K&R Transportation, CMI and California Cartage Express Misclassified Port Truck Drivers
Mike Feuer has filed lawsuits against three leading port trucking companies, all owned by NFI Industries, which purchased the conglomerate from the Bob Curry family (California Cartage) in 2017. In the suits, City Attorney Feuer alleges that the companies intentionally misclassified hundreds of truckers as independent contractors, rather than employees, to avoid providing benefits and paying applicable taxes.
“The Teamsters applaud Los Angeles City Attorney Mike Feuer for taking aggressive action against these market-leading companies – K&R Transportation, CMI, and California Cartage Express – which continue to violate the law even after determinations by the California Labor Commissioner that they are openly violating the law," said Fred Potter, Director of the Teamsters Port Division and International Vice President. "We hope this will send a strong message that not only these companies, but the entire port trucking industry must stop breaking labor laws. Thousands of drivers at many of LA’s port trucking companies have filed private lawsuits and wage and hour claims alleging illegal misclassification; and drivers have gone on strike 15 times to demand change. And every government agency that has conducted an investigation has determined that port trucking companies are violating the law. Yet, despite the legal evidence, LA Port officials have effectively sanctioned their behavior by allowing them to continue to conduct business on public property. This must end."
“With these lawsuits, Los Angeles City Attorney Mike Feuer has made it clear that if you break the law by misclassifying drivers as 'independent contractors' at LA’s port then there will be consequences. Unfettered lawbreaking unfairly undercuts the companies that are following the law,” said Eric Tate, Secretary-Treasurer, Teamsters local 848, which represents more than 500 port truck drivers at America’s largest port complex.
“After years of telling the leaders of Los Angeles’ Port that these companies are blatantly breaking the law on public property – with no action – we are pleased to see LA’s City Attorney file lawsuits against these companies to demand an end to misclassification and wage theft that hurts our families,” Gustavo Villa, misclassified driver, California Cartage Express.
NFI/California Cartage, based in Wilmington, CA, is one of the largest goods movement companies in America, with warehouses and port trucking operations across the U.S. Referred to herein as “NFI/Cal Cartage,” this family of companies was recently acquired by the New Jersey-based National Freight Industries (NFI). Previous to this acquisition, Cal Cartage was owned and managed by Robert Curry, Sr. and his family. NFI/Cal Cartage represents the largest trucking operation at the Ports of Los Angeles and Long Beach by a wide margin.
Cal Cartage Port Trucking Operations
The NFI/Cal Cartage family of companies includes five major trucking operations at the Ports of LA and Long Beach. The four largest - K&R Transportation, California Cartage Express, ContainerFreight EIT and California Multimodal LLC (CMI) – have been facing multiple claims in the courts and government agencies for misclassifying their drivers. In several instances, agencies have already determined that drivers were, in fact, employees. K&R and California Cartage Express operate out of the same property as the Cal Cartage warehouse (described in the following section), CMI operates out of a nearby Wilmington yard, and ContainerFreight operates out of a yard in Long Beach. Combined, more than 600 alleged misclassified drivers work for these companies.
• Over the past two years, there have been at least 12 decisions issued by the California Labor Commissioner in individual claims filed by NFI/Cal Cartage drivers working for K&R Transportation, Cal Cartage Express, ContainerFreight, and CMI. All of these claims found that the drivers were, in fact, employees, and not independent contractors. Together, those decisions ordered NFI/Cal Cartage to pay those 12 drivers a total of $1,419,102.62 for Labor Code violations including unlawful deductions and unreimbursed expenses. NFI/Cal Cartage has appealed nine of these cases, settling eight of them, while one remains pending in Superior Court. For the other three cases, it is as yet unknown if NFI/Cal Cartage will appeal the decisions as it is within the appeal time frame.
• There have been an additional 30 Labor Commissioner claims that drivers have filed against NFI/Cal Cartage, all of which appear to be pending (of these, 15 were filed by K&R drivers and 15 by CMI drivers). 10 of the K&R drivers had their hearings in December 2017. The total liability for those 30 claims is $5,620,338.16.
California Employment Development Department (EDD)
• At least four K&R drivers have been determined to have been employees – not independent contractors – by the California EDD in individual benefits determinations.
• In June and September of 2017, the California EDD filed at least two tax liens against K&R Transportation.
Los Angeles City Attorney:
• On January 8, 2018, Los Angeles City Attorney Mike Feuer announced that his office had filed lawsuits against Cal Cartage Express, CMI, and K&R Transportation for violation of Unfair Competition Law by misclassifying port truck drivers as independent contractors and evade paying taxes and providing benefits to drivers.
