Universal Logistics settles worker misclassification claims, complying with AB5

Dive Brief:

Universal Logistics has settled 11 worker misclassification claims brought against the drayage provider by the International Brotherhood of Teamsters, the National Labor Relations Board announced Wednesday, bringing the company in compliance with California’s AB5 labor law.
As part of the settlement, the Michigan-based company has agreed to reestablish its closed Compton, California, drayage business. It will also provide offers of reinstatement and millions of dollars in backpay to about 66 affected drivers.
Universal will additionally recognize the union and agree not to misclassify drivers as independent contractors, according to the NLRB. The move follows the Supreme Court’s refusal to hear challenges to California’s AB5 law, which extends employee classification to certain independent contractors.

Dive Insight:

The settlement resolves seven cases pending before the NLRB and another set of cases that was set to go to trial on Aug. 4. Administrative Law Judge Michael A. Rosas ruled in an October 2021 decision that the company committed multiple violations of the National Labor Relations Act.

The Teamsters alleged Universal had illegally fired truck drivers, denied them backpay and refused to recognize and bargain with the union. The company shifted their work to other drivers who were misclassified as independent contractors of affiliated entity Southern Counties, according to the union.

In addition to reinstating the Compton business, the company agreed to enter into a collective bargaining agreement with the drivers and provide an option for other drivers at its subsidiaries to become full-time employees.

The settlement is a victory for Teamsters Local 848, as the workers have already voted to ratify a union contract. The Teamsters called the settlement “historic” in a statement.

"This is a big step, but there's more work to be done,” said Sean M. O’Brien, Teamsters general president. “The Teamsters will continue to fight until every misclassified worker is an employee under the law. We will not rest until trucking companies recognize their drivers as employees and treat them with dignity, and that includes respecting their right to form a union.”

Universal’s press release did not use the word “settlement.” Instead, it touted its new “‘best in class’ arrangement” with the Teamsters, and the deal’s benefits for its workers and customers. The union already represents about 2,000 Universal employees, and the company has been unionized for 20 years.

“We are extremely excited to extend our relationship with the Teamsters to the Los Angeles/Long Beach drayage market!” Universal CEO Tim Phillips said in a statement. “Solidifying our relationship with Local Unit 848 will give Southern Counties the ability to advance its capacity footprint in a changing California labor model, and continue to be a leader in the drayage space.”

The settlement is another example of trucking firms’ preparations for the enforcement of the AB5 labor law. The law requires fleets to directly employ drivers — and provide them benefits — rather than paying them as independent contractors. An estimated 70,000 California truckers are owner-operators, including many of the drayage drivers at the nation’s largest port.