Dive Brief:

• The city of Los Angeles is suing CMI Transportation LLC, K&R Transportation California LLC and Cal Cartage Transportation Express LLC, all owned by New Jersey-based NFI Industries, the Wall Street Journal reported Monday.
• The suit claims the companies denied wages and benefits to drivers by illegally classifying them as independent contractors rather than employees. Contractors do not receive benefits such as unemployment insurance, workers’ compensation or overtime pay. 
• Some companies argue that classifying drivers as contractors allows the drivers to make additional money during their off hours.

Dive Insight:

At the Port of Los Angeles, driver misclassification is so rampant that city legal officials are filing lawsuits in an effort to contain the practice.

In some cases, companies are discarding the previous model and hiring former contractors to avoid potential litigation. Across the country, independent lawsuits are a daily occurrence, with plaintiffs demanding jury trials and receiving awards ranging in the millions.

Now with Los Angeles alleging fraudulent practices, the truck lines charged face significant fallout. The city demands restitution of any money or property the companies acquired or retained as a result of the alleged business practices, as well as civil penalties of up to $2,500 for each violation.

"We believe this is a landmark moment," Barbara Maynard, spokeswoman for Justice for Port Drivers told Supply Chain Dive. "Heretofore, claims have been on an individual case basis. This is the first time action has been taken to institutionalize fixing the broken system."