California Labor Commissioner Awards $6 Million to Misclassified Port Truck Drivers, Holding Employer Company and Individual Manager Jointly Liable

The California Labor Commissioner recently ordered National Freight Industries (“NFI”)/California Cartage, a major national third party logistics company, to pay nearly $6 million to 24 port truck driver employees for wage theft violations.

The Labor Commissioner determined that NFI/California Cartage misclassified its drivers as independent contractors when they were employees.  The Labor Commissioner also determined that NFI/California Cartage failed to properly pay the drivers wages, reimburse expenses, and provide meal and rest breaks.  In a historic move, the Labor Commissioner held Jim Degraw, General Manager and Operations Manager of California Cartage Express who supervised and directed the day-to-day work of the employees, jointly liable for the violations.   This is the first time that SB 588 (California Labor Code section 558.1), a 2016 wage theft enforcement law allowing individual employers, including “an owner, director, officer, or managing agent,” to be liable for wage theft violations, has been applied in port trucking.

Misclassification and wage theft are rampant in the port trucking industry.  According to “Rigged,” a 2017 investigative report by USA Today, California port truck drivers are essentially modern-day sharecroppers, oppressed by widespread predatory practices that make it nearly impossible for them to earn a fair wage.  For example, California port trucking companies have “spent the last decade forcing drivers to finance their own trucks by taking on debt they could not afford.  Companies then used that debt as leverage to extract forced labor and trap drivers in jobs that left them destitute.”

This Labor Commissioner decision and others like it are an important step in holding abusive port trucking companies accountable and pressuring the industry to change.  If you have any questions about this decision or SB 588, please contact your labor law counsel.

By Andrea Matsuoka | February 28, 2019

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