Their demand was simple: to be properly recognized as employees. TTSI is one of the largest port trucking companies in the twin ports of Los Angeles and Long Beach. TTSI’s business model – like the vast majority of port trucking companies in the country – relies on misclassifying its drivers as independent contractors.
When companies like TTSI misclassify their employees, they not only deprive the public of much-needed revenue by avoiding taxes, they also deprive workers of hard-earned wages by deducting business expenses like lease payments and fuel from drivers’ paychecks.
As TTSI driver Jose Rosales states, “Some weeks we aren’t even breaking even. How can I build a future for my family this way?”
Rosales and his fellow TTSI drivers who delivered yesterday’s petition are also seeking recourse through the California Division of Labor Standards Enforcement (DLSE), the agency charged with enforcing California labor laws. They have all filed wage and hour claims – also known as wage-theft claims – alleging that the drivers are employees whom TTSI has misclassified as independent contractors. This is not a simple technicality – if TTSI is found liable, it means that the lease payments the company deducts from drivers’ paychecks are illegal.
We’ve previously reported on just how outrageous these paycheck deductions get. TTSI is no exception. One slow week – whether due to light container traffic at the ports, sickness or a family emergency – could even result in a negative paycheck. Last March, as seen in the paystub image below, after lease payment, insurance, parking and fuel were deducted, one TTSI driver received a paycheck for a negative $196.30.
In all, at least 30 TTSI drivers have pending wage and hour claims with the DLSE. The money that TTSI potentially owes these drivers for the lease payments, fuel, maintenance and other costs it deducted, plus penalties and interest, is more than $4.3 million. If all 130 drivers at TTSI file such claims, company liability could exceed $25 million.
If recent decisions made by the Labor Commissioner are any indication, TTSI will be ordered to pay its drivers what it owes them. Last March, the DLSE ruled in favor of two former TTSI drivers, finding that they were in fact employees and determining they were owed a combined total of nearly $180,000.
The DLSE is not the only agency that has ruled that TTSI has improperly classified its employees, thereby avoiding its basic responsibilities as a business. In November 2010, the IRS ruled that one TTSI driver was actually an employee who TTSI had been misclassified as an “independent contractor.”
The labor commissioner’s recent rulings against TTSI shed some light as to why it is that companies engage in misclassification. As the commissioner stated:
Defendants utilize this “independent contractor” label to unlawfully reap financial rewards for themselves at the expense of their workforce and to secure an unfair competitive advantage over their competitors by lowering their labor costs and shifting the risks and operating expenses while retaining the right to control their workforce that an employer exercises over employees.
In other words, they want to have their cake and eat it too. They want to control their workers so they can run their businesses the way they want, but they want to avoid the costs and risks associated with running a business on the up-and-up – like owning and maintaining trucks and paying their workers what they’ve earned.
Not surprisingly, TTSI is resisting its drivers’ demands and appealing these government rulings. It has also recently redoubled its PR efforts. Just last week, an industry press article reported that TTSI’s president, Vic La Rosa, “estimated that 80 percent of the drivers he deals with at the ports of Los Angeles and Long Beach prefer to own and operate their trucks rather than to be direct employees of a drayage company.” (Interestingly, La Rosa appeared to have been open to an employee-based model prior to the passage of the Clean Truck Program in 2008).
In a similar effort to obscure the impact of misclassification on drivers, TTSI held a press conference last month announcing that the first lease of a clean truck the company had made to drivers had been completed. Industry press hailed this single purchase as proof of the bof what they term the “owner-operator model.”
A closer look suggests that this may not be the case, at least not for most drivers. The lease being celebrated was shared by a father and son team, which, while providing a great photo op, may not be the most compelling case for the economic viability of the leasing arrangement. None of the PR covering the completion of the lease mentions that there is a $20,000 balloon payment at the end of the lease. Further, according to a promo piece from the Port of Long Beach, it took two adults working day and night, six days a week, to pay off the lease.
It’s unlikely – if not impossible – that a single driver working a regular schedule will be able to earn enough to pay off the lease – much less save up the 20 grand needed at the end. Finally, as described above, the whole leasing set-up – through which TTSI deducts lease payments and other business costs from drivers’ paychecks – has been ruled by the DLSE to be illegal.
Despite TTSI’s efforts to portray its business model as a success, drivers’ actions – at the workplace and at the DLSE – tell another story. Drivers demand recognition as what they really are – and what government agencies agree that they are: employees.
However, simply gaining employee status won’t be enough to ensure fair treatment. Following the passage of the Clean Truck Program in 2008 – which originally required companies to directly hire their employees – TTSI did actually briefly begin to implement an employee model. However, it appears that TTSI may not have fully respected its drivers’ basic rights as employees during that interlude. Just last month, TTSI settled a 2009 lawsuit filed by drivers whom TTSI briefly hired as employees, which alleged a number of abuses, such as TTSI’s failure to pay minimum wage and to provide meal and rest breaks.
Without oversight – and most critically, without workers standing up for what they have rightfully earned – companies will continue to engage in wage theft like this. (A recent Economic Policy Institute study shows how more than three times as much is stolen from workers by their employers than is stolen by bank, gas station and convenience store robbers combined.)
To make sure that their rights are respected, TTSI drivers require more than just employee status. They need to be able to organize a union, free of employer resistance. As drivers at Toll recently demonstrated, by sticking together on the job, they can negotiate a fair contract, secure a decent wage, benefits and respect for their rights at work. Drivers at TTSI – and throughout the ports – deserve the same opportunity.
The Frying Pan
Friday, 15 November 2013