Finalist: Brett Murphy of USA Today Network

By Brett Murphy

A group of high-profile Democratic Senators, led by Sherrod Brown of Ohio, wrote letters to the nation’s top retail CEOs Monday, demanding they crack down on trucking companies that turned their workers into modern-day indentured servants.

The call to action comes in response to a yearlong USA TODAY Network investigation that found port trucking companies in California forced their drivers into debt, pressured them to work up to 20 hours a day and paid them pennies per hour.

“As a major U.S. corporation,” the senators wrote, “you also have a role to play in ensuring that you are not complicit in the mistreatment of port truck drivers and that American consumers, your customers, are not unwittingly supporting labor abuses in the United States.”

Sen. Elizabeth Warren, D-Mass., and Sens Dianne Feinstein and Kamala Harris of California joined Brown in sending the letter to 16 retail brands, including Target, Wal-Mart and Costco. They asked each CEO to answer a series of questions about their knowledge of labor violations in the port trucking industry and about their plans to cut ties with those companies.

Together, these four senators represent powerful voices around the issues of labor, immigration and corporate malfeasance.

Warren, of Massachusetts, famously took on Wall Street after the real estate collapse in 2008 and transformed her popularity as a consumer crusader into a Senate bid. California Sen. Feinstein is the ranking Democrat on the powerful judiciary committee.

“Port trucking companies’ brazen disregard for federal transportation safety standards and workers’ safety and rights is shameful,” they wrote in Monday’s letter.

They pledged to “pursue aggressively all federal avenues to put an end to this rampant mistreatment of port truck drivers.”

“We cannot allow corporate profits to come at the expense of American workers, and that means putting an end to abusive practices we’ve seen in the port trucking industry," Brown said in a statement.

Since USA TODAY Network published its investigation in June, elected officials across the country have been pressing for action.

Dozens of lawmakers, from the Los Angeles City Council to Capitol Hill, have denounced the business practices, many calling on retail corporations to better police their trucking contractors.

Los Angeles City Councilman Joe Buscaino wrote a letter to the CEO of Target, suggesting the retail giant adopt a code of conduct specific to its port trucking contractors.

In a follow-up statement to reporters, Buscaino said he wants a “commitment from the big box retailers to stop doing business with trucking companies that treat their drivers as indentured servants."

Target, which previously called the mistreatment of workers in its supply chain “unacceptable,” declined to comment about the letters. Others, contacted Monday afternoon by USA TODAY, did not have an immediate response.

As they investigated the port trucking industry, reporters contacted two dozen retail companies, including Target, Costco and LG, that  have used port trucking companies with labor violations. The few that responded said they were either unaware of widespread labor violations or not responsible for monitoring the maze of contractors and subcontractors in their shipping operation.

Now, some companies say they are taking steps to identify any abusive companies in their supply chain.

“We’re investigating this issue directly with carriers,” Home Depot spokesman Stephen Holmes said. Holmes pointed out that Home Depot had previously changed trucking companies and no longer uses any companies named in the USA TODAY investigation.

Over the past month, elected officials have met with experts and labor union leaders to discuss new laws that could curb abuse in the industry. And they’ve begun publicly pressuring federal Department of Transportation regulators to better coordinate with state officials to ferret out predatory labor practices.

Rep. Grace Napolitano, D-Calif., said she’s working with Rep. DeFazio, D-Ore., and Rep. Jerrold Nadler, D-N.Y., to resurrect a federal bill, the Clean Ports Act, which would give states and cities the power to better enforce labor laws and standards in the port trucking industry.

In California, state Rep. Ricardo Lara said he’s drafting another bill to tweak California law so companies would have to disclose how they audit their operations at American ports.

California law already requires big companies doing business there to disclose what efforts they make to monitor their supply chain overseas. But retailers are not required to apply those standards to their U.S. shipping operations.

“We can’t ignore the reality of what’s happening in our backyard,” Lara said. “I think it’s one of the biggest injustices happening in our state.”

Federal lawmakers have also called on regulators to begin working with state officials to coordinate efforts to crack down on labor law violators.

Two weeks ago, Rep. Alan Lowenthal, D-Calif, and Rep. DeFazio quizzed Department of Transportation officials on whether they had begun taking action at the ports.

Unhappy with the response, Lowenthal said he may seek to compel federal and state coordination if the agencies don’t quickly take steps on their own.

DOT officials said the agency typically investigates cases only after they receive complaints.

Hundreds of California drivers have testified in state labor cases that they were cheated out of wages. Many described potential crimes, including managers who coerced them to work past the legal limit of hours and doctor logs, at times physically preventing workers from going home.

