Notes From the Underground Economy

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

Notes From the Underground Economy

"Trucking makes me feel like a benefit to society," Adolfo Meyers says, "and I'm doing what I like to do. It's what I've done since I was young. Unfortunately, now, this job seems worth nothing."

A waiter pours coffee into his mug. Meyers is a troquero at the Port of Long Beach, one of the busiest in the world, and the focal point of the multibillion-dollar trucking industry in Southern California, the profession that keeps nearly every business in the region humming. He's speaking through a translator at Blackbird Cafe in Long Beach—Meyers' English is decent, but, he says, he's much more comfortable telling his story in Spanish. And telling his story is already dangerous. ("Adolfo Meyers" is a pseudonym, but his real name has appeared in previous stories about port truck drivers.)

"Everyone becomes so afraid to speak up because they can fire us," says Meyers. "I'm always afraid, but I have to speak up. It's my money; they're stealing my money."

Lining up for the day's loads
Kenneth M. Ruggiano
Lining up for the day's loads
Coral Itzcalli: Advocate for troqueros
Kenneth M. Ruggiano
Coral Itzcalli: Advocate for troqueros
An anonymous trucker, wearing the vest of his employer
Kenneth M. Ruggiano
An anonymous trucker, wearing the vest of his employer

He leases a big rig with Carson-based Shippers Transport Express, moving "short haul" loads—deliveries within Southern California. But the Mexico native isn't technically an employee of Shippers; as an independent contractor, his truck is considered a moving and rumbling small business. Meyers has to cover the truck's lease, trucking insurance, maintenance and diesel, all of which, he says, Shippers deducts from his paycheck. His pay is determined by how many hauls he can take per day from the port to the cargo's intended location and back. Stuck in traffic, or a long wait to load or unload, problems endemic to trucking? Tough.

"Now, when I stop working for a company, I don't take my truck; I take my vest. The company keeps everything," Meyers says. (As of press time, Shippers did not respond to requests for an interview.) "All the money we invested in the truck, the lease payments—things have gotten worse in the past five years. We're earning wages that we used to get 20 to 30 years ago. Right now, we're paying to work. The little money that we do earn is just barely enough to get by."

If Meyers grosses $2,300 one week, after the deductions, what he takes home is around $900 to $1,000; on that take-home amount, he still has to pay taxes at the end of the year. On top of that, he says, any repairs to the truck must be performed by a company mechanic. "If I took it to another mechanic," he says, "they would probably fire me."

Meyers is a part of the port's underground economy, or the shadow economy, terms used by Teamsters and labor activists to describe the port's dirty secret: a system of employment that designates truckers as independent contractors so the port's trucking companies can avoid paying truck costs, taxes, benefits, workers' compensation and hourly rates yet essentially ties said truckers to one company as though they are indentured servants. It's a controversy that has plagued the port's trucking industry for the past 30 years, pinning unions desperate to tap into a potential membership pool of thousands against an industry that will do anything possible to make sure this day never comes, with the independent contractors—who, by law, aren't allowed to unionize, let alone strike—stuck in the middle.

Some labor activists have even dubbed the independent-contractor system as "labor laundering." These terms, concepts and narratives conjure up a grand image of a silent workforce sneaking through the ports, unnoticed and uncared for. Trucking companies, on the other hand, tell drivers they have a great opportunity to run their own businesses if they sign up as independent contractors.

"From the very beginning, they made us believe we were our own independent companies," Meyers says. "Back then, we had our own trucks and had a little bit more control over who we worked for. But in reality, the ones who always had the control over our work, our wages, really everything, were the companies.

"The company decides what truck you're going to rent," he adds, "what time you're going to work, and what dates you're going to start. I finish working every day between 1 and 3 a.m. I start at 3 or 4 p.m. We have to be there the latest by 4 p.m. because if we don't, they might not get us a truck. But by 10 a.m., I have to wake up and call the office to see if they're going to have work for me."

And if he refuses a "bad" load—cargo hauls that pay low rates yet take a long travel time—he's not given any more work that day.

