Truck Law

A Transportation Law Blog from TransportationAttorneys.NET

Work Comp Premium Audits

by G. Spencer Mynko, Esq.


Unfortunately, trucking companies may go into “shock” when they receive an audit bill for a recently expired Worker’s Compensation insurance policy. Of course, this is due to an unexpectedly high increase in premium from an audit. What is particularly troubling is that the increase in premium can be so high, that the viability of the trucking company is threatened. Hence the term “shock audit”.

Understandably, these audits can result in serious distress and frustration for the owners of a trucking company. And while outrage is a common reaction to being on the receiving end of such an audit, a cool, methodical, and specific analysis of the facts, along with supporting evidence, are what you will need to successfully dispute an unfavorable audit.

Finally, I want to make you aware of a trucking company that is facing CRIMINAL LIABILITY FOR FRAUD in a work comp audit for improperly classifying drivers as ICs.


The procedures involved in disputing a work comp audit are specific, detailed and deadline driven. Here is information directly from the WCIRB’s website:

Disputing Your Insurer’s Decision

To dispute a decision made by your insurer, the dispute must be in writing and sent to your insurer’s designated office. Contact information for your insurer’s dispute process is found in a policyholder notice attached to your policy titled “Your Right to Rating and Dividend Information,” under the paragraph “Our Dispute Resolution Process.” Issues disputed with your insurer may include classification assignments or premium issues. Claims-handling issues are not addressed in this procedure and should be directed to your claims adjuster.

Disputing the WCIRB’s Decision

To dispute a decision made by the WCIRB, such as the classification of the operations assigned on a WCIRB inspection report or the calculation of your experience modification, follow the process explained in the
California Workers’ Compensation Uniform Statistical Reporting Plan – 1995, the California Workers’ Compensation Experience Rating Plan – 1995 and the Miscellaneous Regulations for the Recording and Reporting of Data – 1995 under a section titled “Inquiries, Complaints and Requests for Action, Reconsideration, and Appeals.”

Appealing to the Insurance Commissioner

If you have exhausted either your insurer’s dispute process or the WCIRB’s dispute process, and you are still not satisfied with the outcome, you have the right to appeal the issue to the Administrative Hearing Bureau at the California Department of Insurance. When responding to your dispute, your insurer or the WCIRB should provide you with contact information for filing your appeal with the Department of Insurance. The information is also found in the “Your Right to Rating and Dividend Information” policyholder notice attached to your workers’ compensation policy; Part 1, Section V of the California Workers’ Compensation Uniform Statistical Reporting Plan – 1995; and Section VIII of the California Workers’ Compensation Experience Rating Plan – 1995. The appeals process is also found in the California Code of Regulations, Title 10, Chapter 5, Subchapter 3, Article 9.7. When filing an appeal, you should be as specific as possible concerning your issue and include any supporting documentation. You should also clearly explain why you believe your insurer or the WCIRB acted (or failed to act) in error.”

If you happen to be insured by State Compensation Insurance Fund (SCIF), The dispute resolution process is very specific:

A written statement detailing the specific information claimed to be inaccurate must be submitted to the dispute department. Any claim of inaccurate audit information must be supported by a detailed explanation of what is believed to be incorrect and what the correction should be. Copies of original financial and/or other records that support the discrepancy must cover all disputed information. All information needs to be received within 10 CALENDAR DAYS, if not SCIF will consider the matter closed. (You may wish to referred to SCIF’s Premium Audit Guide which is available online.)

Obviously this may seem intimidating and unfair: try to keep these things in mind if you feel your audit is incorrect:

Do not wait until the last minute to respond to the audit; Do not procrastinate. You have to get in front of this! If your account is turned over to a collection agency or a lawsuit is filed against you, you have very limited ability to negotiate directly with the insurance company.

Be proactive at correcting your audit. mistakes occur in a high percentage of audits. Insurance carriers know that. Be proactive at correcting those errors!

Follow the rules established by your insurance carrier for filing a workers compensation audit dispute. And be sure to be aware of the various deadlines in place for filing disputes and the appeal of any unfavorable decision. Again, do not delay.

So what do auditors look for and what are they interested in?

First and foremost: Do the drivers on their own trucks? AB5 and the ABC Test be damned, I have always stated that if the driver owns his own truck, and the truck is registered in the independent contractor’s name, this will get the Company 90 yards down the field toward being successful in their argument that the drivers are properly classified as independent contractors. One of the tests of whether someone is an independent contractor is whether they have made a substantial investment into their business: because a truck clearly qualifies as a “substantial investment”, owning a truck and have it having it registered in the driver’s name goes along way toward establishing that they are independent contractors. However, and many trucking companies may find this frightening, simply because the drivers own their own trucks does not guarantee the Work Comp auditor will agree that they are independent contractors. I have actually had Work Comp auditors decide that the drivers were independent contractors despite the fact that they owned their own trucks.

Who pays for fuel, insurance, and maintenance: Work Comp auditors will almost universally be interested in who is responsible for paying for fuel, insurance, and maintenance. More often than not, independent contractors will purchase fuel and insurance through the company. The critical issue though, is whether the drivers are free to pay for their own insurance and get fuel wherever they choose. As long as the driver is not forced to purchase fuel, maintenance, and insurance through the trucking company, the scale will tilt toward independence.

Work Comp auditors will ask whether the drivers drive for other companies. Obviously, if you work with independent contractors who actually drive for other companies, you want the work comp auditor to be aware of that. If they don’t drive for other companies, then you need to make it clear to the auditor that they have the freedom to drive for any company they choose to, but simply choose to only drive for your company. Again this is a huge issue.

Work Comp auditors will always ask whether drivers are free to accept or reject loads. If the driver accepts 100% of the loads they are offered, the work comp auditor maybe skeptical of their true independence. That is why it is so important to convince the auditor that the drivers are truly free to accept or reject loads as they please. Furthermore, there can be no reprisal for rejecting a load. It also needs to be made clear to the auditor that there are no guaranteed number of loads, and just because the driver gets a load this week, doesn’t mean he will get another load next week or for that matter, ever again.

Operating authority: Work Comp auditors always ask whether drivers have their own operating authority. While it is common industry practice for independent contractor drivers to drive under the companies’ authority, and I think it’s proper to do so, they still ask whether they have their own authority. This is why I always advise clients to work with drivers who do have their own authority, even if it is simply a CA number. Obviously, it’s nice if they have their own MC or DOT number, but some authority is better than no authority.

Contracts: Work Comp auditors always ask whether the independent contractor driver has a written contract establishing that the driver is in an independent contractor relationship with the company. While having a contract in place stating that “I am an independent contractor” is necessary in my opinion, it is not sufficient, nor will it guarantee, that a driver is an independent contractor. Auditors will always look beyond the contract and scrutinize the actual conduct of the parties.

