Global transportation company cited for violations
A global transportation company that received a $2.7 million loan from Connecticut has been cited in federal and California courts for misclassifying workers as independent contractors, potentially leaving them without coverage under wage and hour laws.
XPO Logistics Inc. was ordered by a federal appeals court earlier this year to pay nearly $1 million for misclassifying workers, according to unions supporting an organizing effort. The wage claims dated to between 2012 and 2014 and wound their way through courts before the State Bond Commission approved the loan to the Greenwich company in 2017.
In a second case, the unions said a California court awarded seven drivers $2.3 million for being misclassified as independent contractors. And in another case XPO settled a case in which a California judge awarded more than $800,000 to four drivers for unpaid meal and rest breaks and expenses.
XPO said a report by transportation unions criticizing the company on numerous issues “repeats wholly inaccurate allegations that have been entirely debunked.” Independent contractors say they choose the flexibility to work for themselves and the freedom to drive for several companies, a spokesman for XPO said in an email.
“We follow the rules as they evolve and continue to believe independent contractors should be free to decide what works best for themselves,” he said.
The loan was approved by the State Bond Commission under then-Gov. Dannel P. Mallloy, who two years earlier praised his departing labor commissioner as she “ramped up efforts to fight misclassification.”
Conflict between companies and unions over whether to hire independent contractors or put employees on the payroll is common as companies seek to cut labor costs and unions look for opportunities to organize workers.
The Connecticut Department of Labor defines misclassification as employers incorrectly defining a worker as an independent contractor rather than an employee. “Although misclassification can happen inadvertently, it is more often used to circumvent the law” and creates an unfair business climate, the agency says.
The State Bond Commission approved the loan to help XPO with $5.5 million in improvements to leased property and equipment at its Greenwich headquarters. XPO was vetted before receiving financial assistance, which requires the company to hire new employees, not contract workers, said a spokesman for the Department of Economic and Community Development.
XPOcanearn $1 million in loan forgiveness if it creates 30 jobs and retains 23 by Dec. 31, 2020 and keeps the jobs for 24 consecutive months, according to DECD. If it creates 60 jobs and retains 23 jobs XPO can earn $2 million in loan forgiveness. The entire loan can be waived if XPOcreates 99 jobs and keeps 23 jobs in the same time period.
XPO posted profit last year of $419 million on revenue of $16.6 billion.
Rep. Chris Davis, R-Ellington, opposed the package when it was approved by the bond commission. In an interview, he criticized the XPO deal for “creating so few jobs.”
Economic development officials in the Malloy administration failed to detail “how they negotiated deals with those companies,” Davis said.
Malloy at the time defended the financial aid as investments boosting
Connecticut’s economic competitiveness and strengthen business support.
Among other corporate recipients at the time XPO was granted the loan were Xerox Corp., the Norwalkbased maker of office equipment; and Terex Corp., a Westport manufacturer of heavy machinery and vehicles.
Gov. Ned Lamont, who took office in January 2019, pledged to end, or limit, financial assistance to promote economic development. The State Bond Commission has recently awarded millions of dollars to combat the coronavirus and aid cash-strapped cities and towns.