Truckers Deemed Employees – as the Independent Contractor Debate in the Trucking Industry Rages On
May 1, 2019 by Kena Cador
A federal district court judge has issued a decision rejecting a trucking association’s attack on the California Supreme Court’s recent decision establishing a new test to distinguish between employees and independent contractors for purposes of California’s wage orders. Last spring the California Supreme Court in its Dynamex Operations decision adopted the “ABC” test to determine employee versus independent contractor status. This test places a burden on the employer to establish that a worker is an independent contractor and asks three questions: (A) Is the worker free from employer control in the performance of their work? (B) Does the worker perform work outside the employer’s usual course of business? (C) Is the worker engaged in an independently established trade of the same nature as the work performed?
In Western States Trucking Association v. Schoorl, the trucking association argued the ABC test, as applied to truck drivers, is pre-empted by federal law and violates the U.S. Constitution. The court ruled that the California rule on determining employee status does not interfere with federal laws regulating motor carrier prices, routes, services or safety. And because the California rule applies equally to in-state, multi-state, and out-of-state employers operating within California, the court concluded that the rule does not violate the Constitutional prohibition against state laws that discriminatorily burden out-of-state employers compared with in-state employers. (Note that the plaintiff trade association has appealed the district court’s decision to the Ninth Circuit Court of Appeals, so we have not yet seen the end of this story.)
In a related development, a California Labor Commissioner has issued a ruling finding Long Beach port drivers to be employees, not independent contractors, and ordered an employer to pay $1.2 million for wage-and-hour violations due to the misclassification of the drivers. (Zelaya v. KRT2931 LLC) The hearing officer did not apply the ABC test, but instead applied an older, “economic reality” test that places primary emphasis on employer control as a factor in determining employee versus independent contractor status. In determining that the port drivers are employees, the hearing officer concluded that the employer “retained pervasive control over the drayage operation as a whole.” Because the employer had treated the drivers as independent contractors, not employees, the hearing officer ordered the employer to pay damages, back wages, unpaid overtime, reimbursable business expenses and penalties for break violations and payroll violations.
The full opinions can be downloaded below:
(Western States Trucking Association) https://oag.ca.gov/system/files/attachments/press-docs/westernstatestruckingvandreschoorlopinion.pdf
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