Instructions and training. Remember, an independent contractor decides how to do the job and will establish his or hour and procedures, and act without supervision. So as far as a trucking company is concerned, the trucking company should only be concerned that the driver gets the freight from point A to point B The “how” that happens is entirely up to the driver. A company should never admit to providing the driver with “training” . Again, the driver uses his own methods and receives no training from the trucking company. Nor should the driver be required to attend meetings

Does the driver have any proof or indicators that he or she is truly in business for him or herself. Things like business licenses, incorporation, business cards, website, etc. are all important indicators that the driver is genuinely in business for himself. This is another reason I encourage companies to work with drivers who are incorporated. I’ve had work comp auditors clear drivers if they are incorporated and the 1099 that the company issues is attached to an EIN number as opposed to a Social Security number. Remember, an independent contractor is supposed to be in business for him or herself, and hold him or herself out to the general public as a professional driver who is free to drive for any company he or she chooses.

Membership in Owner Operators Independent Drivers Association. Membership in OOIDA helps make a driver look as if he’s truly independent.

Occupational accident Insurance: I have always felt it is a great idea to work with contractors who carry their own occupational accident Insurance . First of all, it makes them look independent if they purchase insurance to protect themselves against injury. Secondly, it protects the company if, God forbid, something horrible happened.

Understandably, these audits can result in serious distress and frustration for the owners of a trucking company. And while outrage is a common reaction to being on the receiving end of such an audit, a cool, methodical, and specific analysis of the facts are what you will need to successfully dispute an unfavorable audit.

The starting point in your fact-finding mission will include the original policy, the audit billing statement, and the audit worksheets.

A company will need to examine how the estimated original premium was calculated. Critical to this analysis are two important considerations: 1) what classification codes were used, and 2) how much payroll was assigned to each classification. For example, this frequently becomes an issue where the auditor assigns clerical workers into the higher risk “truckmen’s” classification. Another example is where independent contractor truck drivers are considered to be company or employee truck drivers. If the auditors misunderstood the nature of work done by some employees, the auditor may have misclassified certain workers into the wrong classification.

Certainly, estimated payroll on the original policy will need to be compared with the payroll used in the audit. Furthermore, any increase in additional premium will need to correlate with an increase in payroll. If you receive a significant audit bill, but any increase in payroll does not justify such a large additional premium bill, there may be a problem. Furthermore You must also compare the experience modification factor on the policy to the experience modifier on the audit.

What About Those Criminals You Mentioned Earlier?

OK, first of let me say I’m referring to “alleged” criminals since everyone is presumed innocent until proven guilty beyond a reasonable doubt. Here’s the link to the story: California Trucking Firm Owners Charged in Alleged $450K Workers Comp Fraud

“Trucking company owners were charged this week with multiple counts of insurance fraud after allegedly misclassifying employees as independent contractors in a scheme to underreport payroll by more than $1.4 million, resulting in a $234,000 loss to their insurer and a $220,000 loss to the Employment Development Department. [The owners] were doing business as Trust Transport Inc., a long-haul trucking company based out of their residence in Sacramento and a separate trucking yard in West Sacramento. From Feb. 25, 2014 through Oct. 20, 2016, Trust Transport maintained workers’ compensation insurance coverage with State Compensation Insurance Fund and reported $105,811 in payroll.”

“SCIF conducted audits to confirm the payroll and found that several workers were issued 1099s and had been misclassified as independent contractors.

California Department of Insurance detectives served a search warrant at Trust Transport’s bank for financial records and discovered roughly $1.4 million in unreported payroll from the misclassified “independent contractors.” The investigation reportedly revealed [the owners] fraudulently misclassified these employees in order to avoid paying higher workers’ comp insurance premiums.”


Don’t be those guys.

Finally, if you are unsure as to what you need to do, contact someone who does. If you find yourself at risk for undergoing a workers compensation premium audit or you are in the midst of one or you have been assessed, call Transportation Attorneys ASAP.

California Supreme Court Rules Dynamex is Retroactive

by G. Spencer Mynko, Esq.

This is a case that should make business owners in general, and trucking company owners in particular, both one) extremely mad; two) somewhat relieved that The statute of limitations is about to completely pass on any conduct this case may affect; and three) afraid because you live in a state where this kind of stuff can happen.

And what can fairly be described as a legal kick in the groin, The California Supreme Court ruled in Vasquez v. Jan-Pro Franchising International, Inc., that it’s decision in Dynamex applies retroactively to all pending cases that pre-date the Dynamex decision.

As all of my readers know all too well, the California Supreme Court upended decades of precedent by instituting the infamous “ABC“ test to determine independence:

(A) The person is free from the control and direction of the hiring entity in connection with the performance of the work, both under the contract for the performance of the work and in fact; and

(B) The person performs work that is outside the usual course of the hiring entity’s’ business; and

(C) The person is customarily engaged in an independently established trade, occupation, or business of the same nature as that involved in the work performed.

The prior test, known as the “Borello” test, focused primarily on the right of the employer to control the activities of the worker. The use of the ABC test is far more strict in its requirements on trucking companies seeking to properly classify drivers and others as independent contractors.

The prior test, which was known as the “Borello“ test or common law test focused on the right of the hiring entity to control the activities of the worker, and also looked at the “economic realities“ of the relationship to establish whether truck drivers and others in the industry are properly classified as independent contractors. However, the Dynamex decision was a bombshell and it raised many questions, because in certain situations a person may legally be considered an independent contractor, while in other situations they would be an employee. Further adding to the unfairness, was the big question as to whether or not the Dynamex decision could be applied retroactively: meaning that conduct that was legal the day before the Dynamex decision was handed down, was now illegal, and even though you were abiding by the law before the decision came down, you were now acting illegally for conduct that occurred prior to the decision. See what I mean by legal kick in the you know whats?

Of course, and as I have written about, the legislature which was so enamored with the “ABC“ test, decided to make this into law , which we know as the even more infamous AB5, which went into effect January 1, 2020. AB5, was then modified further by AB2257 which was enacted September 4, 2020. That said, I don’t wish to rehash the sordid history of AB5.

So what did the California Supreme Court say? Well, they said that Dynamex does apply retroactively:

“In concluding that the standard set forth in Dynamex applies retroactively — that is, to all cases not yet final as of the date our decision in Dynamex became final — we rely primarily on the fact that Dynamex addressed an issue of first impression. It did not change a settled rule on which the parties below had relied. No decision of this court prior to Dynamex had determined how the “suffer or permit to work” definition in California’s wage orders should be applied in distinguishing employees from independent contractors. Particularly because we had not previously issued a definitive ruling on the issue addressed in Dynamex, we see no reason to depart from the general rule that judicial decisions are given retroactive effect.”

