Truck Law

A Transportation Law Blog from TransportationAttorneys.NET

Month: April, 2020

UPDATE: PANDEMIC UNEMPLOYMENT ASSISTANCE (PUA) FOR OWNER-OPS

by gspencermynko

EDD Will Accept PUA Application Starting April 28, 2020.

“This is a newly available emergency unemployment assistance program under the federal CARES Act.  PUA provides assistance for unemployed or partially unemployed individuals who are not eligible for regular unemployment insurance and who are unable or unavailable to work due to COVID-19 related circumstances.

The Employment Development Department (EDD) will be accepting on-line applications for this program beginning on Tuesday, April 28.  Check back on this page for the latest updates.”

For More Information Go To These Web Pages:

Pandemic Unemployment Assistance (PUA) Program

https://www.edd.ca.gov/about_edd/coronavirus-2019/pandemic-unemployment-assistance.htm

Good Luck from TransportationAttorneys.net.

 

 

The Prospect Of Owner-Operators Filing For Unemployment Benefits Is Creating Fear Of Misclassification Audits and Allegations. But should you be worried or are these fears the product of paranoia?

by gspencermynko

Rumor Has It Trucking Companies Will Be At Increased Risk For Misclassification Allegations If Their Owner-Operators Apply For Unemployment Benefits.

First A Quick Review:

In my last article, I discussed how the CARES Act provides expanded unemployment assistance to individuals not traditionally eligible for unemployment insurance benefits: specifically independent contractors, including “Owner-Operators”. Under this new program, ICs could receive over $600 a week from the federal Pandemic Unemployment Assistance (PUA) program. In addition to the $600 a week offered through the end of July, self-employed individuals and independent contractors would also receive from the federal government 50% of what their state offers as unemployment pay. In an unprecedented change, independent contractors and those self-employed will be able to draw unemployment pay should they lose work because of the COVID-19 Corona-virus outbreak. Whether you are completely out of work or have experienced a substantial decline in your business, you are still eligible for PUA Program benefits. While these are Federal programs, they will be administered by State Unemployment agencies, which in California, means the Employment Development Department (EDD).
As I also discussed in my last article, nearly 50% of independent truck drivers have experienced a substantial decrease of work as a result of the COVID-19 pandemic. As a result, many of these owner operators are filing unemployment claims with the California EDD. That is to be expected, considering all of the politicians who are trumpeting about expanded Unemployment benefits for independent contractors. At least that is the theory: The reality is the EDD is woefully unprepared to administer this program and start handing out benefits under the PUA program to ICs. Indeed, the EDD has yet to update their Application for unemployment benefits to include self-employed individuals. (I will circle back and discuss this problem in a minute and what EDD is saying). As a result, independent contractors/owner operators are filing for unemployment benefits as traditional employees (and not ICs). Of course, that ain’t going to fly because ICs generally do not pay unemployment insurance premiums, but it can “red-flag” the employer for further scrutiny.

The New Old Problem

Which leads us to the “new problem” of independent contractors applying for unemployment benefits with EDD. But, this “new problem” is really an “old problem”: Will an application for unemployment benefits by an IC result in an EDD audit for misclassification of an employee as an independent contractor?

The answer to that is a resounding “maybe”. Lord knows I’ve had many a trucking company executive lament the fallout of an IC applying for Unemployment. Considering that unemployment benefit applications to EDD have been skyrocketing, and they are completely overwhelmed with the flood of applications, the risk of an audit is certainly no worse than it has been all along; and for that matter, it may actually be less since they are stretched a bit thin over at EDD these days. Admittedly, that is speculation on my part. So let’s focus on what Trucking Co.’s need to do in light of ICs applying for unemployment benefits (whether as regular employees or as self-employed workers).

