Page 41

INDUSTRY INSIGHT

DEBORAH LOCKRIDGE

E d i t o r- i n - C h i e f

T

Owner-operator or employee? The answer may not be as simple as you think

he owner-operator has a long and colorful history in American trucking. And by many counts, 2018 was a great time to be an owner-operator. Even though the electronic logging device mandate may have cut productivity, higher rates and an abundance of freight more than made up for it.

Today highlighted some of the most egregious examples of Los Angeles and Long Beach port drivers who were allegedly being exploited by trucking companies. While it was challenged by port companies as misleading and sensationalism, the article helped ramp up political efforts in the state to crack down on employee misclassification of truck drivers, including a law that holds retailers partly accountable for the actions of the companies hauling their products.

In fact, Todd Amen, president and CEO of ATBS, a tax and accounting firm for owner-operators, said his company’s data showed owner-operators have actually been running fewer miles while making more money.

Then the state Supreme Court last year handed down a decision that many in trucking say makes it impossible for trucking companies to use owner-operators in the state.

Many fleets like the capacity flexibility of using owner-operators, and owner-operators generally like the independence of having their own business. But owner-operators and the motor carriers who use them face an increasingly complex web of regulatory and legal challenges.

In Dynamex Operations West Inc. v. The Superior Court of Los Angeles County, the court ruled that transportation drivers should essentially automatically be presumed to be employees when evaluating wage and hour classification claims. The court found that Dynamex, a courier and delivery service, had misclassified its couriers as independent contractors to cut costs. Going forward, the court said, to be classified as an independent contractor for wage claims, companies must pass a newly adopted ABC test:

At issue is the definition of “independent contractor” and whether a motor carrier is “misclassifying” a driver as a contractor when he or she is truly an employee. Fleets must provide certain benefits to employees that they don’t to contractors. Employees must be paid minimum wage, but that’s not a consideration with contractors. Employees can participate in labor unions and organized bargaining; contractors by law cannot.

A: that the worker 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; B: that the worker performs work that is outside the usual course of the hiring entity’s business; and C: that the worker is customarily engaged in an independently established trade, occupation, or business of the same nature as the work performed.

At the federal level, things have gotten easier, with the Trump administration backing off the Obama administration’s get-tough stance on misclassification. The Department of Labor last year released new guidance overruling a 2015 Obama-era ruling that found most workers were employees under the Fair Labor Standard Act’s definitions. And in January, the National Labor Relations Board reversed another Obama-era standard for determining independent contractor status. In a case involving shuttle-van-driver franchisees of SuperShuttle at Dallas-Fort Worth Airport, the NLRB concluded that the franchisees were not employees under the National Labor Relations Act, but rather independent contractors excluded from the act’s coverage.

It’s the second provision that is the problem, as truck drivers are not outside the course of a motor carrier’s business. The Western States Trucking Association and the California Trucking Association have filed separate suits challenging the ruling, among other things arguing that it’s an impermissible burden on interstate commerce under the U.S. Constitution’s commerce clause.

However, states, especially California, seem to be going the opposite direction. California’s busy ports have resulted in a great deal of attention to the question of employee misclassification. The Teamsters union has for some time wanted to convert port drayage contractors to employees so they can participate in collective bargaining. A 2019 expose by USA

The California attorney general’s office has filed motions in both cases asking for dismissal of the suits, but at press time there was not decision in either case.

41

Profile for Mid-America Trucking Show

2019 Mid-America Trucking Show Digital Directory  

The Mid-America Trucking Show (MATS) is the largest annual heavy-duty trucking event in the world. Founded in 1972, MATS is the longest runn...

2019 Mid-America Trucking Show Digital Directory  

The Mid-America Trucking Show (MATS) is the largest annual heavy-duty trucking event in the world. Founded in 1972, MATS is the longest runn...