The Court rejected reliance on the Borello test to justify an exception to the general rule of retroactivity (despite thousands upon thousands of businesses and their lawyers relying upon it). The Court explained that Borello apllied to workers’ compensation instead of wage and hour matters (why that makes a difference I have no clue), and the ABC Test in Dynamex applies to wage and hour matters only. And here’s the kicker: because no prior decision set a test for independent contractorship under California’s wage orders prior to Dynamex, it was unreasonable for employers to think the Borello test would govern. Yeah – see why you should be angry and afraid: You could be acting legally one day, until a court changes the law, and now your previously legal behavior is illegal and may destroy your business. Are you still in California?

And while the Court tried to minimize the impact of the decision by noting that the applicable statutes of limitations are about to run because the Dynamex decision is nearly three years old, that’s a lame way of minimizing the damage caused. That’s cold comfort to clients of mine who are appealing decisions about conduct that occurred prior to Dynamex, where they reasoanbly relied on Borello, only to be told that in this fairyland state we live in, a court can punish and criminalize conduct today that was legal yesterday. And so another nail is nailed into business’ coffin.


by G. Spencer Mynko, Esq.


This is not a complete list, but rather a list of new laws that are relevant to my typical clients.


AB 685

AB 685 requires employers to notify employees of potential COVID-19 exposure upon notice that any person at the worksite has received a laboratory-confirmed COVID-19 case, medical diagnosis, or isolation order.

Per the CDPH: “Upon identifying a COVID-19 case in the workplace, you need to provide the following information:
Notice to your employees and the employer of subcontracted workers that they may have been exposed to COVID-19.
You can inform other workers of the dates that an individual with COVID-19 was at the worksite but should not share information that could identify the affected individual. You must also provide this information to the exclusive labor representative, if any.
Information about benefits & options
You must provide your employees with information about COVID-19 benefits under federal, state, or local laws. This includes workers’ compensation, company sick leave, state-mandated leave, supplemental sick leave, negotiated leave, and anti-retaliation and anti-discrimination protections.
A disinfection & safety plan
You need to inform your employees and the employer of subcontracted workers of your disinfection and safety plan for the worksite, in accordance with CDC guidelines. You must also provide this information to the exclusive labor representative, if any.

AB 685 allows Cal/OSHA to:
Issue an Order Prohibiting Use[3] to shut down an entire worksite or a specific worksite area that exposes employees to an imminent hazard related to COVID-19.
Cite or fine employers for serious violations related to COVID-19 without having to provide 15-days’ notice.
Cite or fine employers for violations of AB 685 worker notification provisions.”

SB 1159

This “codifies Governor Newsom’s Executive Order , which created a rebuttable presumption that COVID-19 and related conditions were compensable for workers not subject to the Governor’s stay-home order.

“Labor Code § 3212.86 has requirements which must be met before the rebuttable presumption applies. These are:

  1. The employee has tested positive for or was diagnosed with COVID-19 within 14 days after a day that the employee performed labor or services at the employee’s place(s) of employment at the employer’s direction.
  2. The employee’s place(s) of employment do not include the employee’s residence.
  3. The day that the employee performed labor or services is between March 19 and July 5.
  4. If the employee makes a claim for workers’ compensation benefits based upon a diagnosis of COVID-19, the diagnosis must be done by a licensed physician and surgeon holding an M.D. or D.O. degree, or a state licensed physician assistant or nurse practitioner, acting under the review or supervision of a physician and surgeon pursuant to standardized procedures or protocols within their lawfully authorized scope of practice, and that diagnosis is confirmed by testing or by a COVID-19 serologic test within 30 days of the date of the diagnosis.
  5. If an employee has paid sick leave benefits specifically available in response to COVID-19, those benefits shall be used and exhausted before any temporary disability benefits or benefits are due and payable. If an employee does not have those sick leave benefits, the employee shall be provided temporary disability benefits or Section 4850 benefits, if applicable, from the date of disability. There shall not be a waiting period for temporary disability benefits.
  6. If temporary disability (TD) is awarded, the employee must be recertified for TD by a physician every 15 days for the first 45 days following the diagnosis.
  7. The claims administrator has 30 days in which to reject or accept the claim. After that 30 days, the claim can only be contested with evidence discovered after the 30-day period.
  8. The law sunsets on January 1, 2023.” See

Leaves of Absence

SB 1383

The new law, which goes into effect on January 1, 2021, expands the California Family Rights Act (“CFRA”), affecting large and small employers. SB 1383 expands California’s Family Rights Act provisions to employers with as few as five employees. The employer is required to provide up to 12 weeks of unpaid, job-protected leave for an employee’s own serious health condition or that of a qualifying family member, for the birth or adoption of a child, or for a qualifying family member’s active duty in the U.S. Armed Services. Only employees who have worked for the employer for more than 12 months, and for more than 1,250 hours during the previous 12-month period are eligible for such leaves. Upon completion of the leave, the employee is entitled to return to the same or a comparable position.

Under current law, employers do not have to provide more than 12 weeks of leave to parents who both work for the same company in connection with the birth, adoption, or foster care placement. Employers will now have to provide
12 weeks leave to both employees in such situations.

AB 2992

AB 2992 extends job-protected leave for a victim of a crime or abuse that caused physical injury or mental injury and a threat of physical injury.

Labor Law

Minimum wage will go to $14.00 per hour for employers with 26 or more employees and $13.00 per hour for employers with 25 or fewer employees. Local ordinances (see LA and SF) may impose further increases to the minimum wage.

SB 1384

SB 1384 empowers the Labor Commissioner to legally represent wage and hour claimants forced into arbitration but cannot afford their own lawyer. That’s very generous of the state – I mean the people of California – who will be forced to pay for people’s lawyers in arbitration of labor code violations.

Employer Reporting Requirements

AB 3075

Employers Must Disclose Final Judgments for Violation of Wage Order on Statement of Information : Beginning Jan. 1, 2022, or when the California Business Connect is implemented, whichever is earlier, business entities will have to include on their Statement of Information whether “any officer or any director, or, in the case of a limited liability company, any member or any manager,” has outstanding final judgment that was issued for the violation of any wage order.

This expands liability of “successor employers”, which basically means Bad Company A owned by Bad People can’t avoid liability by closing Bad Company A and opening Bad Company B that does the same Bad Stuff that Bad Company A did. If Bad Company A defaults on a judgment, Bad Company B and its owners will be liable for that judgment. Successor employers will be liable for unpaid wages and penalties owed by the “predecessor employer” to its employees.