But that information has not yet led to criminal investigations at the federal or state level.

Julie Su, the California Labor Commissioner, told reporters in December that her office has not passed along port truckers’ testimony to the DOT or the California Highway Patrol.

“I don’t have a good answer to that,” Su said when asked why the agency did not sharethe evidence. “It hasn’t been something we pursue.”

The USA TODAY Network’s investigation focused on trucking companies around Los Angeles, where two ports are responsible for about half of all imports brought into the country.

In 2008, California officials ordered trucking companies at the ports to replace old big rigs with cleaner trucks. The companies pushed that cost onto drivers with a lease-to-own program, forcing many drivers to work around the clock. When they got sick or fell behind on payments, companies fired them, seizing their trucks and thousands they had paid in.

Company owners deny the claims made by their drivers, arguing most drivers are successful, and those who aren’t have the freedom to quit.

Weston LaBar, executive director of the Harbor Trucking Association, which represents port trucking companies, said most of the complaints so far have been “noise drummed up by the Teamsters union.”

“If policymakers feel inclined to investigate this issue further,” LaBar said in a later email, “hopefully they will reach out to industry as well to get all perspectives.” 

By Brett Murphy

Costco, one of the world's largest retailers, has stopped doing business with a California trucking company accused of trapping drivers in debt and then using it to force them to work overtime.

The action comes as brands across the U.S. face increased scrutiny for ignoring labor abuses in their supply lines, a widespread problem first revealed in a USA TODAY Network investigation in June.

Earlier this month, four prominent Democratic Senators, led by Sherrod Brown of Ohio, sent letters to 16 retailers, calling on them to root out “shameful” labor abuses first outlined by the USA TODAY Network.

Soon after, Costco Wholesale dropped Pacific 9 Transportation, one of the biggest port trucking companies in Southern California.

Hewlett-Packard also sent an auditor to investigate the company’s labor practices.

Both retailers declined to comment on their actions. Alan Ta, chief operating officer for Pacific 9, said that even before Costco withdrew, his company had stopped leasing trucks to drivers and launched a series of reforms to improve their pay.

A wave of pressure from retailers and manufacturers has hit port trucking operations across the industry, according to drivers who say their employers have been fielding calls from clients.  

Those clients include Walmart, which pledged in a letter responding to the senators that it would cancel contracts with any trucking company that did not provide “assurances” it was following fair labor practices.

“The stories profiled in that article are deeply concerning,” Executive Vice President Jay Jorgensen wrote of the USA TODAY Network investigation, “Rigged.”

“Any motor carrier that fails to comply with law, such as those alleged in the article, would be in violation of our contract and would therefore be subject to cancellation,” he wrote.

The series revealed how port trucking companies in southern California have spent the past decade forcing drivers to finance their own trucks through company-sponsored lease-to-own programs they could not afford.

The longer drivers worked, the more trapped they felt. After just a few months, drivers typically had paid thousands of dollars towards a truck.

If drivers quit or got fired for any reason, most of them lost the truck and everything they had paid in. Many worked 20 hours a day to keep up with their truck payment and feed their family.

For years, Pacific 9 used the same kind of lease-to-own program.

Forty drivers have won California labor commissioner cases against Pacific 9, accusing the company of using the leases to cheat them of fair pay. Half of them testified that they had to work up to 19 hours a day, violating federal fatigue laws for truckers.

As the USA TODAY Network began investigating and as labor judgments piled up against Pacific 9, the company stopped using leases. In April 2016, facing almost $7 million in court-ordered back pay and penalties, the company filed for bankruptcy protection.

It has since started rehiring drivers as full-time employees and stopped charging them truck expenses.

Ta and many of his drivers said the company is now working to become a model for the rest of the industry.

Pacific 9’s sudden loss of business comes at a precarious time for the company – the tail end of drawn out bankruptcy negotiation with truckers.

Drivers and their attorneys sent at least two letters to the senators pleading with them to ease pressure on retailers using Pacific 9.

Rivera and Shackelford, a San Diego firm representing some Pacific 9 drivers, said Costco’s decision might “lead to the closing of Pacific 9 altogether,” undoing months of negotiations and possibly leaving drivers empty-handed.

“We believe this would be a tragedy,” the attorneys wrote.  

Some drivers feel the same — even those who once testified about pervasive labor abuses inside the company.

“Pacific 9 has followed through on its commitments to us drivers,” wrote trucker Santiago Aguilar, who filed a labor claim against the company in 2013 and has since been rehired as an employee with full protections. Aguilar’s letter was signed by 13 others at the company. “Now, I get a fair day’s pay for a hard day’s work,” he said.