The Solution For The New Old Problem

Desperate ICs are going to apply for these benefits and trucking companies can’t really do much about that. You may be able to advise your ICs to hold-off on filing for benefits until EDD updates their application for PUA benefits. But I advise against placing your fate into the hands of people who are getting conflicting information (eg.: Some people are advising ICs to go ahead and apply for unemployment as a regular employee, while others say hold off). Notably, EDD has explicitly encouraged independent contractors in both its public statements and website to file a claim for unemployment if they believe they are misclassified:

“If you are unsure if you are an independent contractor or an employee who could be eligible for benefits, then you are still encouraged to apply for Unemployment Insurance as instructed in our FAQs under the Unemployment Insurance Benefits section.”

Therefore, the better strategy is to be well prepared if EDD decides to knock on your door and start asking pesky questions.

Answer The Door

First of all, if they knock, you have to answer the door: You are going to have to respond. Ignoring contact from EDD usually ends badly – especially for you – not so much EDD. Most often, EDD will send You a “Pre-audit questionnaire”: This will likely be your initial notice that an audit is coming. While I have had some clients receive pre-audit questionnaires that never turned into actual audits, that tends to be unusual.

Clean Your House Before Your “Guests” Arrive

However, Trucking companies do not want to wait for a notice from EDD before getting prepared for a worker classification audit. Indeed, you should act today as if EDD is going to knock on your tomorrow. By and large, EDD audits center around the proper classification of independent contractors. In an audit situation, the employer has the burden of proving that their independent contractors are properly classified. (In California, the burden of proof is always on the employer to make the case that independent contractors are properly classified. And yes, you are presumed guilty until proven innocent). Therefore, you always want to be prepared to defend yourself and be ready with solid and substantial evidence that your independent contractors are properly classified. That is nothing new – but the tsunami of unemployment applications by ICs makes it clear that now is the time to get prepared.

Help Me, Mr. Wizard!

When I am hired by a Trucking company to prove their Owner-Ops are properly classified as ICs, my job is to marshal the evidence and apply that evidence to the rule of law to support the finding that the ICs are properly classified. So where do we start? Actually at the end! The first thing I do is let everybody know that the O-Os are properly classified as ICs! Unfortunately, it generally doesn’t end there and I have more persuasion to do. The next thing to do is state what the rule of law is.

Remember our old friend, Borello?

Despite the passage of AB-5 and codification of the “ABC” Test, a friendly federal judge specifically told EDD they cannot apply and use AB-5 and the “ABC” Test against trucking companies. Here is what we need to know:

“Whether certain laws and regulations in the California Labor Code apply to truck drivers, generally, depends on their status as employees or independent contractors. S.G. Borello & Sons, Inc. v. Dep’t of Indus. Relations, 48 Cal. 3d 341, 350 (1989). For nearly three decades, California courts have used a test, based on the Borello decision, to determine whether workers are correctly classified as employees or independent contractors. The Borello standard considers the “right to control work,” as well as many other factors, including (a) whether the worker is engaged in a distinct occupation or business, (b) the amount of supervision required, (c) the skill required, (d) whether the worker supplies the tools required, (e) the length of time for which services are to be performed, (f) the method of payment, (g) whether the work is part of the regular business of the principal, and (h) whether the parties believe they are creating an employer-employee relationship”

The ruling makes it clear that AB-5’s ABC test is preempted by the FAAAA, and restores the multi-factor Borello test as the standard to determine whether a truck driver is an independent contractor or employee. The Court ruled that the FAAAA preempted Prong B of AB-5’s ABC test because it effectively prohibits motor carriers from utilizing independent owner-operator truck drivers. Hooray again.

Now We Apply The Law To Your Facts

NOW is the time to collect all of the necessary information and documentation for every IC that currently drives for you and has driven for you in the last 3 years (EDD can go back 3 years in a misclassification audit). This starts with your Independent Contractor Operating Agreement. Then we gather numerous documents (some obvious – some not so much), and others that need to be created, that will tip the scales in your favor. Then I make the case that the facts satisfy the Borello standard. Notably, EDD has a Audit Guideline that essentially follows the Borello standard that auditors use and that I rely on to help my clients.