AB 1281

California Consumer Privacy Act’s Employer Exemption Extended. This bill extends the employer exemption from certain provisions of the California Consumer Privacy Act (CCPA) to January 2022: Employers must provide notice to applicants and employees of information collected by the company and the purposes for which said information is collected.

This is merely a sample of new laws: in the interest of brevity, I focused on those that are most relevant to my readers.

Appeals Court Rules AB-5 and “ABC” Test NOT Preempted By Federal Law

by gspencermynko


Get ready for some bad news…I mean, really bad news. The California State Court of Appeals issued a decision in People of the State of California v. Superior Court Los Angeles County ruling that California’s ABC Test is not preempted by the Federal Aviation Administration Authorization Act (FAAAA) and that motor carriers may comply with the business-to-business exemption as outlined in AB 2257. I urge my readers to review my article from September 25, 2020 article on AB 2257: Specifically my discussion of the “business to business exemption.”

What did the California Court of Appeals say (that was so bad)?

Let’s cut to the chase by looking at the “Introduction” which tells you everything you need to know about how this court feels about the use of ICs in trucking. “Does the Federal Aviation Administration Authorization Act of 1994 (FAAAA) preempt application of California’s “ABC” test, originally set forth in Dynamex Operations W. v. Superior Court (2018) 4 Cal.5th 903 (Dynamex) and eventually codified by Assembly Bill 2257 (AB 2257), to determine whether a federally licensed interstate motor carrier has correctly classified its truck drivers as independent contractors? The FAAAA preempts state laws “related to a price, route, or service of any motor carrier . . . with respect to the transportation of property.” (49 U.S.C. § 14501 (c)(1).) After surveying the FAAAA’s legislative history and relevant federal caselaw, our Supreme Court held the FAAAA does not preempt generally applicable worker-classification laws that do not prohibit the use of independent contractors.  We hold the ABC test, as codified by AB 2257, is such a law, and therefore is not preempted by the FAAAA.”

Did you catch that?  These guys basically just said the use of ICs by trucking companies is illegal because the “ABC” is “A-OK” as far as these guys are concerned. Remember how the “B-prong” prevents the use of Owner-Operators to contract with a trucking company? Here: (B)  that the worker performs work that is outside the usual course of the hiring entity’s business; and

Yeah, that’s kind of hard to do when you’re a trucker doing work for a trucking company.  But the Court of Appeals didn’t really seem to care about the plight of ICs and the trucking companies who use them. Of course, courts being courts, they need to make long winded explanations and justifications to why they are saying “f-you”, and this court took 20 pages of legalese to make you feel better about being screwed.  That may be a trifle crass – but also reflects my attitude that courtrooms are no place to expect justice or fairness, and why I advise clients to steer clear of the courthouse.  But let’s get back to this case and figure out why the court ruled as they did.  

First of all, the Court of Appeals ruled that the “ABC” test is not preempted by Federal Law (Specifically the FAAAA). 

The court stated “The FAAAA Does Not Preempt the ABC Test”:
“Defendants (i.e., trucking folk) contend prong B of the ABC test makes it impossible for a motor carrier to contract with an owner-operator as an independent contractor, and thus the ABC test is preempted by the FAAAA under the clear terms of Pac Anchor. [California] counter[s] the ABC test is not preempted because it is a generally applicable employment law that does not prohibit the use of independent contractors, and therefore does not have an impermissible effect on prices, routes, or services. We agree with [California].

Here’s some more twisted logic as to why the court is so enamored with the ABC test:

“The ABC test does not mandate the use of employees for any business or hiring entity. Instead, the ABC test is a worker-classification test that states a general and rebuttable presumption that a worker is an employee unless the hiring entity demonstrates certain conditions. That independent owner-operator truck drivers, as defendants currently use them, may be incorrectly classified, does not mean the ABC test prohibits motor carriers from using independent contractors. The ABC test, therefore, is not the type of law Congress intended to preempt.”

W…T…F?  The B prong makes it clear that trucking companies can’t use ICs, yet these judges go on to say the ABC test doesn’t prohibit motor carriers from using ICs.  Really?  I’m not sure what reality the court lives in, but it certainly bears no resemblance to the world my readers and clients live in.  Of course, the court never really addressed the absolute bar the B-prong creates to the use of ICs. I guess real world problems trucking companies face is simply beneath their concern. Do you see why I have such a cynical opinion of our justice system?

The Court Then Goes On To Tout The “Business-to-business exemption” as a panacea for all of your misclassification woes.

“Defendants (trucking folk) argue independent owner-operators can never meet several of the requirements in the business-to-business exemption, and thus, the exemption does not save the statutes codified by AB 2257 from preemption. We are unpersuaded.” Well – what a surprise – the California court ruled against the trucking industry.  Of course, the court doesn’t actually have to work in trucking and is therefore unconcerned about the realities of running a trucking company. 
Remember, a few articles ago I said essentially the same thing: The business-to-business exemption sucks for trucking companies and good luck threading that camel through the eye of a needle. Here’s a few of the B2B exemption provisions that will be damn tough for trucking companies to comply with:

(1) The business service provider is free from the control and direction of the contracting business entity – Good luck with that one: be very, very careful about the extent of your “direction and control”.

(2) The business service provider is providing services directly to the contracting business rather than to customers of the contracting business. Of course, the court dismissed this concern: 

“Defendants contend this condition is impossible for an owner-operator to meet because an owner-operator contracting with a motor carrier necessarily is providing services to the motor carrier’s customers by moving the customer’s goods at the customer’s direction. But defendants provide no support for their strained reading of this provision.”  “Strained reading”? Really? – try that when a plaintiff lawyer beats you over the head with this.

Let’s pray the Federal Courts Put an end to this nonsense and the law and reality agree that the ABC test should be preempted by Federal Law.  Remember that the federal litigation in CTA v. Becerra is still ongoing and the 9th circuit is expected to rule soon on the current injunction. Maybe one day the US Supreme Court will deal with the issue, but until then I urge trucking companies using ICs to sit down with their transportation lawyers to sort this out and discuss the B2B exemption.

Can You Avoid California Labor Laws? Application of California Labor Law to Interstate Truck Drivers

by gspencermynko

Two Companion Decisions Affect Employers with workers in or traveling through California

I regularly am asked if there is any way to get around California labor laws. As most of my readers know, California is a very employee friendly and anti-employer state. I don’t think I need to remind anybody about the heavy-handed regulation in this state against trucking companies.

Unsurprisingly, I am frequently asked if there is a way to avoid California law. People will ask if setting up a trucking company in another state, forming a corporation in another state, running a trucking company in another state, etc. will “work” and are some of the more common schemes I am asked about. Other examples include forming a limited liability company and making every driver a member of the limited liability company, forming a limited liability company in a jurisdiction that will “hide” the identity of its owners, working with drivers who “incorporate”, etc.

