Los Angeles Port Drivers Awarded Millions in Back Pay

On December 22, 2015, the Los Angeles Times published an article titled: “Port Drivers Win Millions in back pay from Trucking Firm.” In that case, the California Labor Commissioner ordered a Carson port trucking company, Pacific 9 Transportation, to pay 38 truck drivers nearly $7 million in back pay.  The Labor Commissioner found that Pacific 9 had misclassified their employee drivers as independent contractors, ordering them to compensate their drivers for illegal paycheck deductions, back wages, and legal costs.

There are significant benefits for being an independent contractor and some workers who have specialized talents or technical expertise, may insist or indicate a strong preference that they be retained on an independent contractor basis. Their reasons for making such a request may include tax considerations, such as being able to lawfully deduct more business expenses under the tax code than if they were employees, a desire to maintain control over their work schedules or because they wish to be their own boss. However, it is very common for trucking companies to misclassify their employee drivers as independent contractors. They do this for a number of reasons, including:

  • Businesses do not have to pay independent contractors the minimum wage or overtime pay for working more than 8 hours a day or 40 hours in a workweek.
  • Businesses do not have to provide 30-minute meal periods for each work period of five hours or more to independent contractors.
  • The federal labor laws do not afford independent contractors the right to be represented by a labor union, whereas workers who qualify as employees are capable of organizing.
  • Independent contractors sign Form 1099 rather than Form W-2. Therefore, businesses are not required to make Social Security and Medicare contributions or withhold taxes.
  • Businesses do not have to pay unemployment and workers’ compensation premiums for independent contractors.
  • Employee benefit plans, including group health insurance and 401(k) plans, only cover employees, not independent contractors, and do not have to be accounted for under the Affordable Care Act.
  • Independent contractors generally do not have the right to sue companies for discrimination.
  • Businesses are not required to pay or reimburse owner operators for business expenses, including but not limited to: fuel, vehicle maintenance, and insurance costs.
  • Businesses are not liable for the injuries and accidents caused by independent contractors.

While the extent of employee misclassification is unknown, studies suggest that it could be a significant problem with adverse consequences. In 1984, the IRS estimated that U.S. employers misclassified a total of 3.4 million employees, resulting in an estimated revenue loss of $1.6 billion (in 1984 dollars). In 2000, the Department of Labor found that up to 30 percent of firms audited, in 9 states, misclassified at least some employees.

The attorneys at Strauss & Strauss, APC have become leaders in the field of representing truck drivers who have been misclassified by their employers as independent contractors. We have obtained awards for hundreds of thousands of dollars for our owner operator clients, often times hundreds of thousands per person. Take our independent contractor misclassification test. We hope that the information here will help you determine if you are misclassified as an independent contractor and, if so, what we can do to help.

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