A major issue in employment law is whether a worker is an employee or an independent contractor. Employees have many rights, including the right to be paid overtime and receive employee benefits, to join a union, to take family leave, to receive workers compensation and unemployment insurance, to name just a few. Because independent contractors have none of these rights, companies have a strong economic incentive to classify employees as independent contractors.
This illegal practice is called “misclassification.” Since deregulation, misclassification in the delivery and transportation industry has become very common. However, recent court decisions indicate that in California employers have gone too far, and misclassified drivers are now suing for substantial damages under the California labor code.
Even if a driver has a signed a contract, is paid through a form 1099 (as opposed to a W-2), or operates his/her own truck, it’s the nature of the relationship, and particularly the level of control that the company exerts over its drivers, that determines whether the drivers are employees. If a family member, friend, or someone you know may have been misclassified as an independent contractor, you should encourage him or her to call the Beeson, Tayor Bodine law firm at the numbers listed below.
California and federal courts have affirmed that under California law if a company has a “right to control” the driver on a daily basis, then this means the driver is an employee. Last month, a federal appeals panel, with jurisdiction over the nationwide FedEx Ground misclassification cases, recently decided that a trial court committed error when it failed to distinguish and apply the greater protections afforded California drivers under California’s “right to control test.” The appeals panel ruled that “the strongest evidence of the right to control is where the hirer can terminate the worker without cause, as that power gives the hirer the means to control the worker’s activities.” The court noted that whether a driver owns his own truck is not of great significance if the arrangement allows the company to control the drivers’ activities. An example of indications that a driver is misclassified and is really an employee entitled to damages include:
Does the driver:
• report to work at a designated time or on a daily
• accept assignments or dispatches;
• drive trucks with the employer’s insignia or signage;
• request time-off or ‘vacation’ days; or
• face discipline or termination if he or she doesn’t comply with these requirements?
And does the company have the right to:
• terminate the driver or the contract whenever it wants;
• approve a driver’s hiring of helpers;
• determine the type of truck to be driven;
• set routes or assign daily dispatches;
• assess customer service or do ride-alongs for purposes of evaluating the driver; or
• establish standards of conduct or “safe driving standards”?
Several recent cases reject employers’ arguments that federal trucking and airline deregulation statutes overrule (“preempt”) California’s employment laws when applied to drivers involved in inter-state commerce. The statute does “not preempt generally applicable employment laws that affect prices, routes, and services” and, in September, the federal court of appeal in San Francisco confirmed that California’s meal and rest provisions are not preempted by federal transportation law. Similarly, in July, the California Supreme Court held that the federal law did not prevent misclassified port-truck drivers from suing their trucking broker under California’s unfair competition law, claiming that the trucking company that misclassified them to avoid workers compensation, disability, unemployment insurance, and other FICA taxes, which gave the company an unfair advantage.
These rulings open the door to challenges of driver misclassification and further mean that employers can not rely on federal preemption as a shield from liability. These recent decisions indicate that, in California, the law regarding misclassification can be a powerful tool for advancing the rights of truck and delivery drivers, and we encourage any drivers who believe they may be misclassified to call our office for a consultation.
Beeson, Tayer & Bodine — Oakland: 510-625- 9700. Sacramento: 916-325-2100.