Retail giants enabled trucker exploitation
Powerhouses such as Target, Costco benefit while drivers plunge into debt
America’s retail giants have spent a decade ignoring signs of labor abuse in their supply chains, sometimes fighting government efforts to crack down even as thousands of truckers were driven into debt and pover- ty, a USA TODAY Network investigation has found.
Target, Costco, Hewlett-Packard and many others have benefited from California port trucking companies that forced their drivers into debt, made them work up to 20 hours a day and sometimes paid them pennies an hour.
Retailers and manufacturers rarely hire truckers directly. In- stead, they rely on a maze of subcontractors to move their goods and have paid little attention to whom their direct vendors hire.
In the 1990s, similar abuses in overseas manufacturing operations led to a widespread crackdown by American brands, which now scour through their production opera-
tions to weed out child labor abuses, forced overtime and debt-driven schemes that exploit workers.
But companies have made no such effort at the Southern California ports, even after hundreds of truckers told regulators they were treated as modern-day indentured servants.
In fact, when lawmakers tried to pass worker protections — a few aimed directly at helping port truckers — retailers paid lobbyists up to $12.6 million to fight the bills, lobbying disclosure records in California and Washington, D.C., show.
U.S. brands and their lobbying associations opposed a bill in California that would have criminalized wage theft in low-wage industries and another that would have made it easier for truckers to recoup stolen wages.
They fought bills that would have converted port truckers to fully protected employees and others that would give state agencies more leeway to punish trucking companies that violate protection standards.
DRIVEN INTO DEBT
All the while, Los Angeles-area truckers, drivers who touch half of all imports sold in stores across America, were losing a fight of their own on the waterfront.
As the USA TODAY Network reported this month, at least 140 trucking companies around Los Angeles have been accused of improperly billing drivers for their own work equipment by calling them independent contractors instead of employees.
Hundreds of drivers say they were coerced into truck lease contracts they didn’t understand and found themselves $100,000 or more in debt to their employers, according to claims made to state regulators and in civil courts.
When drivers got sick or fell behind on payments, trucking companies fired them, seizing their trucks and tens of thousands of dollars they had paid toward buying them.
Faustino Denova, a Mexican immigrant with a sixth-grade education, said he regularly worked 19-hour days but still went broke trying to pay off the truck his bosses promised him. In the worst weeks, he made so little that he owed money on Friday.
“I wasn’t able to cover the expenses,” he testified in 2015 in a California case at the Department of Industrial Relations’ enforcement arm, known as the Labor Commissioner’s Office.
Lawyers and executives with port trucking companies denied widescale labor abuses and said the more than 1,100 drivers who have filed court and labor commissioner complaints represent a minority of truckers. They also say the allegations have been overstated, part of a Teamsters union organizing campaign against the industry.
No law requires retail companies to police their vendors or the subcontractors those vendors hire. And unlike with overseas manufacturing plants, there has been no public pressure to force a cleanup of the shipping industry.
That makes it easy for the companies to look the other way, said David Weil, who led the federal Wage and Hour Division under President Obama.
“Not my problem, not my workforce,” Weil said.
It was a series of high-profile revelations that led to more oversight in overseas manufacturing operations, according to Shawn MacDonald, CEO of the international research firm Verité that produces labor and logistics studies commissioned by the federal government.
But workers involved in shipping deserve the same protection from the big companies that rely on their labor, MacDonald said.
“They’ve just never thought about this,” he said, “let alone done any due diligence.” THE RESPONSE: NO COMMENT Reporters contacted two dozen retailers whose goods were moved by port trucking companies accused of labor violations.
Seventeen declined to comment or did not respond to multiple interview requests; the rest sent brief statements about their corporate responsibility policies.
“I wanted to let you know we aren’t going to be able to help with this story,” Nike spokesman Greg Rossiter said in an email.
“Regretfully we are not able to provide a response at this time,” Costco’s Muriel Cooper wrote.
Only Goodyear said it took immediate action, dropping a trucking company within weeks of a negative California labor commissioner ruling.
Other retail companies consider the problem out of their hands.
LG Electronics is the eighth-biggest importer in the country, according to the Journal of Com
merce, a shipping trade publication. The home appliance giant said it doesn’t hold itself responsible until products are inside company-owned warehouses.
“We’re not trying to wash our hands of this issue,” spokesman John Taylor said in an email, “but it’s frankly far afield” and “really very disconnected from LG Electronics.” TARGET LEADS THE CHARGE In 2008, California sparked the labor problems at the ports of Los Angeles and Long Beach by banning older trucks from entering the harbor.
Companies suddenly faced the prospect of replacing 16,000 aging big rigs with newer, cleaner trucks.
To avoid the $2.5 billion price tag, the port trucking industry launched a lease-to-own program that pushed the cost onto truckers, most of them independent contractors who had to cover their own expenses.
Trucking companies arranged to finance their fleet, then passed on the cost of each truck to an individual driver.
