Misclassification of Drivers as Independent Contractors Is Widespread

August 21, 2019 Truck Accident Blog

Driver Misclassification and Legal Cases

The California Labor Commissioner awarded almost $6 million to a group of truck drivers working at the Los Angeles and Long Beach ports. In similar cases, at least $45 million in damages is still owed to misclassified drivers, according to the California Division of Labor Standards Enforcement. Misclassification of truck drivers is a serious problem that puts the public at risk.

Mitigating Risks Through Awareness

Misclassification in the trucking industry has serious consequences for the general public. Independent contractors can face the total erosion of their rights under the National Labor Relations Act, which only applies if the worker is classified as an employee.

Costs of Misclassification to the Public

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Contract drivers can be forced to accept unsafe working conditions that increase the likelihood of a collision. Since the tractor trailer is statistically one of the most dangerous vehicles on the highway, public safety is directly impacted by the working conditions of contract drivers, lease contractors, employees and owner-operators.

There are many other costs involved in driver misclassification. These may include the following:

  • Significant loss of revenues to the Social Security, Medicare, workers’ compensation and unemployment insurance pools reduces the capacity of these programs to function. Both the state and federal government are deprived of tax revenues, thus reducing the ability of these institutions to maintain their obligations to the public.

  • The so-called “safe harbor” tax loophole allows companies that are found guilty of misclassifying workers to continue the practice. States are often overwhelmed with cases and can’t keep up with the number of complaints. In addition to the state auditing restrictions, the IRS is similarly constrained at the federal level.

  • Companies that participate in this practice have a competitive advantage over the trucking companies that observe the law and classify their drivers accurately. This provides the financial incentive for companies to continue undermining the ability of workers to receive the benefits provided under existing labor laws.

Costs of Misclassification to Independent Contract Drivers

The misclassified truck driver is forced to be responsible for paying the entire FICA tax instead of the usual half. This puts an increased burden on the truck driver and family members as well as the local economy, which no longer benefits from the driver’s normal pay rate. This amounts to a transfer of wealth that is experienced as a theft by many drivers, especially at tax time.

Additional losses to the driver include the loss of the right to join a union. The driver becomes ineligible for unemployment insurance and disability. The additional tax burden combined with the loss of workplace protections can be catastrophic for some workers. According to the National Employment Law Project, up to 30 percent of the taxes paid by these independent contractors would be included in their pay. This situation could be described as modern wage theft.

The IRS uses something called a multifactor test to determine whether or not a worker is an employee or an independent contractor. Examples include control over work hours, financial control over the equipment used and the relationship between the worker and the company. The ability to work for multiple companies is also used to define who is an independent contractor.

No Control Over Working Conditions

Drivers whose working hours are completely determined by the company are often unable to control any aspect of their work while simultaneously shouldering the added tax burden of the employer. This causes financial distress for workers and family members who understand the situation and can find no legal remedy. This situation can have serious psychological implications for drivers who are unable to change their employment status after being misclassified.

Misclassified truck drivers are not protected by the Fair Labor Standards Act. Employers can ignore minimum wage and overtime laws, for example. They can also avoid laws that require them to verify the status of workers. They can hire undocumented workers and exploit them with legal impunity. The stress on these workers spreads to the other parts of the labor force as employers effectively race to the bottom in terms of wages and working conditions.

Independent contract truck drivers can be forced to compete with undocumented drivers for loads, routes and even truck maintenance access. Employers can inflict workplace abuse with what appears to be legal impunity. These workers can’t turn to a union for assistance or collective bargaining arrangements. Some of them might even seek assistance from a truck accident lawyer if the case involves a collision in addition to employer abuse.

Misclassified Truck Drivers, Fatigue and Fatalities

The effect of misclassifying undocumented and citizen truck drivers as independent contractors can have a detrimental effect in the public realm. Workers are often exploited and pressured to ignore hours-of-service laws that restrict the number of hours that a driver is allowed to operate. These drivers are vulnerable to demands imposed by the employer, which are purely designed to increase profits at the expense of the worker and the public’s safety. Employers can now ignore basic laws that protect workers from exploitation, unfair labor practices and wage theft.

To illustrate, an independent contractor can be assigned a truck that doesn’t have a functioning electronic logging device. The employer can pressure the driver to falsify logbooks to get around the hours-of-service rules. If this continues long enough, the driver can be worked beyond the normal limits of endurance. These drivers are more likely to become involved in a collision on the road. The public’s safety is seriously compromised because the fatality rate of passengers in a collision with a commercial truck is extremely high. For the victims, a truck accident lawyer is often needed to fight the same companies that created the unsafe conditions in the first place.

The law allows a truck driver to work up to 70 hours during an eight-day period. The ability of the employer to pressure independent contractors to work even longer hours should raise alarms about the dangerous situation employers are imposing on the public in general and drivers specifically. This situation only benefits the trucking companies at the expense of public safety and the workers.

Case Examples of Misclassification, Legal Actions

A lease truck driver worked over 16 hours per day until his truck had a breakdown. After expenses, he earned as little as 67 cents for an entire week of work. Following the breakdown, the company fired him and seized the truck. He had already paid over $70,000 toward the truck with the intent of becoming the owner someday. This is just one example of how a company can misclassify an employee driver as independent while exercising total control. The financial dependency of this driver and the exclusive nature of the working relationship raise questions about employees who are coerced into accepting these impossible working conditions.

According to a yearlong investigation, trucking companies in the port of Los Angeles were able to force drivers to work up to 20 hours every day under threats of seizing trucks as well as the money paid toward ownership. Truck drivers from three companies reported being physically stopped from leaving the work site. These drivers had to pay cash for their diesel fuel, insurance, parking and other expenses. The companies exerted extreme pressure to force drivers to break the 11-hour daily limit for driving. Threats of truck repossession were routinely used to intimidate workers into violating hours-of-service rules.

Independent Contractor Resources

Although federal law defines the relationship between the independent contractor and employer as a relationship defined by the contract’s terms and conditions, these workers might still have legal recourse. Class-action lawsuits have already occurred in many states, and other people can use these rulings as a precedent to make additional claims through the court system. Some truck drivers classified as independent contractors can still form or join a union.

Misclassified truck drivers have won over 95 percent of their court cases; however, even more drivers are unable to launch a legal case until extensive damage has already been done. A qualified truck accident lawyer in New Jersey can help victims navigate the unique legal complexities that exist in cases involving commercial trucks. Contact RAM Law at (732) 247-3600 in New Brunswick or (908) 448-2560 in Somerville for more information.

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