Driver Misclassification Update

ATA Independent Contractor Activities
During the ATA Independent Contractor Task Force (ICTF) meeting October 1, ATA president Chris Spear reiterated the ATA top tier status of the IC issue and committed to fashioning a revised Independent Contractor Task Force structure to better and more proactively engage Teamsters' inspired state legislative and departments of labor regulatory actions which are unfair, unnecessary, financially burdensome and only serve to assist union efforts to organize port drivers.

The revision process is now being finalized and it is anticipated that a new Independent Contractor Policy Committee will be created and will have its first meeting during the Spring Leadership meeting in early May.
On May 19th, a bill misclassification bill crafted by the New Jersey Motor Truck Association (NJMTA) was favorably reported out by the NJ Assembly Transportation and Independent Authorities Committee on a bipartisan vote. The New Jersey Teamsters, the Port Drivers Association, along with many industry groups supported the bill but the International Teamsters continued to fight against it. As a result, the committee voted the bill out but added the following conditions: the international Teamsters opposing the bill will have to provide in writing their specific concerns 72 hours prior to a meeting with both parties along with the Chairman of the Transportation Committee and the Assembly Speaker. Work is now underway to prepare the necessary briefing materials and press forward to have this final negotiating meeting completed ASAP. More to come...
On April 18 the Regional Director for the Los Angeles office of the National Labor Relations Board (NLRB) issued an unfair labor practice complaint to an intermodal transport company (Intermodal Bridge Transport) alleging that the company had misclassified its drivers as independent contractors and, therefore, violated the National Labor Relations Act (NLRA). This complaint is based on the unique premise that the NLRA provides employees with the right to unionize and engage in protected organizing activities, and that if an employer misclassifies a worker as an independent contractor, it unlawfully deprives the worker of rights accorded to employees under the NLRA.

The complaint specifically cites the following types of company activities as violations of U.S. labor law: questions by a dispatcher to a driver about his support for the union; promising the driver more work if the driver refrained from engaging in union organizing; threatening to close the carrier's operation if the union won representation; and threatening an employee with unspecified reprisals by stating that there would be consequences and employees would regret it if employees continued supporting the union.

DOL Issues Guidance on Misclassification

On July 14, 2015 the Administrator of the Wage and Hour Division of the U.S. Department of Labor issued interpretive guidance on how workers are to be classified as employees or independent contractors under the Fair Labor Standards Act. The guidance recognizes the multifactor “economic realities” test that courts have used to determine whether a worker is an employee or independent contractor but further suggests that FLSA’s broad definition of “employ” results in most workers being employees. While the guidance is not legally binding and may not be adhered to by the courts, it is a clear statement that the USDOL will portray most factors as weighing toward an employee relationship and is another indicator of USDOL’s increased attention to its misclassification initiative.

I have also been advised by an east coast member that officials that are now making motor carrier visits-conducting field audits to examine driver - independent contractor status are much more aware of industry operations as evidenced by the operational areas they are reviewing including:

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  Who supplies the fuel-IFTA filing;
  
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  Are benefits offered and/or discounts on purchasing;
  
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  Insurance - they wanted the insurance policies on each Independent to determine if they could still work for another;
  
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  Information on any and all advances given to drivers and what they were for;
  
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  Information on tire repairs - who pays, the driver or the company;
  
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  Information on whether we offer equipment purchased as part of our offer.
  

Unfortunately, this heighten scrutiny can be expected to continue until we hopefully get a change in our federal administration and its current pro labor/Teamsters point of view....
Senators Introduce Worker Misclassification Legislation

Just two weeks after the DOL released the interpretation discussed above, Senators Bob Casey (D-PA) and Al Franken (D-MN) introduced a worker misclassification bill entitled the Payroll Fraud Prevention Act of 2015 which makes a number of amendments to the Fair Labor Standards Act to require employers to delineate employees from non-employee contractors, impose additional employer reporting requirements, and establish new penalties for misclassification violations. This bill is actually the same legislation democrats have introduced in both 2013 and 2014 and Hillary Clinton is raising in recent campaign speeches.

The measure specifically defines who is to be considered a "non-employee," and requires employers to provide their workers with a written notice of their classification as an employee or non-employee. The bill includes provisions preventing an employer from firing or otherwise retaliating against an individual who pursues his or her rights under the act. Employers could face up to $1,100 in civil penalties for each misclassification, or up to $5,000 if such violation is deemed repeated or willful. Finally, the bill directs the DOL's Wage and Hour Division to conduct targeted audits of industries having a high rate of worker misclassification.

Judge Upholds FAAA Preempts Massachusetts Independent Contractor Law

On July 8, 2015, a federal district court held that a section of the Massachusetts Independent Contractor law is preempted by the Federal Aviation Administration Authorization Act of 1994 (FAAAA).  The case of Massachusetts Delivery Association v. Coakley¹ involved the interpretation of two statutes: the "B Prong" of the Massachusetts Independent Contractor law, Mass. Gen. Law’s c. 149, § 148B, and the FAAAA. The B Prong of the Massachusetts Independent Contractor law provides that an individual may properly be classified as an independent contractor only if the individual performs services "outside the usual course of the employer's business."  This B Prong law is unique to MA and requires that the contractor be in an entirely different business from that of the hiring company. 

As you know, the FAAAA, which was key to our victory over the Port of LA’s attempt to require port dray drivers to be employees, prohibits states from enforcing laws or regulations that are related to a price, route, or service of any motor carrier with respect to the transportation of property. The FAAAA was enacted to allow motor carriers to operate in accordance with national or regional standards, without the burdens of onerous or inconsistent state regulation.