The Los Angeles City Council Tuesday overruled the civilian board that oversees the Port of Los Angeles and vetoed a special trade agreement for a warehousing and trucking company over concerns about its labor practices.
The move against California Cartage Co., LLC, is one of a series taken lately by Los Angeles city leaders as they seek to pressure trucking companies at the port to stop classifying drivers as independent contractors. Some drivers and their unions have been arguing for years that labeling them contractors is a scheme to deny them just compensation and benefits.
The council, on an 11-0 vote, vetoed a ruling by the Board of Harbor Commissioners to extend a Foreign Trade Zone Operating Agreement at the company’s warehouse on port property in Wilmington.
“How can we incentivize a company that is treating its employees like crap? It’s not going to fly with me and it shouldn’t fly with you,” Councilman Joe Buscaino told his City Council colleagues before the vote. Buscaino represents the Port of Los Angeles area.
California Carthage officials did not immediately respond to a request for comment.
The FTZ Act of 1934 allows certain companies to reduce import duties or excise taxes by deferring payment of the duties, which makes it attractive for companies to perform some work on their products in the U.S. rather than offshore. The Harbor Department, as the grantee, is required by the FTZ Board to have an operating agreement with FTZ site operators.
According to Buscaino, California Carthage has some pending litigation against it and other legal complaints under consideration by the National Labor Relations Board, Department of Justice and in civil court. But Harbor Commission staff recommended to commissioners that the FTZ agreement be extended for Cal Carthage because it could not prove the company had broken any laws.
The issue of companies at the Port of Los Angeles and the Port of Long Beach classifying drivers as independent contractors has been a focal point of 15 strikes at the port in the last four years.
The truckers maintain they are improperly classified as independent contractors by companies at the port in a scheme that deprives them of benefits and job protections while increasing their overhead costs by forcing them to lease their trucks from the companies for which they drive.
According to a USA Tuesday investigative report published last June, there are around 800 companies regularly operating at the L.A. ports, and almost all of them turned to some form of a lease-to-own trucking model after California banned older trucks from entering the ports in 2008.
Since the USA Tuesday investigation, L.A. leaders have been putting more pressure on companies to change their business practices.
In January, City Attorney Mike Feuer sued three Port of Los Angeles trucking companies over their practice of classifying truck drivers as independent contractors, alleging it bilked them out of fair pay and benefits while also shifting operating costs onto their shoulders. The lawsuits were brought against CMI Transportation LLC, K&R Transportation California LLC and Cal Cartage Transportation Express LLC. All three of the companies were owned by Cal Carthage until last October, when they were sold to NFI Industries.
Mayor Eric Garcetti issued a statement in support of Feuer’s action when those lawsuits were announced.
“The Port of Los Angeles is one of America’s most powerful economic engines, and the workers who keep it running every day deserve better than to be deprived of basic employment protections,” Garcetti said then. “Denying workers fair wages and benefits to pad profit margins is unacceptable, and we will not stand for it in Los Angeles. I fully support the city attorney’s action against these unfair practices.”
The Trade, Travel and Tourism Committee, which Buscaino chairs, last year held a special hearing at the port, where truckers and warehouse workers spoke about alleged labor abuses that result from their classification as independent contractors instead of employees. The hearing led to the council’s vote in December to explore banning companies that use the practice from the port.
The City Council’s vote sends the matter back to the Board of Harbor Commissioners for reconsideration.
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