Palay Law Firm has long been representing the interests of California-based truckers in disputes with their employers.  The last few years have seen an increasing number of trucking companies reclassifying their employees as independent contracts.  Known as “owner-operators,” these individuals are for all intents and purposes employees.  For the most part, the intentional classification of drivers as independent owner-operators is a scam that is only meant to line the pockets of the trucking companies.  The drivers are still common-law employees, regardless of whether their employers make them sign independent contractor agreements.  The companies exert control over almost every aspect of the relationship, from the drivers’ hours worked to who can perform work on their trucks to where they can buy fuel to what logos must be on their trucks and uniforms.

Why does this matter?  Most labor laws in California do not apply to independent contractors.  That makes sense.  If Company A, which sells T-shirts, hires Company B, a marketing company, to design a website, the relationship between Company A and Company B would most likely be independent.  Company B can hire its own employees — as many as it needs to get the job done — and supervises them too.   In this independent contractor relationship, Company B has control over its employees, and it must comply with California labor laws.  Company A simply pays for Company B’s services and Company B produces a website for Company A.

In this example, Company B is a separate legal entity with its own employees, and it provides a service — web design — that is independent from Company A’s business — making T-shirts.  Company A has its own employees too.  The relationship is clearly independent.

But what if Company A were to take one of its own clothing designers and reclassify her as an independent contractor?  There are circumstances in which that would work.  Say, if the clothing designer used her own equipment, worked outside of Company A’s offices, could design clothes for other T-shirt companies, and had her own business, it is very likely that she could lawfully be classified as an independent contractor.

But what if the newly reclassified independent contractor still worked in Company A’s office, using Company A’s equipment, could only design clothes for Company A, and did not have her own business?  The chances are that she would be found to be an employee, regardless of the “independent contractor” title given to her.

As an employee, rather than an independent contractor, the clothing designer for Company A would have significant rights.  Company A would have to follow California labor laws, including paying overtime, if applicable, withhold employment taxes from her paychecks, and pay payroll taxes.  If the clothing designer were to leave Company A, she could receive unemployment (assuming that she was otherwise eligible), and, while employed, she could receive workers’ compensation benefits (again, if otherwise eligible).

By classifying an employee as an independent contractor, therefore, an employer can skirt these fundamental California labor laws and avoid paying significant amounts of payroll taxes.

Back to our trucker cases.  These owner-operators, who drive trucks with their company’s logo on them and cannot haul for any other company, are more than likely employees.  The companies they work for are avoiding California labor laws and not paying payroll taxes.  Employees and the taxing authorities alike are up in arms.  The recent strike at the Port of Los Angeles is evidence of the drivers’ dissatisfaction.

But the drivers are not without recourse.  Over the past few years, Palay Law Firm has been able to recover hundreds of thousands of dollars for misclassified owner-operators.  Their claims are typically for wrongful deductions from wages.  Their employers pay them on a per-mile or per-job basis, then deduct their pay for line items like insurance, fuel, maintenance, tolls, etc.  If the owner-operators were truly independent contractors, these deductions might be legal.  But since the owner-operators are truly employees, and California employers cannot make deductions from wages for typical business expenses, these owner operators can seek full reimbursement for these deducted expenses in a claim against their trucking company.

See the factors that courts and the Labor Commissioner use to determine whether a truck driver has been misclassified as an independent contractor.

Below are recent Labor Commissioner decisions that were rendered in favor of our clients in owner-operator misclassificaiton cases (the amount in parentheses is how much the Labor Commissioner awarded and the location is where the hearing took place).

In these cases, the amount awarded was nearly 100% of the amount claimed by our clients.

If you have been classified as an owner-operator, or it has happened to someone you care about, do not hesitate to contact Palay Law Firm at (805) 641-6600 or contact us through our online intake form.  We represent owner-operators throughout the state.  They just need to be based in California.

[js-disqus]