A Teamsters-backed effort to have owner-operator truck drivers classified as employees instead of contractors has been dismissed by a federal judge in New Jersey.
U.S. District Court Judge Esther Salas said “the circumstances of the whole activity” indicated the drivers’ economic relationship with Ironbound Express in Newark, N.J., was that of independent contractors.
Attorney Sal Simao, managing partner of Ford & Harrison’s New Jersey office and chair of the firm’s transportation practice group, said the decision “is important because it goes through a typical lease agreement and identifies what facts support a finding that owner-operators are contractors and not employees.”
The drivers contended they should have been classified as company employees, which would make them eligible to unionize. The Teamsters union and environmental groups have been pushing to have drayage drivers classified as employees.
Salas based her ruling on six factors: the degree of the company’s control of the drivers, the owner-operators’ opportunity for profit or loss, the drivers’ investment in equipment, whether they possessed a special skill, the permanence of their working relationship with the company, and whether the drivers’ services were integral to the company’s operations.
“The court found that four of the six factors weighed in favor of the owner-operators’ status as independent contractors,” Simao said. The court said the owner-operators had driven for Ironbound for several years and worked closely with the company, but that these factors weren’t enough to qualify them as employees.
Ironbound officials “exercise minimal control” over how the drivers operate their leased equipment, Salas said. The company’s lease agreement shows drivers make their own decisions on things such as route selection, vehicle repairs and financing, and how frequently they will work, she said.
The lawsuit was dismissed without prejudice, meaning it could be refiled within 30 days. Simao, however, said the judge’s view of lease terms made it unlikely the drivers could revise their lawsuit in a way that would satisfy the judge.
Simao, who filed the motion to dismiss the lawsuit, said the Ironbound ruling shows it’s important for trucking companies to have a well-drafted owner-operator lease agreement, and to follow it.
“The key to avoiding litigation for motor carriers is to use owner-operators that have very strong lease agreements, and to comply with the contract,” he said. “You have to treat them like any other contractor. If you hire a plumber to fix your sink, you’re not going to tell him how to do his job or when to start and finish. But if he doesn’t do the job according to the specifications you put in our contract, you’re going to hold him accountable.”
Gail Toth, executive director of New Jersey Motor Truck Association, agreed with the American Trucking Associations’ New Jersey affiliate. “We’ve been telling our members to make sure their leases are written with the advice of a good transportation attorney, and that the lease spells out the legal requirements,” she said. “If it does, they shouldn’t have any problems.”