Port truck drivers, gig-economy workers have much in common
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In a good year, port truck driver Jose Portillo says he can rake in $80,000 a year.
But the barrel-chested grandfather says he takes home only $25,000 after paying for gas, insurance and rental fees for the big rig he drives.
Portillo is an independent contractor. He and other truck drivers — bemoaning that they don’t get vacation, overtime or workers compensation in case of an accident — have worked with the union to file a complaint against trucking companies, contending that they are really employees.
The debate isn’t new. Since the deregulation drive of the 1980s, the contractor model has dominated the trucking industry.
But truckers like Portillo now share the road, and have much in common with, a new brand of worker.
Summoned via app by such companies as Uber, Lyft and Task Rabbit, they set their own schedules, get paid electronically, select their own pay-per-chore options and are afforded more freedom than traditional workers, boosters say.
“Digitalization made it easier for people to offer their services more easily,” said Christine Cooper, senior vice president of the Los Angeles County Economic Development Corporation and a trained labor economist.
But worker advocates allege that these new-era employers, like some trucking companies of the past three decades, are just cutting costs by stripping their workers of benefits and protections.
“When they call workers independent contractors what that means is businesses save up to 30 percent off labor taxes because they don’t have to comply with minimum wage and overtime,” said Rebecca Smith, deputy director at the National Employment Law Center, who has been studying the issue..
Traditional truckers and Uber-crews alike may be at a crossroads. Scholars and regulators say a flood of litigation has set off a legal tug-of-war over the future of so-called “alternative work arrangements.”
LEGAL BATTLES GALORE
Though seemingly from two different eras, trucking companies and task-distributing apps have something in common — litigation.
The Heritage Foundation, a conservative think tank, concluded in a recent study that a flurry of recent worker lawsuits could undermine the gig economy.
“I think the lawsuits have created a lot of tension on these issues,” said Shannon Liss-Riordan, an attorney who represented about 385,000 Uber drivers in class-action lawsuits that challenged the San Francisco-based company’s freelance pay model in California and Massachusetts.
In August, a federal judge rejected a $100 million settlement worked out by attorneys in the Uber case, concerned that it still shortchanged drivers. But, she said, such suits have had a residual effect.
“It has prompted a lot of companies to change,” she said, “that don’t want to fight these legal fees and risk a massive potential judgement.”
Liss-Riordan said the gig-work model is not that different from many of the trucking companies in Southern California that have been fined for failing to recognize drivers as employees.
“The so-callled gig-economy,” Liss-Riordan said, “where the technology company dispatches their workers though an app, they are not doing anything new. They have just added technology to the mix.”
Meanwhile, the Teamsters’ years-long effort targeting port trucking companies has also been bolstered by a series of legal wins for drivers. Since 2011, union officials counted 300 cases the California’s Labor Commission ruled in favor of drivers, awarding a total of $35 million in back wages and penalties.
“The tide is really starting to turn,” said the National Employment Law Center’s Smith.
FREEDOM OR EXPLOITATION?
Nobody agrees on precisely how many workers in the U.S. economy are independent contractors, but estimates range as high as 68 million workers.
One of the best-regarded studies comes from economists Lawrence Katz and Alan B. Krueger, who researched “alternative work arrangements” such as temporary, on-call and contract workers for the National Bureau of Economic Research. Released in March, the study found these workers made up 16 percent of the workforce in 2015. That’s up from 10 percent just a decade earlier — though only 0.5 percent were working through an app such as Uber.
“Traditionally, we found this in construction, said Ruben Rosalez, the Western region’s administrator for the U.S. Department of Labor’s Wage and Hour Division. “Now we are finding it in virtually every industry.”
What is a truly independent contractor? The law is multi-tiered and full of subleties. But a key consideration is how dependent a worker is on a specific company.
“A truly independent contractor would be able to set their own prices and would be able to bill their own hours,” said Rosalez, whose division enforces federal wage laws. “They would be in control of their work and their hours.”
In the trucking cases the division investigated, however, Rosales said the division consistently found that workers were employees.
“The vast majority of people who are independent contractors and freelancers love what they do,” said Rick Wartzman, a senior advisor at the Drucker Institute at Claremont Graduate University.
“The gig economy is one reflection of how we have gone from a workplace in the 1950s, 1960s and into the 1970s — training workers, paying workers wages that were rising across the economy, giving them good benefits including a guaranteed pension,” Wartzman said, “to one where all those things have fallen away. Now companies look at workers as costs that need to be minimized.”
“Fundamentally, there has been a real breakdown over the last 30 years with the social contract between employer and employee,” said Wartzman, author of the forthcoming book “The End of Loyalty: the Rise and Fall of Good Jobs in America.”
“If you are looking for flexibility it’s great,” he said. “If you are looking for security, it’s not great.”
THE ROAD AHEAD
For trucker Portillo, the case is playing out in downtown Los Angeles, where the National Labor Relations Board is deciding whether the company he works for, Intermodal Bridge Transport in Wilmington, should have counted him as an employee.
“The truth is this isn’t just,” said the 45-year old driver, who for years has toted everything from high-end handbags to plasma TVs. “I am an employee but they don’t want to accept it,” said Portillo.
Representatives for Intermodal, which is has six other locations and is operated by the fourth-largest ocean carrier, China Ocean Shipping Co, declined to comment.
Lawyers for the drivers said the case could reshape the industry. But some trucking companies contend changes will just cost them money and efficiency — and cost the drivers freedom and flexibility.
Weston LeBar, executive director for the Harbor Trucking Association in Long Beach, said independent contractors ideally have their own trucks and can make more money working for multiple companies.
LeBar said freelancers are more likely to be more efficient than hourly workers, who don’t have the incentive to run cargo trucks as quickly as drivers who get paid by the load.
David Bensman, a professor at the Rutgers School of Management, disagrees.
“If the companies had to pay their employees by the hour, they would have an incentive to reduce the amount of time drivers were waiting at the port,” he said. Instead, he said, “they are shifting the costs to the truck drivers by making sure their pay is low.”
No one expects swift changes, for either truckers or gig-workers.
It’s a complex issue, said Cooper — and business, the government, the courts and the marketplace must all weigh in on the outcome.
Until then, the debate will endure, and the workplace will continue to evolve.
“Things are still changing,” said Cooper. “We haven’t figured all this stuff out.”