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Truckers, Teamsters Cheer as Supreme Court Seals Misclassification Court Battle

Denies Appeal of Ninth Circuit Decision Upholding State Misclassification Rulings

By Paul Rosenberg, Senior Editor

For years, the Labor Commissioners Office, headed by Julie A. Su, has ruled that port truckers are de facto employees, using a common law test and are therefore illegally misclassified by companies that treat them as independent contractors.

The California Trucking Association challenged this practice in federal court, losing at trial, and on appeal in the Ninth Circuit Court, in a decision handed down this past September. On March 18, the Supreme Court rejected the group’s bid to have the decision reversed.

The decision was hailed by Fred Potter, vice president-at-large, International Brotherhood of Teamsters, and director of the Teamsters Port Division.

“In rejecting the CTA’s appeal, the highest court in the land has effectively closed the case on predatory trucking companies’ efforts to dodge taxes and steal the hard-earned wages of drivers through a scheme that illegally classifies drivers as independent contractors,” Potter said.

“Over the past four years, the California Labor Commissioner has ruled 36 separate times that my co-workers and I at NFI Industries are misclassified as independent contractors, awarding us $7.3 million in stolen wages,” said Gustavo Villa, a port truck driver with NFI Industries/Cal Cartage Express.

“Most of these cases — including mine — are still under appeal by NFI,” Villa said. “Now that the Supreme Court has rejected the industry’s appeals, I hope that I can finally be properly classified as an employee so that I can be paid for all my hours worked, have decent health insurance for my family and have the protections properly classified employees are entitled to, like disability and workers’ compensation.”

The Ninth Circuit rejected the trucking association’s claim that state law was preempted by the Federal Aviation Administration Authorization Act of 1994 — the same argument used to overturn most of the original Clean Trucks Program.

But the court noted that while “the Supreme Court has held state laws preempted when a customer invokes them to obtain certain rates or services beyond what was set forth in their contract with a carrier,” this did not constitute “a broad rule that preemption occurs whenever a state law touches any aspect of a carrier’s contractual relationship with anyone.”

Instead, two other cases “compel us to conclude that the Borello [common law employment] standard is not preempted. And this conclusion finds support in the Federal Aviation Act’s legislative history as well as the California Supreme Court’s view of the matter.”

The Supreme Court’s refusal to review this decision signals an inevitable end to systemic misclassification, but inevitable doesn’t mean swift or automatic. Now that the law is clearly settled, it’s up to the trucking companies to change, up to the shippers to stop using companies that don’t change, and up to the ports to ban them unless they do change.

NFI/Cal Cartage was kicked out because of its labor law violations and a request for proposals has been issued to seek a new tenant. Sealed bids were received in late March. Whoever takes over has to agree to labor peace.  Teamsters expect it to be “a real game-changer.”

A contingent of former NFI warehouse workers and drivers and community supporters will testify at the Harbor Commission on April 4 in public comment, urging the companies that have done business with NFI in the past to continue doing business with its successor.  Warehouse workers are somewhat protected by the city’s worker retention ordinance, but nothing is certain without a struggle.

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