One of the largest port trucking companies in Southern California has filed for bankruptcy after losing several lawsuits to its employees.
Premium Transportation Services (also known as Total Transportation Services) has filed for bankruptcy after losing 25 lawsuits concerning misclassifying employees as independent contractors. In total, the company lost $4 million in those rulings and racked up an additional $4 million in legal fees defending itself.
Unfortunately for the carrier, those fees were the nail in the coffin. When they filed for bankruptcy, Premium Transportation cited $26 million in debt and interest owed.
The port transportation giant employed only 22 people directly, but utilized an additional 74 workers through a partner company and 140 more were independent contractors.
Premium Transportation also cited a bill which is making its way through the California Legislature as a factor in its decision to declare bankruptcy. According to Law360, the bill would give labor officials more power to enforce back-pay judgments, and even hold executives personally liable if the companies can’t pay.
According to Sam Joumblat, CFO of Premium Transportation, “the enactment of this draconian law and the uncertainty of the breadth of its enforcement, in addition to the debtor’s mounting legal fees, the pending rulings, and the customer pricing demands described above, has proven more than the debtor can manage.”
Source: gobytrucknews, latimes, wsj, law360
No more $3-million houses for trucking company owners cause they gotta pay their drivers.
WAAAAAAaaaaaaaaaaaaaaaa!!!!!
And no more European sports cars for their kids.
Life is so cruel sometimes.
Finally a glimmer of hope for the drivers, i say justice served.
I hope the rest of the country follows suit .
My question is who forced these drivers to with for the company? They agreed to work as contractors, got contractor wages and benefits yet still want to be considered employees. This is just another example of government over reach.
But I think. If you are hired as an independent contractor. You don’t get benefits.
And, you get to pay the employers share of your social security and medicare taxes.
@ Jim. No one forced them to work for the company and at the same time these drivers and most of us are not legal scholars armed with the knowledge to scrutinize and dissect a contract and then come to the conclusion that we are being scammed. Hear is a question for you Jim, at any point in your life have you ever been scammed and later on admit to yourself that this was only possible due to a supposedly legal document that you signed and your best defenses were breached because of your inability to rationalize on the wordings in the document or a questionable situation?. If so well don’t feel too bad because if you had recruited the services of a lawyer ( if you had the money to afford one?) he/she could have also failed to detect the scamming elements in the document. So there you have it, you signed the document and years and years go by (your scamming company probably laughing at you while heading to the bank all this time, or in perpetual state of anxiety hoping you dont become smart anytime soon) and you stumbled on the discovery or someone stumbled on it for you and thus begin the legal process.
The “who forced these drivers to with [sic] for the company?” argument does hold a certain amount of water when it comes to these things but taken it to its logical extreme you get ridiculously immoral outcomes. If only we lived in a perfect world where everyone cared about everyone else—-if only.
No, it’s not ‘gubermin overreach. It’s stopping abusive labor practices. There are countless new drivers and drivers with less then stellar records that take whatever job is offered them because, well they need jobs and these type are promised to lead to better ones. These companies pray on those drivers. they hire them, they sell them into the jobs, promise them permanent jobs later on (the proverbial carrot stick), promise them good pay in place of benefits, then begin extracting heavy tolls and abusive practices on them, find ways to cut their pay but increase their work loads every chance they get till they quit or are fired. They let them go at the drop of a hat if they get sick, have a question, refuse to do something illegal and more. It’s easy to get entry level workers churned in and out when they aren’t actually “employed”. And the parent company demands more and more for less and less from the farmed out company and threatens to end their relationship if they don’t give them what they want… which causes them to push those drivers to do illegal, unscrupulous and immoral things and the parent company gets to feign ignorance and wash it’s hands of the whole dirty mess, saying they had no hand in it. It needs to stop. They are not the only company doing this. It is becoming more and more common place, spreading like a virus in business and people are being left with fewer choices then to go into that kind of workforce with poor to no benefits, and threats of being fired for little reasons, no decent wages or benefits, abusive practices thrown upon them all for greed, NOT need. Government didn’t just decide one day to ruin Corporations parade with gubermint overreach just for shits and giggles, it was done because Unfettered Capitalism has no moral backbone and leads to greed and abuse of workers rights darned near every time. If there is a way to skirt moral or legalities to make more money for the top, they do it. It’s how it’s always been done and it’s a BIG reason for government intervention and necessity. It’s reality dude. Not some big bad boogie man of Gubermint coming to destroy your life. This has been long time coming. Even Walmart and Amazon have been doing this in their warehouses, creating more and more poverty wages and destroying the middle class and their buying power in our economy, which means We are subsidizing their Million dollar paychecks with our Tax dollars and paying for their workers needs as well as court and enforcement costs. Companies like that shouldn’t exist if they can’t stand on their own while paying decent wages and treat employees like humans beings, not drone workers or indentured servants. This is America, not India or China. Their excuse that the companies “customer pricing demands” is cause to not employ or pay enough for them to pay proper wages, thats their fault for agreeing to accept those pricing demands and setting the low bar in the first place without actually being able to employ people to do the job! Their customers will always ask to push cost lower and lower to make their CEO’s and shareholders ever more money. They don’t have to accept and neither should their competitors if it means abusive labor practices and becoming corporate welfare recipients is how they get there. The economy and businesses exist to support the people and their needs, not the other way around. One can still exists without the other… care to guess which?
@Jim,
When people are desperate to work they will do anything. Unfortunately some companies take advantage and the end result is a new law.
Because sometimes people don’t have a choice. Maybe their wife had a baby and they needed a job close to home, and this was all they could get. Or maybe they have a sick parent at home that they need to be with every night.
