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Notes From the Underground Economy

Are companies at the Port of Long Beach cheating truckers out of their rightful wages?

"I once asked Shippers if I could take the truck somewhere else to work, and they said no," he says. "There comes a time at work where you haven't been appreciated or properly compensated, and you're being humiliated."

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Trucking companies have standard responses for the claims Meyers and others make. Drivers sign a contract that spells everything out. Companies lease workers an expensive truck, usually valued in the six figures. Not bringing home enough money because of a tremendous amount of overhead is a common struggle among small businesses. If truckers are not prepared for these issues, then wouldn't it make sense for them to try another profession or find a job somewhere else?

An anonymous trucker, wearing the vest of his employer
Kenneth M. Ruggiano
An anonymous trucker, wearing the vest of his employer

"We have a problem when companies are harassed or targeted unjustifiably simply because they use independent contractors," California Trucking Association vice president Michael Shaw told the Los Angeles Business Journal in October 2012. In that article, Shaw and others in the trucking industry claimed that "regulators are investigating on behalf of the Teamsters' union." Many truckers say they believe the trucking companies treat them as though they are not free to make independent decisions that any small business can make. "These guys came in looking to lease a truck, and they knew what we offered," Shippers' general manager Kevin Baddeley is quoted as saying. "If they wanted a job with benefits, working eight hours a day, they should have applied for a job."

But there are next-to-no full-time trucking jobs left at the port. The roots of this debate date back 30 years, when then-President Ronald Reagan deregulated the port-trucking industry. Many of the truckers who were unionized were forced out by the competition, and new companies were allowed to move into the port and operate at lower costs by using independent contractors. It became a cutthroat industry, but one in which independent contractors could still achieve a lower-middle-class salary. Then, in January 2012, the port banned all trucks that didn't meet the Federal Clean Truck Emissions Standards as part of the Clean Truck Program—a process that had been staggered since 2009. Thousands of independent truckers with their own vehicles who couldn't afford new ones or modifications to their old trucks were out of work, placing them at the mercy of trucking companies, who now had a glut of applicants for both full-time employment and independent-contractor status.

Last year, Governor Jerry Brown signed Senate Bill 459, labeled by the trucking industry as the "Job Killer Bill." It prohibits the willful misclassification of independent contractors—a move that identifies the state's recognition of the problem. For each violation, the fine is $5,000 to $15,000; if there is a pattern of practice, then the fine escalates to $20,000 to $25,000 per violation. Plus, the Department of Labor under the Obama administration has beefed up the number of investigators who respond to willful misclassification claims.

The new law seems to have reinvigorated the Teamsters, which has strategized for decades on how to get independent drivers to speak as one voice, to reach out to the trucking community. In August, the Teamsters-backed community/labor coalition Change to Win, along with members of Teamsters Local 848, leafletted at the port about a September meeting, where labor lawyers, members of the Department of Industrial Relations, and Teamsters would be present to tell the troqueros of their rights.

Coral Itzcalli, local spokesperson for Change to Win, dressed in an orange vest, flagged down trucks roaring into the port. "We don't need to tell [the drivers] they're misclassified," she said. "They know it. But what do you do about it?" 

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Organizers were on the lookout for company moles, as independent contractors gathered for the September meeting in the Teamsters Local 848 hall off Cherry Avenue in Long Beach. Many of the contractors were apprehensive about attending the meeting, as SB 459 prohibits them from unionizing. Most of the 70 or so truckers present were Latinos; they sat in chairs under large portraits of Martin Luther King Jr., Cesar Chavez and Jimmy Hoffa. The speakers spoke in Spanish and defined for the troqueros terms such as misclassification and the differences between an independent contractor and an employee.

"[The trucking industry] picked the right group of workers—an immigrant group who comes to the United States with the idea of prosperity," says Itzcalli, who was born in South LA. "Everyone comes here looking for the American dream, and [trucking companies] sell them this idea that they're going to own their own business. 'You're going to have your own truck; you're going to work when you want to work—the hours you want. If you work hard, you're going to make a lot of money.'"

After the meeting, truckers were encouraged to present their tax information and pay stubs to try to document whether they are, in fact, employees and not independent contractors. "We know what the companies are doing is illegal," Itzcalli claims. "We know they're misclassified. The drivers have the proof in their check stubs and taxes."

The IRS has been investigating larger businesses for such violations, and the agency has collected a considerable sum of money. "Critics call the practice misclassification, and it's become a top priority for the Labor Department under the Obama administration," according to a recent CBS report. "In 2011, the department collected more than $5 million in back wages on behalf of about 7,800 employees who had been misclassified—a 500 percent increase over the amount collected in 2008. They have hired 300 additional investigators to probe complaints."

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