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Port Trucker Case Is Tip of the NLRB’s Spear Aimed at Contractor Status

May 2, 2016
The NLRB's theory is that independent contractor status by its very definition constitutes an unfair labor practice whether or not a union is involved.

You may have seen recent news stories about the Los Angeles regional director of the National Labor Relations Board filing a complaint accusing a California port drayage firm for misclassifying drivers as independent contractors. But what you may not be aware of is this is just the first step in a planned nationwide assault on independent contractor status by the NLRB.

In late March Richard E. Griffin Jr., NLRB’s general counsel, issued a memo to the board’s regional directors laying out an agenda he expects them to pursue. Many of the categories of cases described are intended to overturn established precedent and create new standards that will impact all worker/management relationships—both union and nonunion.

One category involves cases where Griffin wants them to apply his theory that independent contractor status by its very definition constitutes an unfair labor practice whether or not a union is involved.

In his view—one shared by a majority of the board members—the NLRB’s enabling law covers any employees who are engaged in what are considered concerted protected activities. This protection extends to nonunion workplaces where employees discuss and act together to address wages and working conditions, even if an organizing campaign is not involved.

Under the law independent contractors cannot engage in collective discussions with management concerning compensation. Because they are defined as separate business entities, antitrust law prohibits them from colluding to negotiate rates. One solution is to declare that they are legally employees, not independent contractors.

On April 18 Olivia Garcia, regional director of NLRB Los Angeles, issued just such an unfair labor practice complaint against drayage carrier Intermodal Bridge Transport, using Griffin’s theory to charge that the company misclassified its drivers as independent contractors. The complaint was filed at the request of the Teamsters union, which has been trying to organize the company and apparently knew about the Griffin memo as soon as it was issued.

“The complaint issued by the NLRB regional director represents a determination that misclassifying drivers in and of itself violates the NLRA,” says Julie Gutman Dickinson, attorney for the Teamsters Port Division. “The complaint will lead to an historic trial where for the first time, a judge will determine whether the act of misclassifying drivers in and of itself violates the National Labor Relations Act.”

In addition to having to respond to the NLRB’s contractor misclassification charge, the company is accused of other practices already illegal, including accusations that a driver was interrogated about his union support and that another was promised more work if he ceased his union organizing. The firm also is accused of threatening to end its relationship with a driver who supported the union and to close a facility if the union won.

The Teamsters Target Warehousing

NLRB assistance to the Teamsters at the southern California ports is nothing new. In 2014 it also began an investigation that determined Green Fleet Systems Inc. and Pacific 9 Transportation misclassified their drivers.

It’s no secret that the Teamsters have pursued a long-game strategy on the West Coast and port areas in other parts of the country seeking to organize owner-operators. Teamsters president James Hoffa estimates that there are about 200,000 potential union members working in drayage on the West Coast alone. Following the union’s suspension of its largely unsuccessful campaign to organize FedEx Ground drivers following an earlier court victory, it has redoubled its efforts in other areas.

Last October the Teamsters also announced that it entered into a formal alliance with the Warehouse Worker Resource Center, a labor-organizing front group working in southern California. The move is seen as evidence that the union has embarked on a vigorous organizing campaign targeting warehouse workers in much the same way as it has drayage drivers.

In late March the NLRB issued a complaint against California Cartage and its subsidiary Orient Tally serving the Port of Los Angeles, charging that they engaged in retaliatory actions against their warehouse workers who are trying to organize. In April warehouse workers at California Cartage went on strike for the third time in seven months after about 200 workers who had been employed through a staffing agency were fired.

The Teamsters have other powerful allies in government in addition to the NLRB, and not just at the federal level. Last October California Governor Jerry Brown signed a law giving fleet operators until the end of this year to accept contractor reclassification under the threat of severe legal consequences. Written by the Teamsters, the law grants drayage fleet operators amnesty from statutory and civil penalties—but only if they conduct a voluntary self-audit and reclassify their drivers as employees by Jan. 1, 2017.

A number of drayage carriers already have switched from using an owner-operator to employee drivers under government pressure. Others have declared bankruptcy, blaming the legal costs incurred by misclassification litigation, including QTS Inc., Tradelink Transport, Seacon Logix and Green Fleet Systems. In March Premium Transportation Services, also known as as Total Transportation Services Inc., filed for Chapter 11 bankruptcy protection, citing the same reason.

Implications for All Employers

The NLRB isn’t the only federal agency aggressively pressing a contractor misclassification campaign. Last July, David Weil, administrator of the Labor Department’s Wage and Hour Division, released a detailed interpretation of contractor status and declared that his agency from then on would assume “most workers are employees” for the purposes of enforcing the Fair Labor Standards Act. His boss, Labor Secretary Thomas Perez (currently being talked about as a possible running mate for Hillary Clinton), has voiced similar views.

