Citing a weak freight market, transportation and logistics giant Universal Logistics Holdings (NASDAQ: ULH) has laid off up to 70 employee port and intermodal drivers at three subsidiaries – Universal Intermodal Services, Universal Truckload Services and Roadrunner Intermodal Services.
The layoffs, which occurred last week, have impacted employees working at the Ports of Los Angeles and Long Beach. They took place less than one month after 28 employee drivers at Universal Intermodal voted to join Long Beach-based Teamsters Local 848.
All of those drivers have now been laid off.
Several drivers claimed they were told they could come back to work as independent contractors if they purchased their own trucks.
Desmond Gibson, one of the former Roadrunner drivers, told FreightWaves he was called into the Fontana, California, facility on Dec. 18 along with at least five other drivers. The operations manager handed the drivers a letter, saying “he was sorry,” according to Gibson.
“He said, ‘If you ever got your own truck, we’d be more than glad to work with you. But with the reduction of freight, we decided to cut out the company driver,’” Gibson said.
According to a copy of the letter obtained by FreightWaves, Roadrunner Intermodal told drivers that “soft freight conditions in 2019 have necessitated that we evaluate our current staffing levels” heading into 2020. “As a result, with much consideration, we regret to inform you that Roadrunner Intermodal Services is reducing all company driver positions effective Friday, Dec. 20, 2019.”
Tim Phillips, Universal’s executive vice president and chief operating officer of transportation, said in an email to FreightWaves that “given the dynamic nature of the transportation industry, our companies continue to make strategic business decisions – some growth-related and some efficiency-related – as part of marketplace fluctuations.”
He said that as a result, “we have also streamlined some of our operations.”
Intermodal was a bright spot in Universal’s otherwise downbeat third-quarter earnings results, increasing $39 million to $93.9 million in the second quarter, up from $54.9 million during the same period last year. The company credited its recent intermodal acquisition spree for the uptick.
Shortly before the layoffs, according to Gibson, Roadrunner asked employees to fill out new W-2 forms and paperwork listing financial beneficiaries. The forms were connected to Universal’s November acquisition of Roadrunner Intermodal.
In a separate letter to drivers also obtained by FreightWaves, Jose Lugo, general manager for Universal Intermodal Services’ Rancho Domingo, California, operation, wrote that the lease on the company’s Compton terminal expired and it had not found a “suitable terminal” where it could relocate.
Combined with a weak truckload and intermodal market, the letter stated, Universal has decided to “make the painful decision to discontinue operations in Compton.”
Some of the Universal Intermodal drivers said the layoffs were in retaliation for joining the Teamsters.
Saul Zuniga, a former employee driver at Universal Intermodal and new member of Local 848, said in a statement released by the Teamsters that, “They let us go right after we voted to form our union. Now we’re not going to have enough money for the rent, let alone Christmas presents for our children. This is incredibly sad for us.”
The Universal layoffs come amid a heated debate in the trucking industry over California’s Assembly Bill 5, which makes it illegal to misclassify California’s truck drivers as independent contractors.
Slated to take effect in January, AB5 is the target of lawsuits from the California Trucking Association and the Western States Trucking Associations. Both claim the legislation will lead to the loss of thousands of jobs in an industry that depends heavily on independent contractors, also known as owner-operators.
Community and labor groups support the bill on the grounds that it will prevent exploitation of drivers who have been misclassified as contractors, depriving them of health insurance, meal and rest breaks and other benefits that come with employee status.
Roadrunner is one of several Universal Logistics subsidiaries with a history of allegedly misclassifying truck drivers. Earlier this year, a California federal court approved a $9.25 million settlement between Roadrunner and 896 truck drivers claiming violations of state wage and hour laws due to their alleged misclassification by the company as independent contractors.
In the Teamsters’ press release, California State Sen. Maria Elena Durazo, a co-author of AB5, said “the era of misclassifying workers as independent contractors to dodge taxes and steal workers’ wages has come to a close in California,” and that “Universal’s egregious actions that also deprive workers of their right to organize will not be tolerated.”
Her office intends to open “an immediate investigation” into the layoffs, Durazo said.