But the reality is that there is no magic solution to avoiding California labor laws. After all, if there was, all of my trucking company clients would be doing it. While the clearest and easiest way to avoid California labor law is to not only run your business from another state, but avoid using drivers who are California residents, The California Supreme Court recently ruled on two cases that shed light on the situation and clarify some lingering issues.

Disclaimer: The rulings from the California Supreme Court are not particularly helpful, and do not deviate substantially from how I have been advising clients all along. That said, because the injunction against AB5 is being reviewed by the Ninth Circuit Court of Appeals, and trucking companies may be forced to either comply with the “ABC” test or try to figure out a way to take advantage of the business to business exemption, these recent cases deserve mentioning since classification of drivers is not a resolved issue.

In Oman v. Delta Air Lines, Inc., and Ward v. United Airlines, Inc., the California Supreme Court has addressed applying California law to employees who occasionally work in California – like truck drivers.

My motivation and writing this article is how trucking companies will be affected by California wage and hour laws and possibly class actions. The court was asked, in the context of interstate employment, “What kinds of California connections will suffice to trigger the relevant provisions of California law?” Vaguely, the Court stated “There is no single, all-purpose answer to the question of when state law will apply to an interstate employment relationship or set of transactions.” What the court did say was: California’s wage statement law (Labor Code § 226) and timing-of-pay law (Labor Code § 204) apply to any employees who, in any particular pay period, either: 1) perform the majority of their work in California; or 2) do not perform the majority of their state, but perform some work in California and California serves as base for their work operations

The California Supreme Court discussed when and under what circumstances employees who may only occasionally work in California are entitled to the protection of California wage and hour laws. The Court held that Labor Code Sections 204 (timing of pay) and 226 (wage statement requirements) apply to employees only if California is the principal place of their work, meaning the employee either works primarily in this state during the pay period, or does not work primarily in any state but has his or her base of operations in California. More specifically, the court ruled that under California labor code section 226, the law only applies to any pay period when the employees principal place of work occurs in California. Furthermore, the court went on to hold that for interstate workers, such as truck drivers, who do not work in any single state over 50% of the time, section 226 of the labor code will only apply if the workers “base of operations” is in California.

The court held employees are entitled to California compliant Wage Statements and California wage laws: An employee is entitled to a Section 226 itemized wage statement and the protections of California Labor Code section 204, establishing certain specific deadlines for twice-monthly pay, if that employee either 1) performs the majority of his or her work during the relevant pay period within California or 2) if the employee does not perform the majority of his or her work during the relevant pay period in any particular state but the employee is based in California for work purposes.

The court went to say that the employer’s location, employee’s residence, location where the employee receives his or her pay, and the state that the employee (or employer) pays taxes to are irrelevant for this analysis.

It is also worth noting that Collective Bargaining Agreements – as with unionized employees – do provide an exemption from California Labor Code Section 226.

The Court Also Addressed California Minimum Wage Laws and “Piece Rate” Pay.

The Court addressed compliance with state minimum wage laws for employers who pay their employees on a non-hourly basis. The Court held that although employers who pay on a non-hourly basis may “average” wages across the unit of payment to determine minimum wage compliance, they may not engage in “wage borrowing,” meaning, “borrowing compensation contractually owed for one set of hours or tasks to rectify compensation below the minimum wage for a second set of hours or tasks.”

Take Home Message

The bottom line is that California’s wage statement requirements apply only when employees, in particular pay periods:

perform the majority of their work in California; or
do not perform the majority of their work in any single state, but perform some work in California and California serves as base for their work operations

If either of these two situations apply, California wage and hour laws (specifically sections 204 and 226 apply), and if neither situation applies, then the sections 204 and 226 do NOT apply.

As always, if your goal is to avoid the long arm of California law, make sure what you are doing and where you are doing it is out of reach.

California “Modifies” AB 5: AB 2257

by gspencermynko

On September 4, 2020, California Governor Newsom signed into law AB 2257, a bill intended to clear up problems with AB 5 – Hahaha – yeah, right. Well, let’s see what AB5’s progeny offers up.

Do you know how breeding plants or animals with negative or undesirable characteristics seems to increasingly amplify those unwanted traits from generation to generation? Well, with that genetic premise in mind, let’s talk about AB 2257 – AB 5’s bastard child which is an imbecile spawned from a moron.

As we know, many industries were none too happy with the enactment of AB5. However, many industries were covered under specific exemptions from the “ABC test”, and independent contractorship would remain subject to the “Borello” or common-law multi factor test. Those industries and professions that weren’t able to afford paying off the whore politicians – I mean granted an exemption by astute legislators based on sound public policy – were left out in the cold to deal with the the heavy burden of the ABC test.

Of course, this created some hard feelings and raw emotions in those folks who didn’t get special treatment in Sacramento’s den of iniquity. As such, a number of groups pounded on the doors of the state brothel…I mean Capitol… until they were able to consort with lawmakers. As a result of this unholy union, AB 2257 was born with more special interest exemptions. Unfortunately Trucking, who could probably not afford the price of admission without offending the regular johns (I’m looking at you teamsters!), was still left out in the cold without an exemption.

Of course, the industry is still hoping that the CTA will ultimately prevail in their Federal preemption based lawsuit, without having to pay you know who for you know what. Well, here’s to righteousness. FYI – the injunction on AB5 is now in the hands of the Ninth Circuit – so don’t hold your breath for an industry favorable ruling. Excuse me, because now I am really digressing. The reason for this article is the modified “business to business exemption” in AB 2257, which may actually provide a sliver of light for trucking (big emphasis on “may”). But it does give us something to talk about besides prostitution.

AB 2257 broadens and clarifies the business-to-business (B2B) exception under AB 5:

AB 2257 expands the “business-to-business exemption” to apply to sole proprietors. Previously, under AB 5, this exemption was only applicable to business entities that were incorporated. AB 2257 broadens the business-to-business exemption. Also AB 2257 no longer requires that a business service provider “actually contracts” with other businesses “without restriction form the hiring entity.” Instead, AB 2257 merely requires that the business service provider can contract with other entities and maintain a clientele. This amendment might allow greater flexibility for ICs that have not actually contracted with other motor carriers: so long as they have the opportunity to do so – as with so many Owner-Operators who work exclusively for one trucking company. But this is uncertain because there is contradictory language in AB 2257: “the business service provider regularly contracts with other businesses.” This is confusing because on one hand they say “yes”, you are allowed to only contract with one trucking company, yet on the other hand, they say “no”. Do you see why I despise these people? The new B2B exemption also relaxes restrictions to allow business service providers to provide services directly to the customers of a contracting business.