Pacific 9 is one of the busiest operators at the Long Beach and Los Angeles ports, according to port truck data obtained through a public records request.

Using the data, reporters tracked the movement of the company’s 160 trucks and found that they were on the clock for more than the 14-hour maximum set by federal law at least 7,500 times over three years. Almost all of the company’s rigs exceeded the time limit set for commercial truckers at least once.

But executives say those practices are a thing of the past.

“We have made significant change in our company and to our industry,” Ta said in an email.

Other companies that have used Pacific 9, either directly or as a subcontractor, include Hasbro and Goodyear. Hasbro did not respond to multiple requests for comment.

Goodyear spokesman Keith Price said the tire giant “took immediate action and ceased use of Pacific 9 within two weeks of the California Labor Commission’s ruling against them.”

By Brett Murphy

House Democrats will introduce two federal bills Thursday aimed at cracking down on port trucking companies that have for years exploited their workforce with lease-to-own contracts that forced drivers to work around the clock for pay that sometimes dipped to pennies on the hour.

The measures come in response to a USA TODAY Network investigation that revealed truckers were working as modern-day indentured servants while hauling goods for America’s retail giants.

The Port Drivers’ Bill of Rights Act of 2017 lays out basic work standards for port truckers, including fair pay, protection under labor laws, and freedom from “exploitative truck lease or rental arrangements,” according to a draft obtained by USA TODAY Network.

“For truck drivers to be treated fairly and paid fairly,” said Grace Napolitano, D-CA, one of the eight bill sponsors, “that’s a no-brainer.”

“We thought [the companies] would do it without legislation, but that hasn’t happened,” she said. “So we had to put it in writing.”

The proposed bill would also require federal regulators to deploy a task force to ports to investigate companies, analyze lease contracts and weed out employers taking advantage of their workers.

The bill marks the first federal attempt to protect port truckers and reign in their employers since California’s clean air initiative took hold five years ago. That law banned aging big rigs from the nation’s two largest ports, both in the Los Angeles area. Companies that move nearly half of America’s imports off the docks faced the prospect of buying 16,000 new trucks.

As the Network first reported in June, dozens of trucking companies in southern California avoided paying for new trucks by forcing their independent drivers into company-sponsored lease-to-own programs.

Drivers found themselves working as much as 20 hours a day for wages that sometimes dropped to pennies per hour after expenses. Some drivers worked a full week only to owe their boss money on payday.

“You’ve got the Trump administration saying, ‘They’re for the workers, they’re for the workers,’” said Jerrold Nadler, D-NY. “But what have they done besides screw the workers? We’ll see what they do now.”

Over the past year, the federal government has been rolling back regulation of the trucking industry. Lawmakers repealed safety rules aimed at keeping tired truckers off the highway in December. And last month Trump’s administration withdrew a proposed requirement to screen truck drivers for sleep disorders.  

But Democrats hope to present these new initiatives as worker-friendly reforms that will garner bipartisan support.

Nadler is the lead sponsor of a second bill announced Thursday. The Clean Ports Act of 2017 aims to loosen federal restrictions preventing cities from regulating port trucking companies. Retail companies and their trade groups have spent millions successfully lobbying to stop similar reforms in the past.

The trucking industry has long opposed local regulation that could invite changes to the independent contractor business.

Weston LaBar, president of the Harbor Trucking Association, warned against requiring companies to use employees instead of independent truckers, which he said could prevent hiring and stunt job growth. The American Trucking Association successfully sued the city of Los Angeles to prevent such a mandate in 2013.

“This needs to be a discussion on how to ensure fairness to both drivers and companies,” LaBar said in a statement.

Democrats say they they’re resurrecting the Clean Ports Act because the conditions of port drivers has worsened and gained national attention.

But no one expects the bill to pass easily in a Republican-led House that has largely panned labor protections for truckers in the past.

“It’s going to take a lot of people,” said freshman Nanette Barragán, another sponsor who also represents the Port of Los Angeles. “If this leads to a conversation, then I think that’s a good thing too.”

By Brett Murphy

The U.S. military helped fuel labor abuse at America’s largest ports by relying on trucking companies to move goods even after they violated labor laws and were found to have cheated drivers out of fair pay, a USA TODAY Network investigation found.

XPO Logistics and California Cartage, both found guilty of labor infractions, and another company, Konoike-Pacific, accused of the same kinds of violations by a quarter of its drivers, continue to work as federal contractors or subcontractors.

