Were Truck Drivers Misclassified as Independent Contractors?

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By Allison M. Gatrone

“We are employees, not independent contractors, because you control too much of what we do each day,” Mark, a driver, told Sheila, the payroll manager of a transport company.

“We treat you differently than our employee drivers, and we give you more freedom than they have, so we've classified you correctly,” Sheila said.

FACTS: Two truck drivers worked for a freight transport company as independent contractors. The drivers leased their trucks from a company created by the transport company's owner for that purpose.

The drivers were supportive of a union that was attempting to form for the company's drivers, lead by the International Brotherhood of Teamsters. The drivers and the union claimed that the drivers were employees; however, the employer claimed that the drivers were “nonemployee independent contractors,” a term that described the drivers in an agreement that they signed with the company.

The drivers filed wage complaints with the California Division of Labor Standards Enforcement, claiming they were misclassified as independent contractors.

The transport company required the drivers to obey company policies and provided them with tools. Their skills were identical to those of drivers who had employee status with the company.

While the company determined whether a driver worked the day or night shift, the drivers could start and stop their shifts any time they pleased. They often would start and end their shifts at the same times because of other factors, such as the opening and closing times of the ports but not because of a requirement by the company. The drivers often worked a five day workweek, but they could choose which days they worked, and they were not required to get approval or give advance notice if they did not work a particular day.

The drivers received assignments from a company dispatcher and could accept or reject assignments with no penalties. However, employee drivers of the company could not reject assignments.

The drivers were responsible for the maintenance and fueling of the trucks and were free to choose service and fuel providers. They also were free to hire additional drivers and could take on deliveries from other companies but did not do either during the time they worked for the company.

The company terminated the drivers after they participated in a strike organized by the union.

ISSUE: Were the truck drivers properly classified as independent contractors?

The drivers leased their trucks from a leasing company created by the transport company's owner.

DECISION: The drivers were misclassified as independent contractors and were instead employees of the transport company, an administrative law judge of the National Labor Relations Board ruled.

The judge used a 10-factor common-law test that was stated in Fedex Home Delivery, 361 N.L.R.B. No. 55(2014), as well as the additional factor of whether the drivers rendered services as independent businesses.

The judge found that although some factors supported independent contractor status, more factors supported employee status, and therefore the judge ruled the drivers to be employees.

The factors supporting independent contractor status include: the company did not control the drivers' work schedules or how they performed their work, the drivers had special skills and the company paid the drivers differently from the employee drivers and did not withhold taxes or provide benefits.

The drivers qualified as employees under the test factors because the company controlled the drivers shifts and assignments, required them to follow company policies and provided them with tools; the drivers were not engaged in a distinct separate business and their skills were identical to the skills of drivers employed by the company; and the work of the drivers was an essential part of the company's business.

The judge also determined that the company terminated the employees because of striking as well as the wage claims they had filed. He recommended that the company be ordered to offer the drivers reinstatement to their former jobs or to substantially equivalent positions and to “make them whole for any loss of earnings and other benefits as a result of their unlawful terminations” (Green Fleet Sys. LLC, NLRB ALJ, No. 21-CA-100003, 4/9/15).

POINTERS: The common-law test can be difficult to apply to specific cases or situations. Proper application of the test requires an employer to consider a number of factors or characteristics of the work in question to determine whether an employer-employee relationship exists.

In determining whether an employer-employee relationship exists, there are several important points to keep in mind: That the employer allows the individual considerable discretion and freedom in deciding how to perform or carry out the work or job is irrelevant. Rather, the decisive factor is that the employer possesses the legal right to control or direct both the results and the method of the work or services in question.

This analysis illustrates how courts resolve pay-related disputes. The names and dialogue are fictitious.