• In recent years, NFI/Cal Cartage has faced four class action lawsuits in California Superior Court for multiple Labor Code violations, including willful misclassification, unlawful deductions, unreimbursed expenses, unpaid minimum wages, and failure to provide meal and rest breaks, along with violation of California’s Unfair Competition Law. In December 2017, the last pending case settled for $3.5 million and a motion for final approval is scheduled for April 2018. The company recently settled three similar suits.
• NFI/Cal Cartage also recently settled two “mass action” lawsuits for misclassification and wage theft in CA Superior Court involving 55 drivers.
Cal Cartage Warehouse:
Cal Cartage Container Freight Station in Wilmington is a warehouse and freight center on Port of LA property and employs approximately 500 workers, with 80 percent of the workforce being employed through a temp agency. While Cal Cartage warehouse workers used to have good paying jobs that provided benefits, they have not had representation from a union in over 30 years and conditions have suffered. Workers are now paid the state minimum wage with little or no benefits (even though they are entitled to a higher wage under the Los Angeles Living Wage Ordinance), and work in health and safety conditions that are deplorable. The company has been cited for serious health and safety violations twice in the past three years, and workers face serious retaliation resulting in unfair labor practices charges and five strikes.
Health & Safety:
The warehouse facility has health and safety issues. The building was built in the 1940s and is poorly maintained. Several workers have been hurt just trying to walk around the facility due to potholes and poor infrastructure. The machines, including forklifts, are not maintained and often have faulty brakes and horns—leading to accidents. Workers filed a formal complaint with Cal/OSHA in June 2015, triggering an investigation at the facility. In November 2015, over $21,000 in citations were issued—4 serious and 6 general penalties. It was noted in these citations that the chipped paint at this facility contains lead.
Cal/OSHA reinvestigated the facility a year later, resulting in additional serious citations in November 2016 amounting $67,150 for the warehouse and $51,275 for the staffing agency. Citations included not providing workers with steel toed boots, not properly attaching shipping containers to the dock, and repeat violations for unsafe brakes on forklifts. The investigation regarding the company’s abatement of these citations is still active.
National Labor Relations Board:
On June 12, 2017, a trial began at the National Labor Relations Board (NLRB)’s Region 21 on several Unfair Labor Practice Charges (ULPs), summarized below:
• Region 21 found merit to Unfair Labor Practice charges filed in September and October 2015 and issued a complaint and notice of hearing on March 21, 2016.
• The NLRB began its investigation in September 2015, when the Warehouse Worker Resource Center (WWRC) filed an unfair labor practice (ULP) charge with the NLRB, alleging that California Cartage had interfered with workers' concerted and protected activities by threatening supporters with discharge and attempting to initiate a physical altercation with a worker due to a worker delegation.
• The NLRB continued their investigation in October 2015 when new ULPs were filed alleging that California Cartage had interfered with workers' concerted and protected activities. The company instituted unlawful workplace rules to limit workers’ ability to petition and delegate management.
• In April 2016, WWRC filed charges alleging that California Cartage and Associated Management Resources, Inc. (AMR staff agency) interfered with workers' protected activities by threatening and interrogating supporters with termination. Additionally, the charges alleged that Cal Cartage violated federal labor laws by retaliating against a supporter by discharging Manuel Reyes for his protected concerted activities.
Additionally, in 2016, the Teamsters filed ULP charges against California Cartage for several unfair labor practices including the Company Owner Bob Curry threatening to close the warehouse if workers unionized. These charges are pending.
On December 17, 2014, workers from the California Cartage warehouse on Pacific Coast Highway at the Port of Los Angeles filed a class action lawsuit alleging millions of dollars in wage theft. The workers, many of whom are paid the state minimum wage and have worked through a staffing agency for years, are entitled to the benefits of the Los Angeles Living Wage Ordinance because the warehouse where they work is operated on City of Los Angeles property. Despite this, the workers at the warehouse have not been paid the applicable living wage rate in the 18 years since the ordinance passed.
Under the City of Los Angeles Living Wage Ordinance, Cal Cartage is currently required to provide each worker with either $12.52 per hour for an all-cash wage or $11.27 per hour plus $1.25 per hour in health benefits and as of July 1, 2017, it will go up to be $12.73 all-cash wage or $11.48 plus $1.25 in health benefits. Further, each worker is entitled to 12 paid days off per year. The law extends the obligation to any staffing agencies that are contracted by Cal Cartage and that directly employ more than 50 percent of the workers in the warehouse facility.
The case is currently in mediation proceedings.
NFI/Cal Cartage’s key customers include: Lowe’s, Amazon, TJ Maxx, Home Depot, Kmart, and Sears, as well as the U.S. Department of Defense.