by G. Spencer Mynko, Esq.
What is the current state of the law on the Independent Contractor Drivers? This is the first article in a series where I will discuss recent legal developments and new case law that directly impacts trucking companies that use independent contractor drivers.
Any California trucking company who utilizes Independent Contractor drivers needs to understand that they are a target for misclassification accusations and are at risk for audits, lawsuits, and even criminal charges. Therefore, and now more than ever, trucking companies need to have clear understanding of the legal climate in California regarding independent contractor drivers and what the case law has to say about this critical issue. 2014 has been a very important year and many important cases have been decided by California state and federal courts. What the courts have said on what is and what isn’t an Independent Contractor Truck Driver is something every trucking company needs to understand.
So you probably want to know, based on the recent legal developments, what do I have do to avoid an accusation of misclassifying employee drivers as independent contractors. The answer unfortunately is not simple.
The problem peculiar to California that makes this analysis so difficult is the law in California tells you what not to do instead of what to do. There is no clear formula that a trucking company can follow to be certain it is properly classifying its drivers as Independent Contractors. Historically, California has presumed that anyone who receives compensation for services is an employee. Therefore, the burden has traditionally fell upon the prinicipal to prove that a worker is an Independent Contractor. This deeply rooted and long standing California tradition helps explain why the State (and its agencies like the Employment Development Department (EDD), the Department of Labor Standards Enforcement (DLSE), etc.) and the Courts are naturally suspicious and distrustful of trucking companies who classify their drivers as Independent Contractors. In other words, when you tell an EDD auditor, Labor Board commissioner, Administrative Law Judge, or any other state official, that your truck driver is an Independent Contractor, they think you are lying. While that seems harsh, and cynical on my part, it sadly seems to be the case.
So where do we start? In California, a person who provides services to another is presumed to be an employee. EDD states that the basic test for determining whether a worker is an independent contractor or an employee is whether the principal has the right to direct and control the manner and means by which the work is performed. When the principal has the “right of control,” the worker will be an employee even if the principal never actually exercises that control. See http://www.EDD.ca.gov/PDF_PUB_CTR/DE38.pdf.
Why is it so important to get it right? The penalties for misclassification are very stiff. California labor code section 2 to 6.8 imposes penalties on employers who willfully misclassify their employees as independent contractors. Will fullness classification is defined as “voluntarily and knowingly miss classifying that individual as an independent contractor.” The penalties for violating section 2 to 6.8 include finds between $5000 and $15,000 per violation of the law. If the employer is engaged in a pattern or practice of violating this law, the fines are increased to between $10,000 and $25,000 per violation. See http://www.leginfo.ca.gov/cgi-bin/displaycode?section=lab&group=00001-01000&file=200-244
How serious is the State of California taking this? Very seriously, as evidenced by how aggressively its agencies like EDD and the Labor Commission is going after trucking companies. For example, in one specific case involving onetrucking company, the labor commissioner awarded 40 improperly classified drivers $4.3 million in back pay and penalities. More than 500 complaints alleging misclassification were filed in 2013 and 2014 against trucking companies. Finally, EDD is systematically, methodically, and very aggressively targeting trucking companies in audits alleging misclassification.
In my next installment, I will elaborate on the Right To Control test utilized by the courts and discuss the recent case law interpreting Right To Control. And be advised: The Right To Control test is a complicated legal analysis used by courts and administrative agencies, looking closely at ten separate factors: it is not simply a matter of common sense. This is why it is so important to get sound legal advice on this critical matter.
I urge any trucking company to contact Transportation Attorneys today so we can assess whether your company’s right to control its drivers puts you at risk for misclassification accusations.
We hope that once you utilize Transportation Attorneys to help you get your IC agreements and business model set up, you’ll enjoy many miles of trouble-free trucking. Worker misclassification is a big deal in California. Trucking companies who use independent contractors should carefully review their contracts and practices in order to comply with the law. We are one of the few law firms that focuses on trucking, transportation and logistics with the knowledge and experience to competently guide you through these ever present hazards. We are very experienced in dealing with the distinctions between independent contractors and employees.
We here at Transportation Attorneys can help you with your Independent Contractor business model and your ability to withstand the toughest scrutinization of anyone alleging your company is misclassifying its drivers.
Contact Transportationattorneys.net today!