This article is contributed by the Harbor Trucking Association
During his 2008 campaign for the presidency, Barack Obama famously quipped that he would "use a scalpel, not a hatchet" when approaching complex budgetary and regulatory issues. What has transpired since, however, has been quite different. Both his administration, and that of Governor Brown, has engendered a regulatory climate that takes broad strokes when dealing with certain industries.
No place has this assault been more apparent than within the local trucking and drayage communities of Southern California. Over the course of the last 6 months, most (if not all) of the smaller and mid-size Licensed Motor Carriers - companies that utilize their Department of Transportation licenses to truck goods to and from the Ports of Los Angeles and Long Beach - have been approached by either Federal or State agencies questioning whether their decades old business model of utilizing independent contractors for drivers, as opposed to employees, is passable under the new political climates in Washington and Sacramento.
According to both administrations, these efforts are part of a larger "misclassification project", aimed at cracking down on those employers who are intentionally mischaracterizing the status of their workers and thereby avoiding tax revenue and workers compensation protections. The reality, however, is that most in the trucking industry are "good actors" that play by the rules. In fact, this is the same group of businesses that over the course of the last three years have invested nearly $800 million of their own money into buying and deploying cleaner trucks such as LNG and CNG - well ahead of regulatory mandates. Their thanks from the powers that be? Unwarranted scrutiny and audits by an administration that does not take the time to distinguish between those who are playing by the rules and those who are not. In short, the promises of candidate Obama regarding "scalpels" have manifest themselves into both Federal and State "hatchets".
For example, last month the IRS, Federal Department of Labor and the State Division of Labor Standards Enforcement (DLSE) of the Department of Industrial Relations (DIR) visited or audited over 25 trucking companies in Southern California alone. The results? Nothing concrete to date, other than legal bills, staff time and a bad name for goods movement in Southern California. While they are spending valuable Federal and State resources on what are often ineffective and unjustified audits, there are three unintended consequences of their efforts that are being felt loud and clear.
First, these audits are imposing an undue administrative and financial burden on trucking companies in the midst of one of the most competitive environments the goods-movement industry has seen in the last 20 years. Companies involved in logistics can ill-afford to spend time digging through boxes and boxes of old time cards to satiate a Federal or State auditor on a witch-hunt.
Second, in a time when business is struggling, these investigations are forcing smaller LMCs, without the administrative wherewithal to combat these frivolous audits, to either fold or find ways to work with larger ones. The continuation of aggressive audits of trucking companies will undoubtedly continue to obstruct the development of small businesses here in California.
Lastly, in addition to the unintended consequence of suffocating small businesses, these investigations taint shippers' perceptions of Southern California's ports and decrease our ports' competitiveness, leading shippers to seek less volatile sites for sending their cargo.
The Harbor Trucking Association (HTA) and each member that our coalition represents in the Southern California area strives to advocate and promote sustainable strategies while restoring jobs and ensuring a thriving cargo business in our ports. While the Labor Commissioner and other agencies are entitled to conduct audits of trucking companies, we believe the current shotgun approach being applied has clear and unintended consequences that must be considered. Until both the Federal and State agencies leading these efforts become more discerning in whom they select to audit, we can't help but believe this is all a pretext for the bigger goal being pursued in DC and Sacramento - allowing organized labor to unionize the truck drivers - an effort that has been going on for the last two decades.
In short, ineffective audits of intermodal carriers by Federal and State agencies have unintended consequences, which clearly threaten California's business environment. This is why we seek to make the threat of these investigations known. Not only are small trucking businesses being hindered from thriving, but the very competitiveness of our ports is under attack.