Work rules spelled out in contracts between owner-operator truckers and drayage companies may not provide the legal grounding to maintain the truckers’ status as independent contractors at U.S. ports, according to a Southern California labor attorney.
The warning at a meeting of the region’s Harbor Trucking Association this week comes as the independent status at ports is coming under growing fire, with the federal government, state governments and organized labor seek to demonstrate the drivers are direct employees of harbor trucking companies.
The attacks on several fronts carry significant taxation and cost consequences for drayage company executives who believe their contracts with owner-operators provide adequate protection.
“Contractual language alone is not determinative of an independent contractor relationship,” Robert Roginson, a partner in the Cerritos, Calif., firm of Atkinson, Andelson, Loya, Ruud & Romo, told the California group.
The driver classification issue burst on to the national scene when the House Transportation and Infrastructure Committee on May 5 held a hearing on the Los Angeles-Long Beach clean-truck programs and issues surrounding a possible amendment to federal preemption of transportation regulation.
As it turned out, the hearing had very little to do with those issues and “everything to do with economics and driver classification,” said Alex Cherin, a Long Beach attorney and counsel to the Harbor Trucking Association.
The issue reaches beyond the ports, however, since several industries that use independent contractors, especially trucking and courier companies, are targets.
Federal and state agencies are openly investigating the status of independent contractors with the assumption that tax revenues are being lost due to possible misclassification of workers, Roginson said.
For example, the Internal Revenue Service in February launched a nationwide misclassification audit campaign, and the U.S. Department of Labor in March requested $25 million for a multi-agency misclassification campaign.
If owner-operator drivers arere-classified as employees, harbor drayage companies face huge costs in terms of liability for minimum wages, overtime pay, and failure to pay worker’s compensation and employee benefits, Roginson said.
Harbor trucking companies attempt to maintain an arm’s length relationship with owner-operators by allowing them to leeway on work rules, including allowing them to drive for whichever companies they choose, reject any job assignments they don’t want and determine work hours.
But many federal and state government agencies concerned about employee classification have varying definitions of what constitutes an independent contractor, Roginson said, and the issue is further complicated by the courts, which likewise vary in their definitions.
“It boils down to the smell test – the totality of circumstances,” he said.