Report: Some port trucking firms label truckers contractors

February 19, 2014 -- Partnership for Working Families

SACRAMENTO, Feb. 19 (UPI) -- Port trucking companies labeling employee truckers as independent contractors break state and U.S. laws and cost the country billions of dollars, a study said.

A joint report released Wednesday indicated about 49,000 of the nation's 75,000 port truck drivers were misclassified as independent contractors, violating state and federal labor and tax laws, including provisions covering wage-and-hour standards, income taxes, unemployment insurance, union-related matters and workers' compensation.

The study -- conducted by the National Employment Law Project, Change to Win Strategic Organizing Center and the Los Angeles Alliance for a New Economy -- reported that port drivers filed about 400 complaints with the state's Division of Labor Standards Enforcement for wage theft violations arising from the misclassification. Penalties in 19 cases already adjudicated averaged $66,240 per driver. Claims in reviewed pending complaints average a little over $127,000 per driver.

"Extrapolating from existing claims made under California state law, we conservatively estimate that port trucking companies operating in California are annually liable for wage and hour violations of $787 [million] to $998 million each year," the report said. "The true figure probably lies in the middle of this range at around $850 million per year."

The report estimated the industry's total federal and state liability for unemployment insurance fund contributions, workers' compensation premiums, and income tax payments was about $563 million annually.

"Total quantifiable costs of misclassification nationally -- tax losses plus wage-and-hour violations -- run to $1.4 billion annually with non-quantified costs likely exceeding the figure significantly."

The report recommended state and federal labor and tax law enforcement agencies should prioritize investigations in those industries in which widespread violations have the greatest impact on workers and lawful employers, be adequately funded and coordinate efforts to fight misclassification in the trucking industry.

The report also recommended anti-retaliation measures for whistle-blowers should be strengthened.

The report urged the U.S. Labor Department to expedite its recently announced study on the incidence of worker employment classification because existing studies are out of date, and called on Congress to pass several pieces of legislation the report said would help address some of the causes and consequences of misclassification among port drivers.

The original report is available here.