This week, The Wall Street Journal reported that three subsidiary companies of XPO Logistics Inc. are being sued for misclassification of workers as independent contractors. The class-action lawsuit was filed in California with the Los Angeles Superior Court. Kabateck Brown Kellner LLP is the law firm that will be representing the drivers.
The three trucking businesses being sued are Pacer Cartage Inc., PDS Transportation Inc. and Harbor Rental Transport, the source added. These companies are responsible for handling drayage operations, which consist of transporting products and materials from ports to nearby warehouses.
Legal action taken against mistreatment of drivers
According to The Wall Street Journal, the allegations brought against the subsidiaries include refusing to properly compensate the employees, failing to give them breaks and neglecting reimbursement for business-related costs.
"We believe this case is without merit and plan to litigate it vigorously," XPO Chief Operating Officer Troy Cooper said in an email to source. "We are in constant dialogue with our independent-contractor carriers and believe the vast majority of them value the significant benefits that operating independently can bring."
The source explained that XPO is a corporation that provides transportation services and has acquired a number of companies in recent years that has led to significant expansion. Two of these major purchases include Con-way Inc. and Norbert Dentressangle SA.
Industry scrutiny surrounding driver misclassification
This is not the first time one of the subsidiaries has been sued for such allegations. The Wall Street Journal revealed that in May 2015, Pacer Cartage Inc., with the claimant's representation provided by the same law firm that will handle the most recent suit, was among several trucking companies that reached a settlement of $4.25 million, though approval from the court is still pending.
Drayage trucking is a sector of the transportation industry that has faced increased controversy over the past few years. The source also pointed out that the issue of companies misclassifying employees as independent contractors was also highlighted when lawsuits were filed against major corporations such as Uber Technologies Inc. and FedEx Corp. In both these cases, which also took place in California, drivers claimed that they were being deprived of essential benefits.
Reuters recently reported that, according to research conducted by the National Employment Law Project, more than "65 percent of all 75,000 U.S. port truckers are misclassified as independent contractors."
The source also added that in October 2015, a coalition of port truckers in California went on strike and petitioned against the unfair pay of shipping and hauling companies.