The companies participate in multi-billion-dollar deals to ship military vehicles and commissary items overseas, raking in taxpayer dollars even after hundreds of drivers leveled formal wage complaints against them.

Drivers at each company said in testimony and interviews they were forced to pay expenses for company equipment. Many drivers said their wages dropped to pennies per hour after companies deducted those costs from their weekly pay. Some said they worked past legal limits and to the point of exhaustion to keep up with the fees. The companies denied the allegations in court.

After learning of the government’s ties with these port companies, prominent Democrats in the U.S. Senate spoke out against any agencies funding them.  

“The DoD shouldn’t be giving taxpayer-funded contracts to companies that cheat their workers out of wages or take shortcuts on safety,” said Sen. Elizabeth Warren of Massachusetts.   

Sen. Bernie Sanders called for President Donald Trump to audit the industry and issue an executive order banning port trucking companies with labor violations from receiving federal contracts.

The government shouldn’t reward companies that “exploit and abuse” their truckers, Sanders wrote in a letter Thursday to Trump. “That is unacceptable.” 

The Defense Department did not answer questions about what steps it has taken to root out abusive labor practices since USA TODAY Network began reporting on the port industry in June.

“Contracts are only awarded to responsive and responsible offerors,” said Patrick L. Evans, a commander in the Defense Press Operations, which handles media inquiries to the Pentagon.

Evans said the agency refers worker complaints to the U.S. Department of Labor, which enforces labor laws.

Labor Department officials confirmed the agency is investigating California Cartage for potential Service Contract Act violations, after a December 2016 complaint filed by the Teamsters Union. Agency spokesperson Jose Carnevali did not respond to multiple inquiries about other ongoing investigations in the industry.

The USA TODAY Network previously reported that more than 1,100 California port truck drivers have filed labor complaints in civil court and with the state labor commissioner since 2008. That year, a new California environmental law required trucking companies serving state ports to replace old trucks with new, cleaner rigs.

To avoid the cost, many companies pushed their independent drivers into lease-to-own contracts that they didn’t understand and could not afford.

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.

In a 2015 court case, Konoike-Pacific driver Jose Mairena said the company required him to sign a contract without translating it, knowing he couldn’t speak English. He quickly found himself buried in debt from the weekly truck expenses that “left little, if any, take home money for me and my family.”

Konoike-Pacific, a small outfit that specializes in refrigerated cargo, moves containers of frozen food for the Army and Airforce Exchange stores, according to driver manifests spanning from March 2014 to July 2017.  

The manifests show the trucking company also has contracts with international steamship giant American President Lines, which has received more than $2 billion in federal contracts from the Defense Department’s transportation division.

Konoike-Pacific and APL did not respond to multiple requests for comment. Drivers’  complaints against Konoike-Pacific went to private arbitration and the outcome is confidential. 

Michael Fischetti, Director of the National Contract Management Association, said it’s difficult for federal agencies to police business practices deep in their supply chain. But those agencies can’t ignore labor abuses by subcontractors just because they don’t pay them directly, he said.

“It’s a technicality,” Fischetti said. “It’s not something to hide behind.”

As the USA TODAY Network first reported in June, at least 60 trucking companies operating in California violated labor laws by billing workers for company equipment. But few have received more complaints than XPO Logistics, one of the largest trucking companies in the world, and its subsidiaries.

XPO driver Vahe Olmassakian said he had to refinance his house twice to borrow money in order to keep up with his truck costs while working 14 hours a day. Facing foreclosure in 2015, he finally sold his house and moved his family into an apartment.

"Thank God we could always afford food," he said.

At least 150 drivers have filed labor claims and lawsuits at XPO’s subsidiaries since 2008.

In that same time period, XPO’s global operation has received almost $160 million in federal contracts from the Defense Department to move and store freight worldwide. Part of that operation is port trucking. XPO driver manifests show deliveries to Marine Corps retail locations around Los Angeles.

Michael P. Kleiman, spokesman for the Defense Department's U.S. Transportation Command, said in email responses to questions that the agency vetted the company, like it does all prospective contractors, and “it was determined XPO Logistics was a responsible contractor.”  

The Defense Department awarded XPO contracts earlier this year and in 2016, according to federal data. California state labor commissioner records show the company’s subsidiaries began losing cases in the Spring of 2015. Last May, the company lost a federal appeal to five drivers for almost $1 million.

XPO, which did not not respond to multiple requests for comment, discloses the decisions, as well as pending claims and lawsuits, in its yearly financial filings.