A DOL action against Shippers Transport Express, a subsidiary of a company that operates a terminal at the Port of Long Beach, resulted in an agreement to reclassify its drivers, who then were then organized by the Teamsters. DOL has filed similar lawsuits against other drayage carriers in the port area.

The NLRB California port case could have implications for Uber and Lyft, whose driver contractor model is already under attack in several states. Around the same time Garcia filed her complaint, Uber signed a settlement agreement with drivers in California and Massachusetts who will receive $100 million in compensation, and the company agreed to change some of its practices and meet regularly to discuss work issues with driver representative groups, some of which have already been created—one by the Teamsters in California.

However, crucial to Uber, the settlement preserves the company’s independent contractor model. Under the agreement drivers will remain contractors and not become employees.

Uber’s business model remains under attack elsewhere in a number of states and cities. The California Labor Commissioner has ruled that a single Uber driver was an employee, a decision that is under appeal.

Uber drivers in Seattle already are working with the Teamsters after the city council enacted legislation permitting the contractors to organize. That law was passed over the Seattle mayor’s veto and is being challenged in court by the U.S. Chamber of Commerce. Similar legislation is pending before the Los Angeles City Council.

Griffin’s misclassification campaign also could negatively impact employers who are federal contractors and face a misclassification charge from the NLRB. They face proposed “blacklisting” regulations implementing one of Obama’s flood of executive orders. Under the pending rules, federal contractors must report all their labor law violations.

If the NLRB simply issues complaints as “administrative merits determinations,” the contractor will be required to file reports with the federal government listing these unresolved complaints as labor law violations, endangering their eligibility to obtain federal contracts.

What Else Is Covered by Griffin’s Memo

The contractor misclassification portion of Griffin’s memo has gotten the most attention, but it’s just one of 24 categories of cases he outlined in his memo.

“From the large laundry list of topics covered in the general counsel's memorandum, it’s clear that the NLRB is far from scaling back on issuing future decisions that will overturn long-standing legal precedent,” says Harold Coxson, an attorney with Ogletree, Deakins, Nash, Smoak & Stewart. “In fact, if the general counsel’s memorandum is a roadmap for the future, perhaps the better question is not what’s next at the NLRB, but what’s not next?”

The roles of the general counsel and the 26 regional directors are central to how the board works. The board itself does not issue complaints. Instead, any person may file an unfair labor practice charge with an NLRB regional director, who works under direction of the board’s general counsel. If a director believes there is sufficient merit to the charge, then a complaint may be issued, which later can be appealed to the board members.

One target of Griffin’s new agenda may concern employers who have nothing to do with unions—those companies that prohibit their workers from speaking any language other than English in the workplace. In the past such policies have come under attack from the Equal Employment Opportunity Commission, but the NLRB sees an opportunity here.

Griffin also is looking at discouraging the hiring of permanent replacement workers during an “economic strike,” which is one that involves wages, hours, or working conditions. The law says returning economic strikers may be placed on a preferential rehire list but are not entitled to be automatically rehired after the strike ends, while long-term replacement workers can continue in their jobs.

This differs from an “unfair labor practice strike” over alleged unfair practice by the employer, where returning strikers must be rehired and replacement workers let go. Griffin is looking for cases where he can once again stretch the definition of unfair labor practices by employers.

Griffin also is looking for cases that will help him expand employee and union access to employers’ electronic systems for purposes beyond organizing. A 2014 board decision gave unions access to an employer’s e-mail system and property during a representation campaign, but the general counsel looks to expand this to cover other non-e-mail electronic systems, possibly including text and other communication systems.

In addition, he wants to grant access by non-employees such as union organizers to work areas for them to have “equal time” to respond to “captive audience” speeches made by employers during a campaign. Griffin also told the directors he is looking for cases where he can limit employer surveillance of employee e-mails, and where he can narrow the exception that allows employers to restrict employee access to e-mail systems in order to maintain production and discipline.

The general counsel also said he is looking for cases where he could allow employees who are not members of a union to ask for and have present union representatives in disciplinary hearings.

Another area in Griffin’s cross-hairs would allow him to make it more difficult for an employer to declare a collective bargaining impasse that is needed before it can implement its last, best and final offer for a collective bargaining agreement.

Coxson says Griffin’s to-do list reflects his intention “to push the envelope to change board law in many areas. Of course, these and other issues will form the basis for complaints seeking to change the law when presented to the board for decision, even where the charged employer is in full compliance with extant board law.”

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