NFI Shuts Port of LA Warehouse Over Labor Troubles

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By The Maritime Executive 01-17-2019 11:01:30

Logistics company NFI Industries has decided to shut its warehouse at the Port of Los Angeles after a series of legal actions and strikes. The LA City Council revoked NFI's lease for the Cal Cartage Wilmington warehouse in October, and and the firm has not successfully negotiated a renewal. The decision affects about 800 employees. 

In a statement, Cal Cartage laid blame for the closure on the Teamsters, which sought to unionize the workers at the Wilmington site. The Teamsters have led seven strikes at Cal Cartage since 2015.

“This is a very sad day for Cal Cartage, our employees, our customers and the Wilmington community,” said Sid Brown, CEO of NFI. “We have been fighting, with the help of our employees, for the past four months to negotiate a deal to keep this facility open long-term. This is not the outcome we wanted. Because of the Teamsters’ efforts, we now have been left with no other option but to shut down the Wilmington operation.”

According to the union, it is not yet known whether NFI will look to negotiate a separate site lease for its trucking operation, the largest drayage provider for the Ports of Los Angeles and Long Beach. Cal Cartage's drayage subsidiaries face multiple lawsuits and regulatory actions for allegedly misclassifying truck drivers as "independent contractors." Over the past four years, the California Labor Commission has cited Cal Cartage 36 times for these violations, and has ordered it to pay penalties exceeding $7 million for unreimbursed expenses and allegedly unlawful deductions from drivers' pay. 24 of these cases remain under appeal. 

The City of Los Angeles has separately sued Cal Cartage's trucking subsidiaries for alleged tax evasion, misclassification of employees as independent contractors and violations of the California Unfair Competition Law. In particular, Los Angeles' City Attorney alleges that these firms used "contractor" classification to pass on operating costs to owner-operator drivers, while still retaining substantial control over these drivers' terms of employment.

"NFI's decision to leave the property . . . presents a much-needed opportunity for the City and Port of Los Angeles to seek a tenant that will follow the laws," said the Teamsters and a statement.