Dive Brief:

The U.S. Department of Labor ordered California Cartage, a logistics firm operating out of the Port of Los Angeles, to pay $3.5 million to 1,416 workers, including subcontractors, after an investigation found the company had not paid required wages and benefits.

From late 2014 to late 2016, the logistics firm was contracted to move containers at the port for Customs and Border Protection (CBP) and therefore was required to adjust pay and benefits to federal government standards as stipulated in the contract.

California Cartage Co. was acquired by New Jersey-based 3PL NFI in 2017. American Shipper reports settlement discussions accelerated following the acquisition. NFI, in a statement to the website, said "all employees customs exam operation are now paid the required prevailing wage and welfare rates."

Dive Insight:

This is not the first time California Cartage has gotten in hot water over labor issues.

In the last two years, the California Labor Commissioner has decided in favor of California Cartage workers in 12 cases of misclassification — when employers classify full-time workers as independent contractors in order to avoid providing benefits among other requirements — totaling $1.4 million in payouts, according to the Los Angeles Business Journal.

The issue has also gained prominence in the city of Los Angeles. The city sued California Cartage and two other subsidiaries of NFI Industries in April for additional alleged misclassification cases. In June, drivers at the port went on their 15th strike in four years, protesting the issue.

As a result, late last year the L.A. City Council investigated whether a land use nuisance abatement law could prevent trucking companies known to violate misclassification laws from doing business on city-owned property at the port. So far, no action has resulted.