Photographs from drivers, reviewed by USA TODAY Network and two military experts, show Defense Department vehicles inside the loading yard at California Cartage, one of the biggest players in the Los Angeles ports.

Since 2012, more than 40 drivers who worked for California Cartage affiliates have filed wage complaints and lawsuits in civil court.

Reyes Castellanos, a driver for K&R Transportation, a division of California Cartage, took home only $21,000 of his $94,000 gross income in 2015 after making his truck payments to his employer, according to his tax returns. He had to choose between making house payments and buying food.

“So we lost the house,” Castellanos said. “I lost the house.”

NFI Industries, which recently bought the California Cartage family of companies, said the company doesn’t have a contract with the Defense Department and it requires its subsidiaries to follow labor laws.

“To the extent we discover that any Cal Cartage operation is not in compliance with applicable laws,” spokesperson Amber Burruezo said in a statement, “we will work quickly to correct such non-compliance.”

By Brett Murphy

JOSE JUAN RODRIGUEZ

Jose Juan Rodriguez lives with his family inside a small house by the freeway in Los Angeles' South Central neighborhood. His wife has stage three cancer and his son severe brain damage. He said he's six years into his five-year lease contract with Morgan Southern and he still doesn't own the truck. "I knew I was being enslaved with these contracts," Rodriguez said. "But I have to work."

REYES CASTELLANOS

Reyes Castellanos, 58, has gallstones and no health insurance, because he’s labeled an independent contractor instead of an employee. Near-constant pain causes him to wince repeatedly as he talks from the cab of his truck.

He keeps a giant thermos of coffee on the passenger seat. By his feet, a bottle he uses to avoid bathroom stops.

Money is tight and it’s not getting any better.

Castellanos‘ 2015 tax return shows that he grossed $94,000. But he took home just $21,000 after truck expenses, including the lease-to-own payment he makes to his employer every week

His wife told him to quit K&R Transportation and leave the truck behind. But Castellanos isn‘t sure what other work he could find.

“The truck is the only thing putting food on the table,” he told her.

“So we lost the house,” Castellanos said. “I lost the house.”

K&R Transportation‘s parent company, California Cartage, declined to comment.

ALFREDO ARAMBULA

Alfredo Arambula, a Mexican immigrant and former driver at K&R Transportation, told reporters he lost everything after breaking his foot on the job in 2013.

Foot surgery put him out of work for weeks and he fell behind on the lease payments for his truck. When the 76-year-old tried coming back, his job was gone.

“I was not allowed to enter the company,” said Arambula, still on crutches and still confused about what had happened.

He lives in a small house besides a parking lot in South Central Los Angeles. There are piles of junk strewn around the backyard.

Arambula doesn’t know what he’ll do for money now. He had paid almost $75,000 in truck lease payments, which ate into his savings over the years. As far as he knows, the truck is still at K&R, being driven by another trucker.

“They took everything,” he said.

MANUEL RIOS

Manuel Rios, 50, worked around the clock for years for K&R Transportation. But his truck lease payments left him unable to support his family.

“There’s not much money, do you understand me?” he told reporters inside his one-bedroom apartment in south Los Angeles. “I wasn’t bringing anything to my family. Everything was left on the truck. All your work, all your sacrifice, would just stay on the truck.”

Rios collapsed in December 2015 on the way to the park with his son. He said he had worked himself into a stroke. Unable to drive while he recovered, he fell behind on the truck costs, so his manager fired him.

A Nicaraguan immigrant with diabetes and a 9th grade education, Rios lost the truck, the money he had spent trying to buy it and his family’s only source of income.

VAHE OLMASSAKIAN

Vahe Olmassakian, 44, bought a used truck 12 years ago after saving some money from a small business he ran with his sister. He lived in a nice house with his wife, two kids and his mother.

Then in 2010, Olmassakian’s managers at Pacer Cartage told him a new environmental policy at the ports had banned old trucks like his. The company was starting a lease program that would let him make payments on a new truck that he could one day own.

He said they told him the money would be better. So he handed over his keys.

Soon Olmassakian found himself working up to 14 hours a day but still falling behind on his truck payments. He had to refinance his house twice to borrow money in order to keep up with his bills.

He said he worked constantly, but always managed to make it home for his kids’ soccer games.

Olmassakian wanted to quit but felt he had paid too much towards the truck to walk away. "I was already three years deep,” he told reporters.

Facing foreclosure in 2015, he finally sold his house and moved his family into an apartment.

"Thank God we could always afford food," he said.

Pacer's parent company, XPO Logistics, did not respond to a list of questions.