As government enforcement increases – both at state and federal level – the legal and financial liability stemming from port driver misclassification continues to spread.
State agencies are not the only governmental actors scrutinizing misclassification at port trucking companies. The National Labor Relations Board (NLRB) is now weighing whether misclassification in and of itself constitutes a violation of federal labor laws.
Following an investigation, Region 21 of the NLRB recently found merit to charges filed by the Teamsters union that port drayage company Intermodal Bridge Transport (IBT) misclassifies its drivers. In the complaint issued by the Region on March 23, 2016 alleges IBT engaged in a variety of unlawful activity, including the allegation that the very act of misclassification in and of itself is a violation of the National Labor Relations Act.
These charges are unique. Past NLRB hearings have tackled the issue of employee status as a preliminary step in establishing jurisdiction. For instance, in an October 2014 decision, an administrative law judge determined that a group of drivers at port drayage company Green Fleet Systems had been misclassified before then considering almost 50 separate unfair labor practice charges.
In contrast, the charge of misclassification at IBT currently before the NLRB goes even further, alleging that the very act of misclassification is itself a violation of the NLRA. The IBT case will be the first time these charges will be going before a judge, who will decide on the matter following a July 18, 2016 hearing.
In the meantime, IBT drivers have been exerting their employee rights, taking collective action, demanding changes, and carrying out work stoppages to protest the pending unfair labor practice charges – including misclassification. Most recently, during a one-day strike on April 20, 2016, IBT trucks were denied entry into many port terminals, including COSCO, of which IBT is a subsidiary.
While it may be the first to go to hearing, the IBT case is not is not an isolated one. The NLRB’s Region 21 also issued a complaint with similar misclassification charges against Pacific 9 Transportation, Inc. earlier this year, on January 28, 2016. The charges were settled on the eve of the hearing, so no final decision was ever issued. Similar charges have also been filed by the Teamsters against logistics behemoth XPO Logistics, and a complaint is expected to be issued soon.
As previously mentioned in Port Innovations, this issue has also caught the attention of the NLRB’s Office of General Counsel. In its March 22, 2016 memorandum on mandatory submissions to the Division of Advice, the General Counsel includes “cases involving the question of whether the misclassification of employees as independent contractors violate Section 8(a)(1)” among issues that are “General Counsel initiatives and/or priority areas of the law and labor policy.”
Port drayage companies continue to face governmental scrutiny of driver misclassification. Forward thinking companies are weighing the risks of continuing on a path ripe with litigation that may result in filing for bankruptcy protection versus converting to a risk-free asset-based model that can provide more control and consistent customer service.