The following is from the National Employment Law Project:
WASHINGTON, D.C. (Feb. 24, 2014) — A new report reveals the enormous scale and shocking costs of an illegal business practice used by employers in the U.S. port trucking industry — with the workers who are cheated and the taxpaying public paying the price.
The report, The Big Rig Overhaul: Restoring Middle-Class Jobs at America’s Ports Though Labor Law Enforcement, details years of wage theft, labor law violations, safety hazards, and tax evasion through the illegal practice of misclassifying employee drivers as independent contractors. Worker misclassification has become the port trucking industry’s dominant business model — an unlawful scam amounting to billions of dollars in stolen back wages and lost tax revenue for federal and state governments.
As a result of the misclassification scam, port trucking companies are currently liable for an estimated $850 million in stolen wages per year in California alone. Nationally, the total cost of lost tax revenue, compounded with violations of wage and hour laws, is an estimated $1.4 billion annually.
“For port truck drivers and many others in related occupations, proper classification can mean the difference between a decent, family-supporting job, and working in poverty,” said Jared Bernstein, senior fellow with the Center on Budget and Policy Priorities, former chief economic advisory to Vice President Joe Biden, and author of the report’s foreword. “By properly classifying workers as regular employees when that’s what they are, we can lift the paychecks of workers, add to public coffers with the resources they’re owed, and reverse a dangerous tilt in the economic playing field.”
Port truck drivers transport goods to and from America’s ports to distribution points before products can make it to the shelves of mega-retail stores such as Wal-Mart and Costco. The report finds that nearly 50,000 of the nation’s 75,000 port truck drivers are misclassified as independent contractors. The illegal scheme artificially suppresses wages and deprives workers of basic labor protections and benefits such as workers’ compensation and unemployment insurance.
In recent years, however, workers have begun fighting back against illegal misclassification — and winning. Port drivers in California have filed some 400 complaints with the California Division of Labor Standards Enforcement for wage theft violations related to misclassification, for example.
“Port truck drivers are filing complaints challenging their misclassification, and they are winning in every forum,” said Rebecca Smith, deputy director of the National Employment Law Project and the report’s lead author. “In the process, they are showing that the port trucking industry and other industries can be transformed, and that jobs in our country can be good jobs again.”
Port truck driving jobs were once solid middle-class jobs, but the degradation of these jobs over the last 30 years — a result of deregulation, rampant misclassification, and workplace laws that have failed to keep up with a fast-changing economy — is a case study in economic inequality and the hollowing out of the American middle class.
A collaboration of the National Employment Law Project, the Los Angeles Alliance for a New Economy, and the Change to Win Strategic Organizing Center, The Big Rig Overhaul calls for the passing of the Payroll Fraud Prevention Act, the Clean Ports Act of 2013, and the Fair Playing Field Act of 2012, believing the legislation will in part, remedy legal conditions of employee misclassification and its damage to the American economy.
The Big Rig Overhaul was released to the public February 19, 2014, with a forward by Jared Bernstein of the Center on Budget and Policy Priorities and former Chief Economic Advisor to Vice President Joe Biden. The report’s authors and Mr. Bernstein held a national press conference announcing the report’s release, including an inside-the-industry look from misclassified drivers from the ports of Los Angeles and Savannah, and a visual presentation provided on the web.