How Might The B2B Exemption Work For IC/OO Truckers?

First, we have to look at the language of the New B2B Exemption:

  1. Section 2775 and the holding in Dynamex do not apply to a bona fide business-to-business contracting relationship, as defined below, under the following conditions:

(a) If an individual acting as a sole proprietor, or a business entity formed as a partnership, limited liability company, limited liability partnership, or corporation (“business service provider”) contracts to provide services to another such business or to a public agency or quasi-public corporation (“contracting business”), the determination of employee or independent contractor status of the business services provider shall be governed by Borello, if the contracting business demonstrates that all of the following criteria are satisfied:

(1) The business service provider is free from the control and direction of the contracting business entity in connection with the performance of the work, both under the contract for the performance of the work and in fact.

(2) The business service provider is providing services directly to the contracting business rather than to customers of the contracting business. This subparagraph does not apply if the business service provider’s employees are solely performing the services under the contract
under the name of the business service provider and the business service provider regularly contracts with other businesses.

(3) The contract with the business service provider is in writing and specifies the payment amount, including any applicable rate of pay, for services to be performed, as well as the due date of payment for such services.

(4) If the work is performed in a jurisdiction that requires the business service provider to have a business license or business tax registration, the business service provider has the required business license or business tax registration.

(5) The business service provider maintains a business location, which may include the business service provider’s residence, that is separate from the business or work location of the contracting business.

(6) The business service provider is customarily engaged in an independently established business of the same nature as that involved in the work performed.

(7) The business service provider can contract with other businesses to provide the same or similar services and maintain a clientele without restrictions from the hiring entity.

(8) The business service provider advertises and holds itself out to the public as available to provide the same or similar services.

(9) Consistent with the nature of the work, the business service provider provides its own tools, vehicles, and equipment to perform the services, not including any proprietary materials that may be necessary to perform the services under the contract.

(10) The business service provider can negotiate its own rates.

(11) Consistent with the nature of the work, the business service provider can set its own hours and location of work.

Here are my thoughts on certain parts of the revised B2B Exemption.

My Comments On The “Red” Highlights

1) have a written contract

2) have a written contract and work with ICs who work with other trucking companies.

3) have a written contract that specifies reimbursement

4) a California MCP number should satisfy this requirement. Work with IC’s who have their own MCP.

7) The IC must be free to contract with other trucking companies – put that in the written contract.

8) A Facebook page, website, or perhaps a safer snapshot would satisfy the advertising requirement.

9) Use ICs who own their own stuff.

Most of these are pretty doable, except for criteria to that requires the IC to “regularly contract with other businesses” (section 2). What if the IC only wants to work with your company? That could make this new B2B exception very tough to satisfy.

Obviously, this is not great and let’s hope the CTA is successful in their lawsuit: AB 2257 is one bastard you don’t want to deal with.

Recent Independent Contractor Misclassification Cases in CA – Drivers Putting The Screws To California Trucking And Logistics Companies

by gspencermynko

There have been some major cases both in California and nationwide which center on Independent Contractor misclassification and compliance. Some of these cases are not so surprising, yet others surprise me because some of the trucking companies had good facts on their side, yet decided to settle major class action cases anyways.

Let’s take a look at these cases so you can make informed decisions about your business practices. Unfortunately, plaintiff’s wage and hour lawyers are happy to file frivolous and extortionate lawsuits with no fear of reprisals because they have the backing of the anti-employer politicians who run this state. So even if you are doing everything right, you are still at risk of being sued by unscrupulous lawyers looking for a quick settlement. While this is disheartening and frustrating, good business practices can make the difference between settling a lawsuit for nuisance value versus spending a fortune defending against wage and hour claims.

JB Hunt settles independent contractor misclassification lawsuit for $6.5 million

Trucking giant JB Hunt transport Inc. settled a class action lawsuit involving 312 truck drivers for $6.5 million. According to court filings in the U.S. Federal District Court for the Central District of California, attorneys for named plaintiff’s, Duy Nam Ly and Kiet Nguyen, asked the court for preliminary approval of the proposed settlement for the entire class of 312 truckers. The truck drivers accused JB Hunt of misclassifying them as independent contractors, and therefore accused them of violating wage and hour laws, meal and rest break violations, unfair competition and a dreaded private attorney general act (PAGA) claim. The truck drivers accused JB Hunt of misclassifying drivers who signed their “intermodal independent contractor operating agreement” as independent contractors, and not employees.

The lawsuit alleged nine counts against J.B. Hunt, including:
Failure to pay minimum wage.
Failure to reimburse for necessary business expenses.
Improper deductions from wages.
Failure to provide meal and rest breaks.
Failure to provide accurate, itemized wage statements.
Unfair competition.
Unjust enrichment.

According to preliminary settlement documents, total damages were estimated to be more than $26.8 million, including nearly $9 million in lost wages and nearly $18 million in expenses. The vast majority of business expenses came from fuel:

Fuel purchase: $15 million.
On-board computer use: $212,000.
Bobtail insurance: $161,091.
Occupational accidental insurance: $959,953.
Physical damage insurance: $725,134.
Tire maintenance: $436,886.
Tractor maintenance: $286,174.
Road service administration charge: $12,880.

The lawsuit is a classic case of misclassifying truckers as independent contractors. J.B. Hunt intermodal drivers in California paid for a variety of expenses they argue should have been paid for by the company if properly classified as employees. Of course, the plaintiff’s were relying on the “ABC Test” to determine worker status:

A. Worker is free from the control and direction of the hirer in connection with the performance of the work, both under the contract for the performance of such work and in fact.

B. He or she performs work that is outside the usual course of the hiring entity’s business.

C. Worker customarily engages in an independently established trade, occupation, or business of the same nature as the work performed for the hiring entity.

The drivers alleged that J.B. Hunt has significant control over the truckers’ schedules, routes, deliveries and the manner and means of how the delivery work is performed. Also, the truckers’ attorneys claimed that truck driving “is not an independently established trade, such as a plumber or electrician.” Rather, truckers are integral and central to the operation of J.B. Hunt’s core business. Lastly, the lawsuit claimed that the company prevents drivers from using their trucks for any purposes other than J.B. Hunt’s business.

The truckers accused JB Hunt of employing this scheme to “increase profits by unlawfully evading their obligations to provide benefits, pay relevant taxes, and absorb various operating costs.” The truckers went on to claim that JB Hunt “completely controls the overall operation of its business, setting delivery times, unilaterally setting the rates paid to truckers, trading independent drivers exactly like employees, retaining the right to terminate independent drivers, and requiring drivers to follow their rules and policies.