It didn’t take long for retailers to embrace the extraordinary so- lution and then tout it publicly.
“Innovative and cost-effective,” JCPenney said in a press release in December 2008.
A California retail lobbyist representing Home Depot, Nike and others called it a “resounding ” success in congressional testimony in 2010.
One truck financing executive likened the cleanup to “landing on the moon.”
Few brands were more public about their support than Target, the country’s second-largest importer of container goods.
In October 2013, one of the busiest trucking companies working the Los Angeles ports, Total Transportation, threw a party to celebrate the success of its lease-purchase program.
Local politicians and trucking executives huddled under white tents and ate sandwiches.
Target sent Rick Gabrielson, then a senior manager for import transportation.
Gabrielson went on camera for a marketing video and praised Total Transportation, which moved containers for Target as well as for J.Crew, Ralph Lauren and LG Electronics. He called the lease-purchase program a “threelegged stool,” a team effort between retailers, shippers and the truck drivers.
Gabrielson had delivered a similar message in a letter to Congress three years earlier, calling the arrangement “efficient” and “mutually beneficial.”
After the lease program rolled out, Target named Total Transportation an “Outstanding Partner” and sent management a letter congratulating its “commitment to supporting Target’s core values and driving efficiencies throughout Target’s supply chain.”
At the time of the party, 44 drivers had filed state labor commissioner claims against Total Transportation, alleging they had been coerced into signing lease-to-own contracts and cheated out of fair pay.
Total Transportation owner Vic La Rosa denied drivers’ claims and said the program was designed to help them.
“The trucking companies stepped in and sponsored a lot of these drivers,” he said, noting that workers have completed the lease program. “No good deed goes unpunished.”
Target and Gabrielson, who began working at Lowe’s in August 2014, declined to comment.
“Target doesn’t have anything to share here,” spokeswoman Daphne Avila said in a March email.
Thursday, another spokeswoman, Jenna Reck, said Target previously took steps to help drivers, including paying them for time spent waiting to pick up loads. FIGHTING BACK From the beginning, retailers and port trucking companies were ready to fight bills designed to protect truckers. They saw the bills as union-friendly and bad for business.
As the clean-truck program rolled out, Target’s Gabrielson cofounded a lobbying organization, the Coalition for Responsible Transportation, to steer policy while regulators decided the rules for clean trucks. Home Depot, Nike, Walmart and Best Buy were some of the first members.
Over the next five years, the coalition and its parent organization, the Retail Industry Leaders Association, fought bills that would have converted California port drivers to employees, given cities the right to regulate port trucking and held retailers themselves liable in civil cases that workers brought against their vendors. Bigbusiness opposition and Republican lawmakers argued that the regulation would kill jobs.
A bill that would have criminalized wage theft in port trucking and other low-wage industries, lost its teeth before passing in 2012.
Walmart itself spent as much as $500,000 — along with $1 million more from the California Retailers Association — on lobbyists who courted state lawmakers while they removed language that would have guaranteed criminal penalties for egregious wage theft.
Retailers originally promoted the lease program because they considered it a best practice, coalition president James Jack said.
“We never really anticipated the legal implications of the program,” he said. “Unfortunately, it was not as successful as we had hoped.”
When a reporter in November pointed out that the coalition still promotes the lease program online along with a guide for how to install it, Jack said, “Maybe that should come off of the website.”
The coalition’s website was taken down earlier this month. A DOUBLE STANDARD Retailers’ response to the port trucking situation stands at odds with the public image of corporate responsibility the industry has tried to cultivate for years.
Target stopped importing rugs made with Indian child labor and clothes from sweatshops in Uzbekistan. Costco and Walmart police their Thai seafood sources for slave labor.
For many years, Nike benefited from sweatshops in countries that banned labor unions. After a series of exposés and protests in the 1990s and early 2000s, the sports apparel company developed a code of conduct and now spends millions every year making sure its foreign vendors adhere to it.
Now Nike conducts hundreds of overseas audits of its factories each year, a type of ethics enforcement adopted by other big retailers, including Polo Ralph Lauren, Home Depot, Neiman Marcus and JCPenney.
But they haven’t held American trucking companies to the same standards.
Take Home Depot, which moved containers through Total Transportation Services, one of the most cited companies on the harbor.
“We require all of our vendors to abide by any regulations and fair work practices,” said Home Depot spokesman Stephen Holmes, citing its “extensive audit program.”
The audit program does not extend to the port trucking companies.
But since the USA TODAY Network reported on labor abuses earlier this month, Holmes said, “we’re investigating this issue directly with carriers.”
Experts say the apparent inconsistency between overseas policy and stateside inaction is troubling but not surprising, because the spotlight hasn’t been on American companies.
“It’s not on their radar screen to monitor their supply chain here,” Verité’s MacDonald said.
“People assume the problems aren’t here, but obviously they’re here, too.”
“I wanted to let you know we aren’t going to be able to help with this story.” Nike spokesman Greg Rossiter in an email response