The controversy is now big enough that state and federal investigators are taking a much closer look at the port trucking industry's use of independent contractors. Plus, they've raised the amount of fines that entities will pay if they are found guilty of what they call "misclassification," or treating independent contractors as employees with none of the benefits, which labor activists say is endemic at the port.

Meyers claims that if he were his own independent company, he would be able to take his truck to any company he wanted, shop around, and set his own schedule. But that's not his current reality.

"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."

*     *     *

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?

"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?" 

*     *     *

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."

California state investigators are vague as to whether they're specifically targeting the port's trucking companies. "It's not a question I can answer in a blanket way," says Julie Su, labor commissioner for California's Division of Labor Standards Enforcement (DLSE). She has fought on behalf of disenfranchised workers for years, receiving a MacArthur "genius grant" in 2001, and was named as one of the "Pioneers In Women's History" by Bill Clinton.

To truly answer whether or not trucking companies are willfully misclassifying drivers depends on the circumstances of specific employment relationship, she says. "It appears from the investigations we have done that the factors speak to potential misclassification. Drivers are not engaged in a distinct occupational business. . . . They have very little control over their working conditions and choices, whether they can work for different motor carriers or not. It appears that in the agreement they sign, they are tied to a certain company. Their relationships are not temporary. Many drivers drive for a number of years or decades."

She emphasized that the DLSE was not targeting the port trucking industry. And in an effort to not malign any specific entities during the investigation, Su wouldn't elaborate on the companies her team was investigating, but she noted that misclassification is widespread across America's labor spectrum, from construction sites to farmlands to carwashes to hospitality services at hotels.

As to whether the port trucking industry is taking advantage of Latino workers as the Teamsters have claimed, Su didn't want to jump to conclusions. "Oftentimes what happens is that independent contractor relationships are modified by some kind of actual contract," she says. "If that contract is written in a language that the contractor can't read, in competent legal language they can't understand, that makes the contract more suspect."

But Su does get angered by workplace retaliation. Truckers who spoke to the Weekly for this story insist companies will blackball them or fire them for talking to Teamsters or the Department of Labor. Su related a case in which a driver had spoken to the DLSE and noticed he was getting fewer and fewer jobs from his company. Her office contacted his bosses and informed them they were engaging in illegal retaliation; the driver got his job back. "It's easier to mask retaliation when someone is considered an independent contractor who is hired by the load," she says. "I have found that in my investigation, we can often uncover those kinds of excuses."

This is part of the DLSE's larger goal: to make sure drivers who voice their concerns about labor conditions are protected. And Su says dozens of Port of Long Beach truckers have filed wage claims over misclassification, demanding minimum wage and overtime and questioning several deductions from their checks.

*     *     *

In 2011, trucker Romeo Garcia accused Gardena-based Seacon Logix Inc. of unauthorized deductions and requested reimbursements for truck leases, fuel, insurance and vehicle maintenance in the amount of $31,689.50. A hearing was conducted on Nov. 16 of that year at the California Department of Industrial Relations in downtown Long Beach. Garcia said that he had signed an agreement with the trucking company and understood payments would be deducted for the lease and other expenses, but, he argued, he was swayed by the defendant, who told him he would "make a lot of money."

Representatives for Seacon Logix argued that Garcia shouldn't be considered an employee because he was allowed to turn down dispatched jobs, decide on his own routes and schedule, and could take the truck home if he had a safe place to park it, even though the lease was registered under Seacon. The defense also claimed it offered to find a Spanish interpreter to help Garcia understand the contract.

But Garcia rebutted that he was denied an interpreter and wasn't allowed to turn down jobs. In order to take time off, he testified, Garcia would have to explain himself to Seacon's dispatchers and that if "he didn't do as [Seacon] wanted, he would not get any loads or the office would 'lose' the keys to the truck," according to case documents. The labor commissioner found in favor of Garcia, who was awarded more than what he asked for: $35,814, which included penalties. Seacon Logix is currently trying to appeal the decision; the company refused any further comment.

