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Los Angeles sues three drayage carriers, claiming they misclassified drivers as contractors

The city government of Los Angeles has filed a lawsuit against three Southern California-based drayage carriers, claiming the fleets wrongly classified hundreds of drivers as independent contractors instead of company employees. All three fleets — CMI Transportation, K&R Transportation and Cal Cartage Transportation Express — operate as divisions under California Cartage Company.

L.A. city attorney Mike Feuer says the companies intentionally misclassified the drivers “to avoid obligations to pay employee benefits” like insurance, worker’s comp, minimum wage requirements and the reimbursement of drivers’ business-related expenses. A spokesperson for California Cartage says the company is not commenting on the lawsuit. Feuer says the city is seeking restitution payments for the drivers. The three companies are also facing lawsuits from drivers themselves, filed last year.

Driver misclassification claims have bubbled up across the country in recent years, but Southern California ports are a hotbed of such disputes. In addition to a bevy of lawsuits in recent years filed by drivers against their carriers, drivers have initiated several work stoppages and strikes to protest their classification as independent contractors.

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Courts have mostly sided with drivers in such cases, awarding them back wages for benefits deemed unpaid. Driver misclassification has reportedly in some cases cut drivers’ wages to nearly nothing after carriers deduct expenses and insurance costs from their paychecks.

Regarding L.A.’s lawsuit, which was announced this week, the carriers “exert near complete control over their drivers’ assignments and details of their work — the most significant factor in determining if a worker is an independent contractor or an employee under California law,” the city said in its announcement about the lawsuit against the three drayage carriers.

A bill was filed in the U.S. House last year to examine the issue of driver classification practices by port carriers, but the bill has seen no action since its introduction. Another bill in Congress, introduced in 2015, would impose stiff penalties for carriers who have incorrectly classified drivers as independent contractors. It too has seen no action since being filed.

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James Jaillet is the News Editor for CCJ and Overdrive. Reach him at jjaillet@randallreilly.com.