The debate over what constitutes an employee and independent contractor in the trucking industry continues to develop. Recent actions by the U.S. Department of Labor only add to the discussion and make the landscape even more volatile than it has been in the past. The DOL went after an Alabama trucking company for having classified people working for them as independent contractors when the DOL thinks those employees should have been classified as actual employees.
Why does this matter to the average trucking company? Because state and federal laws differ and put specific demands on how employers should treat employees. If a company uses independent contractors to conduct their business they can negotiate the price for service up front, avoid paying minimum wage standards, deny required break times, and hire or fire the contractor at will.
Working arrangements such as these have driven employees of trucking companies to courtrooms across the country to be classified as employees, not independent contractors. Workers are looking for back pay, compensation for missed benefits, and a clear understanding going forward that they are actual employees and not independent contractors. But the outcomes of these lawsuits has been mixed.
Earlier this year a federal judge struck down an attempt by the Massachusetts’ Attorney General to make a trucking company classify their independent contractors as employees. Under Massachusetts state law, it was quite clear that the way this company used their independent contractors should have made them employees. But the court in its decision decided that the Federal Aviation Administration Act preempted state law on how the employees would be classified because reclassifying them would necessarily impact how much money the company charged its customers, classified their routes, and conducted their interstate business.
But this decision conflicts with recent decisions out of California and elsewhere. In California two major cases declared that companies using independent contractors misclassified their contractors and should have classified them as employees. This cost the companies involved millions in legal fees and back payments, and requires them to classify their workers as employees going forward. And companies like FedEx and Uber are facing similar problems.
Dept of Labor Actions and Planning Going Forward
With these decisions in the backdrop, the DOL recently fined an Alabama trucking company for misclassifying their independent contractors. In addition to this, the DOL published a memo that warns companies going forward on their practices for classifying independent contractors improperly. The memo lays out the agency’s interpretation of what an independant contractor is and is not, and warns companies of the consequences for violating their view of the law.
What does this mean for your company? If you use independent contractors as part of your business you will need a plan to ensure that you are on the right side of the law. At Anderson and Yamada, P.C., we are here to serve your company’s needs. When it comes to regulatory and legal compliance we can advise you and defend you in all aspects of federal and state law. Contact us so we can be part of your team and serve your company.