The issue of whether truck drivers nationwide are employees or independent contractors is far from dead despite a recent federal court ruling that the employee driver mandate in the Port of Los Angeles clean-truck program is illegal, a transportation attorney said.
This issue isn’t dead “because the government wants to keep it alive,” Ted Adkinson, an attorney with the firm Roberts & Kehagiaras, told the Harbor Transportation Club of Southern California Thursday. The government believes it is losing billions of dollars a year in tax revenue because companies in many industries are misclassifying employees as independent contractors, he said.
Likewise, California is aggressively pursuing the independent contractor issue, and state inspectors will turn up the heat come Jan. 1 when a new law that levies large fines on companies that intentionally misclassify employees takes effect.
Also, California employees of the Texas-based logistics company EGL Inc., sued the company, seeking back wages and penalties. They allege that EGL violated the California Labor Code by illegally classifying them as independent contractors.
Cases such as these are illustrative of procedures that motor carriers should implement, and other actions they should avoid, if they want to minimize the risks involved in contracting with owner-operator drivers, said Cameron Roberts, a principal at Roberts & Kehagiaras.
The California cases and other employee misclassification challenges across the country are fact- intensive, and rulings in one case normally do not set a precedent for other misclassification challenges.
However, the cases of late are “going a lot further in developing facts,” so court rulings discussing many practices that are common in the harbor drayage industry are being scrutinized by other judges that are assigned misclassification cases, he said.
As of the U.S. Court of Appeals for the 9th Circuit's ruling involving the Port of Los Angeles, the American Trucking Association has said that it will appeal the decision to the U.S. Supreme Court by the end of the year. ATA is pleased that the appellate court found the employee mandate to be preempted by federal law, but ATA will challenge other concession requirements that the 9th Circuit upheld.
The Supreme Court is not obliged to hear the case, but Roberts said there is a good chance that it will because many U.S. ports are now developing clean-truck programs. “The Supreme Court has to step in and give clarity,” he said.