ILWU, Dockworkers in Oregon Sued for Roles in Time Card Scam

There are few workplaces in this country that can match the shipping terminal when it comes to wage and hour fraud – especially if the dockworkers are unionized. Back in December, Columbia Export Terminal in Portland, Oregon filed a lawsuit in U.S. District Court for the District of Oregon against the International Longshore and Warehouse Union and more than 150 local members, accusing them of participating in a conspiracy to inflate their clock time in a variety of ways. The schemes allegedly cost the terminal over $5 million. The union, the suit reads, “organized and orchestrated the scheme to submit falsified time sheets.” A court spokesperson told National Legal and Policy Center yesterday afternoon that the case remains active, though a pretrial hearing has yet to be scheduled.

The longshore industry long has been plagued by union-abetted time sheet fraud. About a dozen years ago, Union Corruption Update extensively covered an investigation by the Massachusetts attorney general’s office into payroll, benefit and unemployment fraud at the Conley Terminal in South Boston, long controlled by several tight family clans. The probe produced a combined 118 criminal indictments against 20 defendants; 19 of the defendants belonged to the International Longshoremen’s Association (ILA) and the other defendant was an assistant manager for the Massachusetts Port Authority (aka “Massport”), owner-operator of the terminals. The suit, eventually joined by federal and state agencies, resulted in convictions of all accused. Arguably the most outlandish of the schemes involved union members putting the names of their young children on dockworker time sheets so these kids could claim union seniority when they reached adulthood.

Apparently, there has been an even wider scam on the docks in Portland, courtesy of the San Francisco-based International Longshore and Warehouse Union (ILWU), which represents West Coast dockworkers and auxiliary employees. On December 17, the Columbia Export Terminal filed a federal racketeering suit against the ILWU and dozens of union members at Port of Portland’s Terminal 5 for organizing and/or participating in an overbilling scheme that cost the employer millions of dollars. According to the complaint, the defendants for more than four years falsified information on their time sheets to inflate their wages and benefits. Pat McCormick, a spokesman for Columbia Export Terminal, explains the lawsuit this way: “The lawsuit speaks for itself, alleging persistent, pervasive and rampant time card fraud involving at least 150 individuals who sought pay and benefits they did not earn for work they did not perform.”

The scheme was meticulously organized. “Defendants’ overbilling scheme involved a high level of coordination in terms of who would show up for work and when they would show up for work, who would not show up for work and when they would not show up for work, and what false time would nevertheless be included on time sheets,” read the lawsuit. “This scheme was participated in by each Defendant routinely over a period of years in a highly systematic and coordinated fashion.” Every one of the 152 persons named in the suit is a member of International Longshore and Warehouse Union Local 8 or Local 92. The total loss is listed at $5,311,627, but the employer-plaintiff is seeking $15,934,881, or treble damages, from the ILWU and its accused local members.

According to the suit, some of the union workers would submit would submit time sheets on behalf of other workers who didn’t show up and often weren’t even employed at Terminal 5. Others split their shifts, with one person working half a shift and another working the other half, and with each submitting time sheets claiming a full shift of work. In other instances, certain workers, rather than show up for work, had co-workers submit time sheets on their behalf indicating a full shift. Columbia Export Terminal, meanwhile, dutifully submitted the falsified time sheets to the Pacific Maritime Association in California for payment. The association then routed the payments to workers’ individual accounts and charged the terminal. The union benefited from these activities by deducting extra dues from paychecks.

The ILWU believes the suit is baseless and possessed of ulterior motive. Craig Merrilees, communications director for the union, said that it “borders on the bizarre” for a corporation to file a federal lawsuit “when they haven’t even filed a grievance or raised the slightest concern during ongoing contract negotiations about these alleged payroll or contract infractions.” He also questioned the motives behind the suit. “It also seems suspicious that Columbia Grain, owned by Japan’s largest grain corporation, is filing a lawsuit the day before negotiations are scheduled to resume with workers,” Merrilees wrote in an email. “That kind of timing naturally raises questions about the corporation’s true motives, and whether they filed this lawsuit as some sort of gimmick or negotiations tactic.”

All of this sounds like a red herring. First, the lawsuit is entirely unrelated to grievance procedures or contract negotiations, something that Columbia Export Terminal’s Pat McCormick emphasizes. Second, there is no reason why it should be linked to these things. These allegations are about a blatant disregard for federal wage and hour laws. Though this is a civil suit, if justice prevails, an additional federal criminal suit would be forthcoming. Third and finally, the accusations contain far too much detail to have been made up. And it is a work in progress. The lawsuit states: “The defendants’ coordinated and systematic practice of submitting inflated time sheets over a period of more than four years is their regular way of conducting the business of Local 8 and Local 92, and is ongoing and continuing.” It looks like this union is due for some reforms.