Misclassification as Labor Law Violation Teed up in Ports Case

Irina Baranova

National Labor Relations Board prosecutors have opened a case that could reverse Trump-era board precedent and make misclassifying an employee as an independent contractor a standalone unfair labor practice.

Five trucking, warehousing and logistics companies in Southern California violated federal labor law by designating drivers as independent contractors, NLRB lawyers in Los Angeles alleged last week. The companies work together as a single integrated enterprise under the control of Universal Logistics Holdings Inc., agency lawyers said.

Misclassifying those employees obstructed them from engaging in legally protected activity and gave them the impression they’re not covered by federal labor law, according to the complaint issued against the companies.

Employee classification is one of the most important issues in workplace law. Whether workers are employees with rights and protections under a panoply of state and federal laws can have major consequences for companies and workers. Misclassification is a front-line legal issue in the gig economy.

The case could give the Democratic-majority NLRB the opportunity to reconsider its 2019 decision in Velox Express, which rejected making misclassification itself a violation of the National Labor Relations Act.

The companies’ lawyer, Daniel Adlong of Ogletree Deakins Nash Smoak & Stewart P.C., didn’t immediately respond to telephone and email requests for comment.

Interrogating, Threatening, Retaliating

The complaint stems from a series of charges that the International Brotherhood of Teamsters filed in 2021 against Universal Logistics, Container Connection, Universal Intermodal Services, Southern Counties Express, and Universal Management Services. The drivers operate out of the Ports of Los Angeles and Long Beach.

NLRB prosecutors also accused the companies of several other unfair labor practices related to drivers’ union activities, including interrogating, threatening, and retaliating against them.

Agency lawyers went beyond seeking back pay, reinstatement, and other the traditional remedies for unfair labor practices. They also asked for an order forcing the companies to reclassify drivers as employees, pay consequential damages for resulting from misclassification and other labor law violations, and other enhanced remedies.

“With this powerful complaint, the NLRB has put real teeth into our country’s foundational labor laws and put ULH on notice that no company, no matter how big or powerful, is above the law,” Eric Tate, an offical with a Teamsters affiliate in Southern California, said in a statement.

The case is Deco Logistics d/b/a Container Connection, N.L.R.B. Reg’l Dir., Case 21-CA-272323, Complaint issued 3/17/22.

https://news.bloomberglaw.com/daily-labor-report/misclassification-as-labor-law-violation-teed-up-in-ports-case

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