Back To The Conclusion

Then, I return to my conclusion that the IC’s are indeed properly classified. But let me be clear: THESE DOCUMENTS NEED TO BE COLLECTED AND FILED FOR EVERY IC YOU HAVE EVER WORKED WITH GOING BACK 3 YEARS. Not all trucking companies are created equally which is why it is critical to sit down with an experienced Transportation Attorney ASAP and get your game plan together. That way, if EDD knocks on your door, you can answer with a smile on your face.

An Apology To ICs

My previous article touted the new CARES program and PUA program to help Owner-Ops get desperately needed benefits. In theory, that sounded great: The reality has been nothing but frustrating. EDD is simply unable to currently help Owner-Ops out: Go to EDD’s website on the PUA program which provides their excuses for not being able to implement it here.

“You see, in this world there’s two kinds of people, my friend: Those with loaded guns and those who dig. You dig.”

What does that have to do with this article? Not a damn thing. But I watched “The Good, The Bad, and The Ugly” over the weekend and that is my favorite Clint Eastwood quote in the movie. And nowadays, I can think of worse ways to kill 3 hours.

Federal Relief Package Offers Unemployment For Owner-Operators

by gspencermynko

Out-of-work owner-operators are eligible for benefits!

“Unemployment For Independent Contractors”. Yep, these are strange times indeed. So, you ask, how can my Owner-Operator friends collect Federal unemployment benefits.

Allow Me To Introduce You To The Federal CARES Act – Unemployment Benefits for Independent Contractors.

The CARES program provides unemployment assistance provides expanded unemployment assistance to individuals not eligible for unemployment insurance benefits: specifically independent contractors, including the ubiquitous “Owner-Operator”. In an unprecedented change, independent contractors and those self-employed will be able to draw unemployment pay should they lose work as social distancing and shelter-at-home requirements related to the COVID-19 coronavirus outbreak erode the U.S. economy. Under the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act, both leased and independent Owner Operators will be entitled to “pandemic unemployment assistance” if they are able and willing to work or telework (I think this would encompass freight brokers as well) for pay, but can’t because of reasons related to the COVID-19 pandemic. You heard me right: owner-operators will be able to file for unemployment pay from the federal government.

Unemployment assistance will be available to self-employed individuals under Section 2102 of the CARES Act if the Applicants provide self-certification that they are (1) partially or fully unemployed, OR (2) unable and unavailable to work because of one of the following circumstances:

  • is diagnosed with COVID-19 or experienced symptoms or is seeking a diagnosis,
  • has a member of his or her household that has been diagnosed with the illness,
  • is providing care to a family member with COVID-19,
  • has primary caregiving responsibility to a child that is unable to attend school due to COVID-19,
  • cannot reach his or her place of work because of a quarantine or advice of a health care provider to self-quarantine,
  • has become a breadwinner after the head of household has died from COVID-19,
    has had to quit his or her work as a result of Coronavirus, or
  • has a work location that is closed as a direct result of a COVID-19 public health emergency.

This pay could be necessary for many owner-operators: Nearly 50% of Owner-Operators have experienced a substantial decrease in their work load. The exception is for those hauling food, particularly reefer loads. ICs could receive over $600 a week from the federal Pandemic Unemployment Assistance (PUA) program. In addition to the $600 a week offered through the end of July, self-employed individuals and independent contractors would also receive from the federal government 50% of what their state offers as unemployment pay. Of course, employee drivers who are eligible for state unemployment pay are not eligible for PUA program benefits.

Under the PUA program, self-employed and independent contractors are eligible if they quit their jobs because the virus outbreak, such as if they contract the COVID-19 or if they need to care for a relative who does. This further covers ICs who generally cannot go on “paid leave” from a job.

