Port trucking companies around the country are unlikely to face the same labor pressures that led NFI Industries Inc. to leave a prime site at the Port of Los Angeles.
Other ports experience similar disputes over whether port truckers are employees or independent contractors. But distinct factors in Los Angeles helped lead to the imminent departure of the national logistics provider.
For example, NFI’s 85-acre lot, which included its warehouse and trucking operations, was onsite at the city-owned port. Most warehouse and truck yards are off-site. That gave the city leverage to put labor-friendly language in the new lease it proposed.
“Typically you don’t have a lot of on-terminal truck locations because space is so expensive, and you need to maximize the marine use of it,” said maritime law attorney Paul M. Heylman, a partner at Saul Ewing Arnstein & Lehr in Washington, D.C.
YEARS OF UNREST
The site has seen years of labor unrest, including seven strikes in the past three years. Strikes disrupt business at the port and cost companies and workers money. The interruptions also can scare off shippers.
The labor-friendly language in the proposed lease was added after the city rejected the previous land-use agreement between the company and the city’s harbor commission.
The Los Angeles City Council member who represents part of the port pushed for the addition of the “labor peace agreement” to the lease. These agreements don’t allow disruptions such as work slowdowns or stoppages, strikes, or lockouts. They don’t require a company to recognize a union. But they say it must let a union organize if that is the workers’ will.
“We want to avoid the same situation again,” said a spokesperson for Councilman Joe Buscaino.
Cherry Hill, N.J.-based NFI became entangled in the long-running labor disputes when it acquired the California Cartage Co. group of businesses in 2017. Wilmington, Calif.-based CalCartage is the largest drayage operator at the port. It has operated on the site for decades.
The numerous disputes have roots in another twist specific to the Los Angeles port. To meet clean air rules, L.A. and other ports banned older trucks. But most drivers couldn’t afford newer ones. In Los Angeles, trucking companies decided to buy newer trucks but lease them to the drivers.
CalCartage was a key proponent of this plan. Since the companies considered drivers to be independent contractors, not employees, they didn’t cover the payments or the cost to run, maintain and repair the trucks. Many drivers could not earn minimum wage, according to labor proponents, who said the drivers were employees, not independent businesses, and the strikes began.
The lease plan was not adopted at the country’s second-largest port complex, the port of New York and New Jersey. That port used grant money to help some truckers covers part of the replacement costs and eventually rolled back the ban as too expensive.
NFI did not immediately respond to a request for comment on its decision to leave the port. But in previous public statements NFI said it tried to negotiate with the city. It blamed the International Brotherhood of Teamsters for its decision to leave.
Los Angeles sued NFI in early 2018 on allegations of misclassifying workers as independent contractors rather than employees. And NFI was fined by the California Labor Commissioner’s Office for labor violations.
NFI has appealed a recent decision by the state commissioner saying it owed $1.2 million in pay to 10 workers. Those workers, the commissioner said, should have been classified as employees, not independent contractors.
A transport and logistics company with unionized truck drivers is negotiating to lease the NFI site. Toll Global Forwarding, a unit of international transport and logistics company Toll Group, hopes to expand its operations there.
Toll has employee truck drivers who are union members and would have to accept the labor peace agreement. Such agreements have been challenged in some situations because they are preempted by federal law, opponents say.
Despite the unusual circumstances around the NFI exit, the Teamsters will push if the right elements are in place, according to Fredrick Potter, vice president and port division director at union.
“We would like to use this at other ports including the ports of Los Angeles and Long Beach, and when the opportunity arises, if the will of the employees is to stand up for their rights,” Potter said.
But first, key factors behind the NFI dispute must converge, he said.
Workers need to want union representation and be willing to fight for it. An employer would have to have a record of labor disputes. And a property owner would have to want labor peace to avoid the disruptions, which aren’t good for business or workers, Potter said.
EFFECT ON DISPUTE UNCLEAR
It’s unclear how many port truck drivers will be affected by NFI’s exit.
Los Angeles will require the new leaseholder to hire as many of the employees who will lose their jobs when NFI leaves as possible. That includes about 700 warehouse employees. The Teamsters say they will try organize those workers. But NFI considers the drivers it uses to be independent contractors. So it has not turned over a list of those workers to the city, Potter said.
If Toll were to get the lease and hire some of those drivers as employees, the union would have to win a separate election to represent the driver employees at the new site. Union organizers are hopeful they will succeed.
Whether they will or whether the factors that led to NFI’s exit will be repeated elsewhere, or even at other local port trucking operations, is uncertain.
Particularly in California, the question of whether drivers are employees or independent contractors continues to drive labor disputes and “is at the heart of the Teamster’s role in the NFI situation,” said Heylman.
“This has been sort of range war for many years,” he said.