This month’s news update highlights the increased focus on class action IC misclassification lawsuits brought against transportation industry clients and ride-sharing companies like Uber.  The successes enjoyed to date by most class action lawyers alleging IC misclassification reflects the fact that many companies using ICs have not yet effectively minimized their misclassification liability. Processes such as IC Diagnostics™ are designed to assist companies in structuring, documenting, and implementing their IC relationships in a manner that maximizes their compliance with federal and state IC misclassification laws.

In the Courts

  • PORT TRUCK DRIVERS FILE ANOTHER CLAIM AGAINST TRUCKING COMPANIES IN CALIFORNIA FOR IC MISCLASSIFICATION. Long Beach and Los Angeles port truckers, who allege that they have been misclassified as independent contractors, continue to battle trucking companies. While some of their strikes have ended, new claims were reportedly filed in November 2015 with the California Division of Labor Standards seeking $3.5 million in damages for “wage theft.” There are reportedly 21 pending class action lawsuits covering approximately 3,000 current and former allegedly misclassified California port drivers as well as misclassification lawsuits by the U.S. Department of Labor and California Attorney General against selected California port trucking companies.
  • NEW YORK TRUCKING COMPANY FOUND TO HAVE MISCLASSIFIED LONG-HAUL TRACTOR-TRAILER DRIVERS. New York State appeals court upholds decision of Unemployment Insurance Appeal Board that Utah-based trucking company, CR England Inc. misclassified long-haul tractor-trailer truck drivers who were New York residents as independent contractors and not employees. In support of its decision, the court found, among other things, that the company required drivers to use electronic on-board recorders in their trucks that were installed at the company’s expense; certain tolls were reimbursed by the company; drivers had an exclusive relationship with the company; the company established the rate of pay for the drivers and bore the risk of loss by paying the drivers even if the customer failed to pay the company; and the company handled customer complaints regarding the drivers. The company argued that the trucking industry is highly regulated and that many provisions in the drivers’ independent contractor agreements that appeared to limit or direct the relationship were, in fact, required by federal statutes and regulations. Although the court agreed that compliance with government regulations itself should not be dispositive of an employee-employer relationship, it stated that “the Unemployment Insurance Appeal Board did not rely solely upon required regulatory terms, but instead found the agreement went beyond regulatory requirements…that gave [the company] control over the means by which [the drivers] fulfilled their work responsibilities.” Matter of Scott (CR England Inc. – Commissioner of Labor), 2015 Slip Op. 08016 (3d Dep’t Nov. 5, 2015)
  • UBER IC MISCLASSIFICATION TRIAL SCHEDULED FOR JUNE 2016. A flurry of activity transpired in November 2015 for on-demand ride service giant, Uber Technologies Inc., as a trial date was set by a California federal court judge and a hearing was held to consider the potential expansion of class and arbitration of claims. On November 4, 2015, Judge Edward Chen scheduled a five-week trial to commence on June 20, 2016 in the IC misclassification class action suit brought by drivers against different Uber entities. As more fully discussed in my prior blog post September 1, 2015, the certified class includes drivers for UberX, a ride-sharing service where drivers use their own cars, UberBlack, a high-end car service, and Uber SUV. Three weeks later, Judge Chen held a hearing in which the drivers sought to expand the already existing 160,000-driver class to include drivers who were parties to a 2014 arbitration agreement. No decision has been rendered yet regarding the issues raised at the hearing. O’Connor v. Uber Technologies Inc., No. 3:13-cv-03826 (N.D. Cal. 2015).

On the Legislative Front

  • NEW YORK GOVERNOR VETOES IC BILL COVERING NEWSPAPER DELIVERY WORKERS. On November 23, 2015, New York Governor Andrew Cuomo vetoed a bill (AB 7753) that would have codified the New York State Department of Labor’s existing “Guidelines for Determining Worker Status: Newspaper and Shopping Guide Publishing Industry” determining whether newspaper delivery persons are independent contractors or employees for purposes of unemployment, minimum wage and workers’ compensation. The bill’s bipartisan sponsors wrote: “Codifying the guidelines issued by the Department of Labor will foster the distribution of news to New York State residents widely, easily, and affordably while providing delivery persons with the freedom to engage in a form of small business or self-employment that affords them the freedom from constraints of traditional employment requirements.” Although the bill passed in the Assembly and Senate, Governor Cuomo vetoed it on November 20, 2015 and stated in his veto memo: “Under my administration, we have strived to decrease misclassifications, increase compliance, and ensure that workers secure a fair day’s pay for a fair day’s work, with all of the appropriate protections available under the law. This bill would not advance these goals.”

Regulatory and Enforcement Initiatives

  • LOUISIANA RATCHETS UP IC MISCLASSIFICATION ENFORCEMENT. Increased efforts by the Louisiana Workforce Commission (“LWC”) to crack down on misclassification of workers as ICs has led to the identification of nearly $83 million in underreported wages to date in 2015 and the collection of more than $923,000 in unemployment insurance taxes owed by employers. According to a November 17, 2015 Press Release from the LWC, the agency is on track toward a second consecutive record-setting year in the identification of workers misclassified as independent contractors instead of employees. In 2014, Louisiana led the nation by finding 11 misclassified workers per audit and from January through November 12, 2015, the LWC discovered nearly 9,400 misclassified employees through audits of 865 companies. LWC Executive Director Curt Eysink stated: “We’ve ramped up our efforts in recent years thanks to new laws such as Louisiana’s Fair Play Act of 2012 and cooperation with state and federal agencies that are sharing data on companies.”

Written by Richard Reibstein.