workers from fundamental protections.
In Dilts v. Penske (filed July 9, 2014), the Ninth Circuit rejected a trucking company’s claim that it is not subject to the state’s wage & hour laws because of alleged federal preemption under the F4A.
Harris v. Pac Anchor (filed July 28, 2014) is a case that port truck drivers were watching even more closely. In 2008, then-Attorney General (now Governor) Jerry Brown filed suit against several port trucking companies for gaining an unfair advantage over their competition by wrongfully classifying their drivers as independent contractors. Pac Anchor claimed F4A preemption (the other defendants settled and agreed to properly classify their drivers). After years of legal wrangling, the California Supreme Court ruled against this defense, and sent the case back to be heard on the merits.
California has approximately 15,000 port truck drivers; the overwhelming majority are currently improperly classified as independent contractors. Drivers continue to fight for their basic employee rights in a variety of ways. There are at least sixteen class action suits currently pending, and several more individual suits. There are also hundreds more wage and hour claims pending before the DLSE. In the past two years, the DLSE has ruled on 40 claims, has found all 40 drivers to have been misclassified, and has awarded them a total $4.5 million dollars. Drivers in Los Angeles have also gone on strike at least four times in the past year.
With several recent legal and administrative victories establishing a body of findings, drawing the attention of policy-makers, and adding momentum to those drivers taking direct action, port truck drivers are closer to having their rights restored than they have been at any point in over three decades. On the one hand, the recent arbitration rulings may mean that drivers’ claims get removed from the (legal and/or administrative) system just at the moment the system is developing fluency with the issues. On the other hand, the preemption rulings may mean that as drivers’ claims are heard, they are more likely to be fully heard with a decision on the merits. As more light shines on this dark corner of the economy, employers will find it harder to continue the fiction of independent contractor status.