Los Angeles Hauler Misclassified Port Drivers, ALJ Says

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By Lawrence E. Dubé

Drivers who move shipping containers between port facilities and transportation hubs around Los Angeles are employees protected by federal labor law, not independent contractors, an NLRB administrative law judge determined.

The ruling is significant because the ALJ accepted former National Labor Relations Board general counsel Richard F. Griffin’s position that the act of misclassifying employees as independent contractors is itself an unfair labor practice that violates the National Labor Relations Act.

“This decision sends a message loud and clear to law-breaking port drayage companies nationwide that if they want to avoid legal liability and labor unrest, they must stop misclassifying their drivers as independent contractors,” Julie Gutman Dickinson, a partner at Bush Gottlieb in Glendale, Calif., told Bloomberg Law in an email. Dickinson, who represented the International Brotherhood of Teamsters Port Division in the NLRB proceeding, said the companies should reclassify their drivers as employees and “honor their rights” to unionize or to engage in concerted activity for their mutual aid and protection.

Sustaining unfair labor practice charges against Intermodal Bridge Transport, ALJ Dickie Montemayor found that the company maintains extensive work rules for drivers that are more consistent with their being employees than independent contractors. The “most important aspects of the job are undeniably controlled and directly or indirectly supervised by IBT,” the ALJ wrote in the Nov. 28 decision ( Intermodal Bridge Transp. , 2017 BL 424391, N.L.R.B. A.L.J., Case 21-CA-157647, 11/28/17 ).

ALJ Finds Port Drivers Are Employees

The Teamsters’ charges arise out of a long-running campaign to organize port drivers who transport loaded and empty shipping containers between port terminals, rail hubs, and customer locations.

Montemayor said a number of factors persuaded him that the IBT’s 95 drivers are employees, rather than independent contractors. He cited pay rates that are set unilaterally by the company, detailed rules and dispatch procedures, and a weekly pay schedule that “strongly resembles that of an employer employee relationship.”

The ALJ also said that Intermodal Bridge, which had the legal burden of demonstrating that the drivers were not employees, engaged in a “pattern of attempting to manufacture a record that would color the facts in its favor.”

Until mid-2014, IBT used an “application for employment” for new drivers, Montemayor said. The company then replaced the form with an “independent contractor application” and required drivers to sign the new document and backdate it to the date of their original employment applications.

On the whole, the factors the board has considered in independent contractor disputes “overwhelmingly” supported a finding that IBT drivers are employees protected by the NLRA, he said.

The ALJ found that the company threatened and interrogated drivers, and promised them benefits to discourage them from supporting the union. Because the drivers were employees, he concluded the company’s conduct was unlawful under the NLRA.

Montemayor ordered the company to post a notice to employees remedying the threats and coercive statements. He also ordered IBT to classify the drivers as employees and rescind any documents that treat them as independent contractors.

Misclassification Ruled ‘Per Se Violation’

In addition to finding the drivers are employees, Montemayor approved the former general counsel’s theory that misclassification of the drivers alone was a violation of the NLRA.

The general counsel cited “no direct authority” for his argument but relied on a 2011 decision in which the board found 2-1 that the “preemptive” firing of an employee to prevent her from engaging in NLRA-protected activity was unlawful, the ALJ said.

Montemayor accepted the argument and wrote that misclassification of employees not only chills their exercise of statutory rights but conceals from workers that they even have any protection under the NLRA.

Interference and restraint of NLRA Section 7 rights “flows directly from misclassification,” Montemayor said. “As such, I find that misclassification rises to the level of a per se violation” of the federal labor law, he said.

Griffin’s term as general counsel ended Oct. 31, and Peter B. Robb (R) was sworn in on Nov. 17. Intermodal Bridge asked Montemayor in June to postpone the unfair labor practice case to allow Griffin’s replacement to consider the case, but the ALJ denied the request.

The company argued the “completely novel, untested and unprecedented theory” of misclassification as an unfair labor practice might be rejected by a new general counsel. Now that Montemayor has ruled, it’s likely the company will repeat its arguments to the new general counsel and to the board.

Counsel for Intermodal Bridge Transport did not immediately respond to a request for comment on the decision.

NLRB attorneys represented the board. Scopelitis, Garvin, Light, Hanson & Feary P.C. in Chicago represented Intermodal Bridge Transport. Bush Gottlieb in Glendale, Calif., represented the International Brotherhood of Teamsters Port Division.

To contact the reporter on this story: Lawrence E. Dubé in Washington at ldube@bloomberglaw.com

To contact the editor responsible for this story: Terence Hyland at thyland@bloomberglaw.com

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