The point of all of this, is that there are dishonest, greedy people always waiting in the wings to take advantage of people like this. It’s high time they be recognized, stopped, and be made to start paying penalties.
It’s very easy to poke out one’s upper lip and say, ‘Well, then they shouldn’t have taken the job in the first place then – bwah!’
The old Native American saying goes, ‘Walk a mile in a man’s moccasins before you judge him’.
It’s attitudes like this, even, that allow these dishonest abusers to thrive and proliferate.
some times the 1099, is fickle. i am under such rule but dont see the rewards of a subcontractor rates as a driver. soo i am an employee but its cheaper for the company to hire employees at as a subcontractor classification without the subcontractor pay.
Well I guess the good news is the vast majority of people involved with this won’t lose their jobs since, technically, they never ACTUALLY worked there in the first place.
Yeaaaaay for the little guy!
Yeah!#$$/^$@
This is the only way to stop those big rats , soon we’ll go for the next one and the next one and we’ll see fruit from our hard work
talking about beneffits is not the point the only thing we want as a sub contractor is get pay desent wages .
God BLESS you all and happy good holy Friday
Raise your hand in the air and swing it around if you just don’t care for these guys.
I really hope that law gets pass and I especially love that part where the Company executives themselfs financially are held liable. Sweet. I get so upset every time when I hear of a company laying off numerouse workers and still manages miraculously to award their executives outrageous bonuses either before or after the layoffs took place.
I hope this has a massive ripple down effect not just for the trucking industry but all businesses and becomes a serious physiological deterrent to any company that dreams of ripping their employees off.
Good job guys! Now when you lost your job – go find another one, sue the carrier and lose it too. What a joke. So many people are happy when a carrier, that provides job in this economy, goes bankrupt. It makes me sick. People are so ungrateful.
You knew what you signing up for when you started. If you dont like it – quit and find another job, noone forcing you to stay there. No, they want to sue. Whats a BS.
I’m convinced that 99% of owner/ operators do not understand that they are in fact self employed. Many companies exploit this ignorance by treating them as employees when it suits their purpose and as contractors when it comes to fulfilling their obligations as an employer. These companies can’t have it both ways.
It’s not just truck drivers that fall into this trap. This happens with all sorts of tech startups as well. It’s just that in trucking, the initial investment is pretty significant compared to other fields.
Maybe if you obeyed the labor laws in the first place you wouldnt be in this problem… They really are very easy to understand.. And lay out exactly what you have to do… But apparently you thought they didnt apply to you..
This company was saving a bundle on everything from work comp, insurance, repairs and maintenance…. the list goes on and on. I seriously doubt that the loans on those tractors had the driver’s names on them.
I bet they hit the expeditors next. All the people running around in cargo vans and straight trucks, not being paid a proper salary, and having to cover the taxes and fuel on the whole operation. Lets see what shady operation they take next. I am actually getting excited about it because I love me some good justice. Still sad that you have to wait on a lawyer to climb out of bed though. So much money being lost while waiting.
If any of the above commentators are Actual O-Os , I’d be surprised . A lease is a contract . I read them , before I sign , and if I have any doubts about what’s in the lease , I hand it to my attorney. Under terms of a lease , the contractor can pick his loads , and When , and for how long , he wants to work each day. That makes him a contractor. If said company starts the ” you gotta ” BS , then , yes they violated the terms , and said contractors are re-classified as employees. If that is what happened , then yes , the company is liable. It appears that is the case here , from what I’ve read.
But, the Vitriol above this comment is unwarranted. I do understand it, I guess , as I have pulled containers before , as a company driver.
As an O-O, I’d say I’d have to be pretty desperate , to sign a lease with Any of these port carriers , given my last knowledge of the Rates they pay. Many of the trucks I see , hauling containers , are a DOT mans dream come true.
That said , if you’re an O-O , and you don’t read your lease , or sign it without knowing what’s in it , you have only yourself to blame. The lease can be terminated at any time , by you , or the leassor .
If the leassor violates the terms , and you stay on , you have only yourself to blame .
It is likely said ” contractors ” will get nothing , or , at most , pennies on the dollar. So , what did they Win ? Now they’ll have No income , and a truck that’s probably a Piece of Junk that No reputable carrier would sign on.
I realize there are still some ” lease to own ” deals still out there , but if you fall for one of them , again , who’s to blame? You.
And , if you drove ” Their ” truck , as a contractor , again , there is a contract involved . Desperation , or a “want or need ” to be home at night , does not preclude one from the final responsibility for ones actions.
“You are where you are , because of the Choices you made “. No one Forces you to make those choices.
Get Smart. If you are living hand to mouth, better stop and wonder why. Then figure out how to be smart.
You might be surprised what a short session on your knees , asking God for help and guidance, can do.
so 22 direct employees and 74 indy contract employees all lost there jobs …. and who was taught a lesson ???? ….. Envy is ignorannce and rage is stupidity
And do you think any of these workers will actually ever receive anything ?????
1099 is nothing but a big tax evasion scheme for the company owner. They knows it is illegal but they take the chance of not getting caught. Just look on Craig’s list some time, at least one third of the driver job are 1099. They should throw their ass in jail, and maybe the driver too. Their both illegal, maybe that would stop these lowlifes.
You do realize that these 40 drivers will never see a dime. All that they have accomplished is putting the rest of the drivers for that company in the unemployment line.
Filing bankruptcy is just how the upper management get to keep all there money and houses, while the workers get screwed in a different way even though they won the lawsuits.
Does this mean they won’t be paying the amounts awarded by the courts in the previous lawsuits? So it was all for naught?
Not a win for the workers, bankruptcy will make it impossible for the workers to get their payments, the company went bankrupt to protect the assets of the owners.