Settlement documents claim J.B. Hunt’s total exposure before calculating the risks of a class action was close to nearly $31 million. Eventually, the agreed-upon settlement became $6.5 million, which probably factored in the enforceability of the “ABC Test” against trucking companies.

Each trucker is expected to get anywhere between $20,000-$46,000 depending on how long they worked for the company.  Ly v. J.B. Hunt Transport Inc., No. 2:19-cv-01334 (C. D. Cal. July 6, 2020)

Ryder settles a driver independent contractor misclassification case for $5 million.

Ryder System, Inc. which is part of MXD Group, a.k.a. Ryder Last Mile, has settled an independent contractor misclassification class action case for $5 million. The class included over 900 delivery drivers and their helpers who alleged that Ryder violated wage and hour laws under the California labor code and wage orders, in addition to alleging unfair competition under PAGA.  The workers’ complaint alleged that MXD Group and Ryder denied them employment rights and benefits by misclassifying them as independent contractors rather than employees.

In this case, the drivers performed local transport and delivery of furniture, appliances, and other retail items for Ryder customers. The plaintiffs also alleged that Ryder retained the right to exercise control over the way the drivers performed their jobs, and retained the right to control their schedules, routes, customers, equipment, appearance, insurance, and helpers. The plaintiffs also alleged that Ryder required the drivers to wear uniforms, attend safety meetings, tracked their movements throughout the day, and paid them on a “take it or leave it” basis.

The class action involved more than 300 “Motor Carriers” (who contracted directly with Ryder as individuals or through a formal business entity) and more than 600 “non-carriers” (individuals hired by the motor carriers to help operate their commercial motor vehicles and perform delivery services for Ryder). (Kimbo v. MXD Group Inc., et al, No. 2:19-cv-00166 (E.D. Calif. Aug. 3, 2020)).

New Prime Inc. settles IC misclassification for $28 Million.

I know many of my readers will remember this case, because this matter went all the way to the United States Supreme Court which ultimately eroded the ability of trucking companies to force independent contractors into arbitration pursuant to the Federal Arbitration Act (FAA). You may also recall that this case inspired me to advise my clients to review their arbitration agreements and consider requiring independent contractors to arbitrate under the California Arbitration Act, which does not have a exclusion for transportation workers engaged in interstate commerce like the FAA.
Obviously, the huge setback for New Prime at the United States Supreme Court paved the way for the plaintiffs to pressure them into a $28 million settlement, of which 33% will be paid to the plaintiffs’ lawyers. (Oliveira v. New Prime, Inc., No. 1:15-cv-10603 (D. Mass. July 20, 2020).

Are your relying on ICs?

If the answer to that question is “yes”, then you should sit down with an experienced Transportation Attorney to review your business practices.

Contact for more information on how to deal with legal matters confronting You and Your Company!

NJ Supreme Court Rules Transportation Arbitration Agreements Enforceable… …And Why California Trucking Companies Should Care

by gspencermynko

On July 14, 2020, the New Jersey Supreme Court ruled that state law requires the enforceability of arbitration agreements with “Transportation Workers”, despite the recent 2019 ruling of the United States Supreme Court in New Prime v. Oliveira. The case from New Jersey is “Arafa v. Health Express Corp.” and this is good news for Trucking Co.’s; especially those who rely on owner operators to help transport their freight. I assure you lawyers from across the country who advise trucking companies will be looking at this case carefully and advising their clients accordingly.

Some of my readers may be thinking: “I’m a California trucking company relying on and working with employees and independent contractors who are California residents. Why should I care about what happens in New Jersey?”

Well, thanks for asking and let me tell you why. But before I go into that, let’s do a quick review of the New Prime case because it is worth discussing again.

In New Prime v. Oliveira, the U.S. Supreme Court ruled that a Trucking Company’s Arbitration Agreement is unenforceable against independent contractors under the Federal Arbitration Act (FAA).

In New Prime, the United States Supreme Court ruled that a trucking company cannot compel arbitration in a wage dispute brought by an independent contractor truck driver. Generally speaking, employers can insist upon arbitration agreements in contracts with subcontractors. However, The US Supreme Court decided that an exception to the Federal Arbitration Act (FAA) applies to independent contractor truck drivers.
In this particular case, the truck driver brought a class action lawsuit against New Prime Trucking company, asserting that independent contractor drivers were misclassified and therefore were entitled to benefits due an employee driver. Despite the fact that the driver had signed an arbitration agreement with the trucking company, he claimed that the FAA’s exception applied to independent contractors as well as employees.

The FAA was enacted in 1925 to provide arbitration as an alternative to litigation. For almost a century, trucking companies likely viewed an arbitration agreement with a contractor to not be a “contract of employment”. However, the United States Supreme Court turned that interpretation on its head by stating that “contracts for employment” included all agreements to perform work regardless of whether the work is being done by a properly classified independent contractor.

Two Potential Loopholes in New Prime

Reading between the lines, Arbitration agreements may still be an option for contracts with carriers that are not a “one-man/one-truck” sole-proprietorship, but rather an incorporated business. During the oral argument, several justices probed whether an owner-operator who did not personally perform services or who operated multiple trucks would be subject to the exemption. The court did not address these issues in its opinion, arguably leaving them open for future litigation.

Secondly, and in contrast to the FAA, state arbitration laws generally do not exempt transportation workers involved in interstate commerce from arbitration. Therefore, if a company seeks to compel arbitration under state arbitration law, it is likely that the arbitration clause will be enforceable. And that is exactly what the New Jersey Supreme Court held.

New Jersey Supreme Court rules in favor of the trucking company on Arbitration

In Arafa, The New Jersey Court ruled that the arbitration agreement between the transportation worker and the trucking company is still enforceable under state law and despite the FAA exemption. The NJ Supreme Court applied the New Jersey Arbitration Act and stated that it does not contain an exemption for transportation workers as the federal statute does. Therefore, the NJ Supreme Court ruled that the New Jersey arbitration act would apply to the arbitration agreement unless preempted by the FAA.

The New Jersey Court quoted the US Supreme Court stating that “the FAA contains no express preemptive provision, nor does it reflect a congressional intent to occupy the entire field of arbitration.” The court went on to say that the New Jersey arbitration act does not discriminate against arbitration and therefore is consistent with the FAA. The take-home message is that the New Jersey Supreme Court ruled that arbitration agreements are enforceable in transportation contracts under New Jersey law, even if those agreements are exempt under the FAA.

So What About California?

California has its own arbitration statute, the California Arbitration Act, which does not contain a similar exemption for workers engaged in interstate
commerce – just like New Jersey’s Arbitration Act.

