Days before Christmas, Universal Logistics Holdings laid off about 70 employee port and intermodal drivers.
The Teamsters Local 848 of Long Beach called it a “direct and flagrant violation” of California’s Assembly Bill 5, which was set to go in effect on Jan. 1. However, the transportation and logistics company said it was streamlining operations. The port truckers were let go from three Universal Logistics subsidiaries – Universal Intermodal Services, Universal Truckload Services, and Roadrunner Intermodal Services.
Among the Teamsters’ claims issued in a news release on Dec. 23 is that some of the port drivers said the company told them that if they buy their own trucks then they could come back to work as independent contractors. In addition, the Teamsters said the layoffs came only weeks after 28 employee drivers at Universal Intermodal voted to be represented by Teamsters Local 848. According to the Teamsters, all 28 of those employees were fired.
The Teamsters cited a provision in AB5, which is a law aimed at preventing companies from misclassifying employees as independent contractors, which says “no provision of this measure shall permit an employer to reclassify an individual who was an employee on Jan. 1, 2019, to an independent contractor due to this measure’s enactment.”
“Universal Logistics Holding is the poster child for misclassification in California and across the United States, and now they have doubled down on a business model that the state of California has clearly banned,” Fred Potter, vice president of the International Brotherhood of Teamsters, said in the news release. “Our hearts go out to the drivers that were unlawfully fired just before Christmas, and the Teamsters will not stop until this company complies with the law and these drivers and their families get justice.”
The company’s side
Universal Logistics, however, cited a volatile freight market as the reason to lay off port truckers.
“Given the dynamic nature of the transportation industry, our companies continue to make strategic business decisions – some growth-related and some efficiency-related – as part of marketplace fluctuations,” Tim Phillips, Universal Holdings executive vice president, wrote in an email statement to Land Line. “In addition to making several key intermodal-related acquisitions in 2019, we have also streamlined some of our operations.”
California’s AB5, which went into effect on Jan. 1, codifies the California Supreme Court’s establishment of the ABC test, which considers all workers to be employees unless the hiring business demonstrates that all of the factors are established:
A. That the worker is free from the control and direction of the hirer in connection with the performance of the work, both under the contract for the performance of the work and in fact.
B. That the worker performs work that is outside the usual course of the hiring entity’s business.
C. That the worker is customarily engaged in an independently established trade, occupation or business of the same nature as that involved in the work performed.
On Dec. 31, however, a federal court granted the California Trucking Association’s motion for a temporary restraining order to block California from enforcing the law on motor carriers.
The temporary restraining order was granted on Dec. 31 in U.S. District Court for the Southern District of California and will remain in effect pending the court’s resolution of the trucking group’s motion for a preliminary injunction, which is set for hearing on Jan. 13.
In the California Trucking Association’s amended lawsuit filed on Nov. 12, the trucking group said the B factor of the test prevents motor carriers from contracting with owner-operators and that the law is preempted by the Federal Aviation Administration Authorization Act of 1994.
The lawsuit contends that the FAAAA preempts state regulation of the trucking industry.
“A state … may not enact or enforce a law, regulation, or other provision having the force and effect of law related to a price, route, or service of any motor carrier or any motor private carrier, broker or freight forwarder with respect to the transportation of property.”
The Owner-Operator Independent Drivers Association has spoken out against AB5, calling the law “overly broad and unnecessarily rushed.”