The employee-friendly Supreme Court’s decision to reject the Association’s appeal could mean that tens of thousands of truck drivers hired by freight-hauling companies will be classified as employees, and with that classification they are entitled to minimum wages, overtime pay, meal and rest breaks and reimbursement for travel expenses. If truck drivers are deemed employees, they will also be subject to workplace laws, statutory employee benefits and tax withholding requirements.
Fred Potter, with the International Teamsters and director of the Teamsters Port Division, believes that “predatory trucking companies” illegally classified drivers as independent contractors to “dodge taxes and steal the hard-earned wages of drivers”.
Last October, the California Trucking Association (CTA) and two owner-operators filed a lawsuit over how the state determines whether a truck driver is a company employee or an independent contractor. The Western States Trucking Association also filed a lawsuit against the state of California and its use of a classification test called the Borello Standard, which has now been replaced by the ABC test, which makes it even more difficult than Borello for companies to prove that their workers are independent contractors.
The Associations’ issue had to do with the commissioner’s use of a test that assesses truck drivers’ claims that they have been misclassified as independent contractors and denied certain benefits under the Labor Code. Both groups argued that this test disrupts the contractual arrangements between owner-operators and motor carriers, which is inconsistent with Congress’ deregulatory goals under the Federal Aviation Administration Authorization Act of 1994.
Both Associations say the ABC test creates a standard that could mean the end of independent contractor set-ups in California. They are concerned that the test may be used in any worker dispute and not just those that fall under wage orders. For instance, it could be used in a dispute over who qualifies for workers compensation insurance coverage or disability benefits.
The ABC Test
The ABC test came about with the Dynamex v. Superior Court ruling in April 2018. In a nutshell, Dynamex presumes that all workers are employees unless there is convincing evidence to the contrary. “The decision in Dynamex throws into question the legality of the entire trucking industry in California,” the Western States Trucking Association said in its lawsuit regarding potential enforcement of the Dynamex ruling. The Association argued that the ruling violates federal law governing interstate transportation that pre-empts states from passing laws affecting the prices, routes and services of interstate motor carriers.
To show that a worker is not an employee, a business must demonstrate all of the following:
(A) the worker is free from the control and direction of the hiring entity in connection with the performance of the work, both under the contract for the performance of the work and in fact; and
(B) the worker performs work that is outside the usual course of the hiring entity’s business; and
(C) the worker is customarily engaged in an independently established trade, occupation, or business of the same nature as the work performed.
Failing any one of these three measures means that a worker is an employee. Under what is shorthanded as the “ABC” test, almost all workers are employees.
California Truck Drivers
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The California Labor Commissioner over the last four years has ruled 36 separate times that workers such as Villa are misclassified as independent contractors, awarding them $7.3 million in “stolen” wages.
“Over the last eight years, the Labor Commissioner’s Office has awarded millions of dollars to truck drivers to help them recoup wages stolen from them through minimum wage and overtime violations,” said Julie Su, California Labor Commissioner.