The Unemployment Assistance covers ICs who are “unemployed” and also “partially unemployed”.

Whether you are completely out of work or have experienced a substantial decline in your business, you are still eligible for PUA Program benefits. There are important exceptions: people receiving benefits under the Families First Coronavirus Response Act or state laws providing similar benefits to ICs.

For what period of time am I eligible for these benefits?

This financial assistance is available retroactively to January 27, 2020 through December 31, 2020 provided the individual’s unemployment, partial unemployment, or inability to work caused by COVID-19 continues, up to a maximum of 39 weeks including any weeks when the independent contractor received any other paid benefits under federal or state law.

The Families First Coronavirus Response Act (“FFCRA”)

The Families First Coronavirus Response Act, which covers independent contractors, also provides for paid sick and paid family leave to self-employed individuals. This program has been expanded and extended to pay sick time and family and medical leave to “eligible self-employed individuals” who “regularly [carry] on a trade or business . . . , and would be entitled to receive paid leave . . . if the individual were an employee of an employer (other than himself or herself).”

Independent contractors are eligible for up to 10 days of paid sick leave if they are unable to work because they are subject to a government quarantine or order of isolation due to COVID-19, have been advised by their doctor to self-Quarantine, or are experiencing symptoms of COVID-19 and are seeking medical attention. Such eligible independent contractors are entitled to up to $511 per day up to a maximum of $5110, or 100% of their average daily self-employment income for the taxable year, which ever is less. Further assistance is available if the independent contractor has to care for another individual in isolation or to care for a child whose school has been closed or whose care provider is unavailable due to COVID-19 up to a maximum of $2000 for 10 days paid sick leave or 67% of the average daily self-employment income for the taxable year.

Paid family leave is also available to ICs unable to work because they have to care for a family member who is under government order or under advice by their doctor to isolate, or to care for a child who school has been closed or whose Child care provider is unavailable because of COVID-19. This benefit entitles the recipient to the lesser of $200 per day or 67% of their average daily self-employment income for a maximum of 50 days.

Notably, the FFCRA goes into effect today, April 1, 2020. No foolin’.

So, you ask, how do I get this money?

Look, the government isn’t going to send unemployment fairies out to your homes with bags of money. So, let’s figure out what you need to do; but first a statement from Senator Dianne Feinstein:

“The $2 trillion coronavirus stimulus signed into law last week includes new unemployment benefits for self-employed, part-time and gig workers who in the past haven’t been eligible for such benefits. These workers were made eligible because the economic damage caused by the coronavirus isn’t discriminating between different types of workers and so neither should federal benefits.
“In California, more than 2 million workers are self-employed and 3.4 million work a part-time job. The state is also home to millions of so-called ‘gig workers,’ independent contractors who work through online platforms such as Uber and Lyft. These non-traditional workers comprise as much as one- quarter of all workers in the state.
“I encourage all Californians who have lost their jobs because of the pandemic to apply for unemployment benefits if needed. Even if you weren’t eligible in the past, you may be now.”

Well, ain’t that special.

How do I file for unemployment insurance?

Californians can apply for unemployment benefits through the California Employment Development Department. The best way to begin the process is by going online and clicking HERE. Claims can be filed online Sunday 5 a.m. to 8:30 p.m., Monday 4 a.m. to 10 p.m., Tuesday through Friday 2 a.m. to 10 p.m. and Saturday 2 am to 8 p.m.

But you say, what if I’m not eligible for traditional Unemployment Insurance?

Fear not, Noble O-O! The CARES Act temporarily expands unemployment insurance to cover individuals who are not traditionally covered, including the self-employed, gig-workers, independent contractors, and workers with irregular work histories. It also expands the list of allowable criteria for claiming unemployment compensation to include many reasons related to the COVID-19 public health emergency. Contact the unemployment office in the state where you worked to determine your eligibility.

Got it?

Good – now go n’ get you some.