"Misclassification removes the normal protections," Su says, "that employees are supposed to be guaranteed under law: worker's compensation, minimum wage, overtime. I think too often that entities have kept everything the same about their operation, but they once had employees and converted them to contractors to cut cost. It's bad for employees, it's bad for the competitors, and it cheats the public out of millions of dollars a year because they're not paying taxes."

Several critics of the ruling and misclassification lawsuits say the truckers do not have to sign such contracts with the trucking companies, a stance Su scoffs at.

"I reject the notion that we should blame hardworking people for the abuse they might suffer from the people who break the law," she says. "That's not the way our legal system is structured; that's not the way our labor laws work."

*     *     *

Charles Criddell's open and confident approach to talking about his experience as a port trucker and a member of the underground economy is living proof of what truckers once had and what they currently face. The 59-year-old showed up in a Corvette for an interview for this story at a baseball field in Corona, where children were practicing their batting.

"I'm one of these kind of guys," says Criddell over the crack of the baseball bat. "I don't feel like I have to stay anywhere. When the opportunity knocks, I move."

His entrepreneurial spirit has caused him to jump into many different businesses. In 1979, Criddell started driving a truck for Shell Oil in Wilmington as an employee with benefits. After being laid off, he found a job with Lucky Supermarkets and joined the Teamsters. He went to a couple of other trucking companies over 16 years as a union driver. But in the 1990s, he stopped trucking, switched careers and decided to work in real estate. "Am I going to make $400 to $500 a day—or am I going to make $5,000?" he asks rhetorically.

On his right hand is a ring worthy of a Super Bowl victory, a souvenir from his onetime travel business. Criddell says he made good money in real estate until the market crashed, and he decided to re-enter trucking. At the time, most companies required drivers to have three consecutive years under their belts, so he tried to work at the ports of Long Beach and Los Angeles as an independent contractor. "I established the mindset of getting paid off your efforts," Cridell says. "So whatever I put in, I would get out. . . . I never wanted to put myself in a situation where I worked by the hour."

He believed that as an independent contractor, money would come in, that it all depended on his work ethic. The first company he worked for was Fox Transportation in Rancho Cucamonga. "To be perfectly honest with you," Criddell says, "I did well. I started in July 2009, and by July 2010, I grossed $208,000. In 2011, I grossed $108,000."

Criddell opens a folder and starts leafing through some paperwork. Criddell shows me his "Non-Sleeper" Vehicle Lease Agreement, a statement outlining deduction details, and a copy of his Independent Motor Carrier Agreement from Fox Transportation. While $208,000 sounds like a lot of money, the amount Criddell says actually went "in his pocket" was $60,000 to $70,000. Though it sounds like a good living, he says, he had to work more than the legal limit to make his desired income; 18-hour days on five hours of sleep were the norm.

"But I had to work that way in order to make the income," Criddell says. "Because [port companies] dictate what you get paid for each load. . . . Even though they want to call you an independent contractor, you can't go in there and say, 'I don't want to do this run for $200.' . . . You could negotiate that deal if you were truly an independent worker."

Fox Transportation's lease agreement stipulates the lessee can sublease the truck to another driver. But it also says the lessee has the right to take the truck to other companies, though before doing so, the lessee needs to take out a separate insurance policy.

While Criddell doesn't dispute anything in the contract, he maintains that to actually work for other companies was nearly impossible. "What made it difficult was that they said you could go out and do other work," Criddell says, "but before you can do that, you have to do 10 or 12 of their loads. . . . That meant you would have to work day and night."

Criddell no longer works for Fox Transportation or as an independent driver. He believes he was "fired," because the company thought he was talking to Teamsters and the labor board. Fox Transportation declined to comment.

"It's not about the money with me," Criddell says. "It's about the principle. This needs to be changed," he says. "I know that in order for this to change, certain people need to step forward. . . . What they're doing is unjust, and they need to be put on notice."

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