A company at the Port of Los Angeles that underwent City Council scrutiny over its employment practices is shutting down its operations at a warehouse in Wilmington, it was announced Wednesday.
Cal Cartage has been operating at the warehouse for more than five decades, but will be closing the site in July.
“This is a very sad day for Cal Cartage, our employees, our customers and the Wilmington community,” said Sid Brown, CEO of NFI, which owns Cal Cartage.
NFI officials said there are about 800 people whose employment is tied to the warehouse, with a mix of employees, temporary laborers, independent contractors and vendors. The company said it would try to retain as many employees as possible.
The Los Angeles City Council voted in September to review a revocable permit for the Cal Cartage warehouse at 2401 E. Pacific Coast Highway over concerns about its labor practices.
The council’s decision to assert its jurisdiction over a vote by the board that oversees the port to grant the permit came at the request of Councilman Joe Buscaino, who has been heavily critical of the company in the past and represents the port area.
“Before another agreement is approved, it’s imperative I feel that the city should ensure that operations at the Port of Los Angeles are not affected by a labor disruption,” Buscaino said at the time.
The move was one of a series taken within the past year by Los Angeles city leaders as they seek to pressure trucking and warehouse companies at the port to stop classifying drivers as independent contractors.
In October, the Trade, Travel and Tourism Committee, which is chaired by Buscaino, recommended veto of the proposed permit and asked the Harbor Department to oversee the drafting of a new one that could avoid labor strife between the owners and workers.
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 16 strikes at the port in the last five years, and the Teamsters said the workers at NFI have been involved in seven of those strikes in the last three 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.
“The ongoing disruptions I feel continue to reflect on our operations and in general, I don’t know how this is any different than other work stoppages and work slowdowns at the port complex,” Buscaino said in October.
“So there is no way in good conscience I can support the commission’s recommendations. So why not have both parties come to the table and figure this out, because we will continue to hear the testimony, and we will continue to see these strikes and work stoppages at his site.”
Brown said NFI was unable to reach an agreement with the city, and blamed the Teamsters.
“We have been fighting, with the help of our employees, for the past four months to negotiate a deal to keep the facility open long-term,” he said. “This is not the outcome we wanted. Because of the Teamsters’ efforts, we now have been left with no other option but to shut down the Wilmington operation.”
The latest strike involving some NFI workers at the port came in October. NFI officials said the strike occurred after a recent effort by the Teamsters to unionize its workers failed, and that only a handful of is employees at the warehouse took part in the strike.
In a news release issued Wednesday, the company said the permit negotiations were unsuccessful because of the Teamsters’ efforts to organize the Wilmington employees, though they “overwhelmingly” voted against unionization.
The Teamsters alleged in statement that the company broke numerous laws, which casts doubt on the legitimacy of the election, including unlawfully threatening and intimidating workers.
“We have always welcomed the opportunity to have a second election at the warehouse; however, it is clear by their behavior that the company does not want to have a fair, honest, and lawful election,” said Eric Tate, secretary-treasurer of Teamsters Local 848.
“I am amazed that the company is willing to turn tail and run away rather than sit down with us and have a conversation about working out our differences.”
According to a USA Wednesday investigative report published in June 2017, 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 Wednesday investigation, Los Angeles 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 Cartage until last October, when they were sold to NFI Industries.
The City Council also voted in December 2017 to explore banning companies that use the practice of independent contractors from the port.