Indeed, the California arbitration act is very similar to the New Jersey arbitration act. That’s why I am taking the time to discuss this and bring it to your attention. So, for transportation employers in California, arbitration provisions that would not be enforceable under the FAA, due to the exemption, would still be enforceable under California’s arbitration act. Unfortunately, I cannot guarantee that the California Supreme Court would follow the reasoning of the New Jersey Supreme Court in Arafa. However, and interestingly enough, California law and New Jersey law are very similar, and both states are very pro-employee, anti-business, anti-employer, and, dare I say, liberal. Yet like New Jersey, I am not aware of any exemption under California law that would prevent a California trucking company requiring arbitration with an independent contractor. Finally, The Arafa case takes this discussion out of the theoretical realm and applies it to real life, and the reasoning in New Jersey should apply in California.

Time To Review Your Arbitration Agreements

In light of this decision, it is important to sit down with a transportation attorney and decide whether you need to revise your arbitration agreements. Furthermore, it’s time to scour those arbitration agreements and make sure that any references to the “FAA” are removed, and the arbitration agreement will be conducted according to the “CAA”.

Hair Testing For Drugs In Truck Drivers

by gspencermynko

Hair testing for drugs is definitely the wave of the future for Trucking Co.’s in general and the industry as a whole. A new research study summarized its findings as such:

“Virtually everything we own was transported by truck at some point. Around 3.5 million truck drivers haul almost 71% of U.S. freight. To ensure the safety of our roadways, the U.S. government requires all drivers to pass urinalysis drug screens. However, urinalysis drug screens are easily thwarted and some trucking companies use hair drug screens, a more stringent test. This research examines trucking industry data and finds about 300,000 truck drivers would be removed from their positions if forced to pass a hair drug test. Hair testing opponents argue that the test is biased against ethnic minority groups. Comparing urine and hair pass/fail rates for various ethnic groups, our results indicate ethnic groups are significantly different irrespective of testing procedure. Factors other than testing method seem to underlie ethnic group pass/fail rate differences.”

From “Drug Testing in the U.S. Trucking Industry: Hair vs. Urine Samples and the Implications for Policy and the Industry”. See the full study here. Note that the study was funded by “The Alliance for Driver Safety and Security”, which probably tells you how they feel about stricter, and waaaay more expensive testing. (Hair tests for drugs can run $500 a pop and that doesn’t include collection fees).

Hair Follicle Testing Basics

A hair follicle drug test can determine patterns of illicit drug use or prescription medication misuse over a certain period – this is typically 3 – 6 months for hair samples that come from a person’s head. Testers can use hair follicle tests to check for a specific drug, or they can test a single hair sample for several different drugs or drug classes.

A hair follicle test can detect everything on this list at one time:

amphetamines, including methamphetamine, MDMA (ecstasy), and MDEA (eve)
opiates, such as heroin, codeine, and morphine
phencyclidine (PCP)
Benzodiazepines (eg. Valium, Xanax)
Zolpidem (Ambien)
Buprenorphine (Suboxone)
Tramadol (Ultram)
Meperidine (Demerol)
Oxycodone (Oxycontin)
Propoxyphene (Darvocet)


Hair follicle drug tests can determine whether a person has been using certain substances within the past 3 – 6 months. However, these tests cannot pinpoint the exact date of drug use. Although hair samples undergo a two-step testing process, they are not 100 percent accurate. Factors that can affect the concentration of drug metabolites present in a hair sample include:

the structure of drug compounds
the quantity of drugs a person has consumed
how much a person sweats
the amount of melanin (dark hair pigment) in a person’s hair – certain drugs                      bind more readily to melanin
bleaching or coloring the hair

According to an article by Heavy Duty Trucking, “Because of problems with drivers being able to cheat urine testing, some motor carriers, including Schneider, Knight-Swift Transportation, J.B. Hunt Transport, Werner Enterprises and Maverick, use more stringent hair drug tests…..Using 151,662 paired pre-employment urine and hair drug test results from 15 different trucking companies, their results indicated that 949 (0.6%) applicants failed the urine test while 12,824 (8.5%) failed or refused the hair test.” And I can only imagine why someone would refuse a pre-employment hair test. Hmmmm.

Hair Testing and The Clearinghouse

The HDT Article also brought up the reporting of failed hair tests to the Clearinghouse: “the Trucking Alliance urged that the agency accept a truck driver’s previously failed hair test for drug use, to the newly established Drug and Alcohol Clearinghouse. Current FMCSA policy states that if an employer becomes aware of a commercial motor vehicle driver’s drug or alcohol abuse, other than the DOT urinalysis test, this constitutes an employer’s ‘actual knowledge.’ This knowledge should be reported to FMCSA, specifically, to the clearinghouse…” I think they are right – see below.

Here’s what the USDOT says:

Which violations are employers responsible for reporting? Both employers and medical review officers (MROs) are required to report drug and alcohol program violations in the Clearinghouse per § 382.705. This includes “Actual knowledge of a drug or alcohol violation, as defined in 49 CFR § 382.107.” Therefore, if a driver turns up positive for something on the naughty list, the Employer would have to report it to the Clearinghouse, unless the driver had a valid medical reason for having that particular drug in his or her system.

Are you texting your drivers? You could be liable under the Telephone Consumer Protection Act 47 (U.S.C. section 227)

by gspencermynko

Obviously, texting has become a major method that Trucking, Transportation, and Logistics companies utilize to communicate with employees, drivers, and Business partners such as shippers, brokers, and others in the logistics chain. Of course, the COVID-19 pandemic has increased texting among all of the players in the Transportation world.

Well, before you say “So what, dummy?”, you need to be aware that there is a complicated Federal regulatory law, the “Telephone Consumer Protection Act“(“TCPA”), that governs such communications and puts employers at risk of substantial penalties for improper texting. Do I have your attention now? Good – and you’ll be happy to know that the solution for compliance is simple.

First of all, there are complicated ways of complying with the TCPA: Trucking companies can contract with a third-party to send text messages, text messages can be sent via mobile applications, and by way of a campaign, etc. But these methods, as stated above, are complicated. The simple way to deal with this is simply getting consent from the recipient. That’s right: the TCPA exempts a text message made with consent. Affirmative consent, preferably in writing, by the party receiving the text message should prevent any liability based on allegations of unwanted text messages. While this may seem silly, I see plaintiff’s lawyers salivating at the thought of holding an employer liable for every unconsented to text message. Can you imagine the class action that something like this could generate? Let’s make sure you take the steps necessary so you never have to experience that.

How do you get consent to text your drivers, contractors, employees, etc.? Well, as I say to most of my clients, “get it in writing“. And that means, making sure you have clauses in your contracts or your employee handbooks where it’s clear that employees, independent contractors, customers, business partners, etc. consent to being texted. And don’t blow this off: a plaintiff could charge you with a number of TCPA violations in a lawsuit and you would have to mount an expensive defense.