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Company abuses raise questions about independent contractors

Truckers in California face challenges in the industry that go beyond the typical 14-hour workdays and irregular schedules. After a yearlong investigation, USA TODAY recently published an article in which it outlined abuses in California’s port trucking industry. Among the ways port trucking companies have attempted to justify these abuses is to lure unsophisticated and undereducated drivers into contracts whereby the drivers are treated as independent contractors.

As independent contractors, drivers agree to provide their own trucks, or finance their trucks through leases, and pay port trucking companies expenses ranging from “hundreds of dollars a month for insurance and diesel fuel” to parking fees at company lots. “One company . . . charged $2 per week for the office toilet paper and other supplies.”

Such expenses can be devastating to a truck driver’s income. In one example, a driver’s tax return revealed an annual gross income of $94,000, which became $21,000 in net income after truck expenses. In another case, $854.13 was grossed in a week but only $0.67 taken home after deductions for expenses.

California courts have almost always ruled that port truckers must be treated as employees and not independent contractors. Nonetheless, investigators found that some drivers are required to finance the purchase of trucks they would otherwise be unable to afford. This works to a company's advantage because it "extract[s] forced labor" from a driver. As independent contractors, drivers essentially become “modern-day indentured servant[s].”

Workers presumed to be employees unless proved otherwise

According to the California Department of Industrial Relations, determining whether a worker is an employee or independent contractor is a complex inquiry. In cases involving such a determination, the DIR’s Division of Labor Standards Enforcement presumes that a worker is an employee. This presumption can only be overcome through a fact-based inquiry. Relevant facts are measured against several factors, none of which is determinative. The most important factor concerns the extent to which an employer exercises control over a worker. The more control exercised, the more likely a worker should be classified as an employee.

A contract that states a person will be engaged as an independent contractor is not dispositive as to the person’s employment status. Instead, a court or agency will evaluate the contract as part of a comprehensive inquiry into all relevant circumstances. 

According to the DIR, employers receive benefits when persons are classified as independent contractors. For example, employers can avoid paying minimum wage, social security, and payroll taxes. They can avoid providing workers’ compensation coverage, and disability or unemployment insurance. All these benefits explain why an employer might want to misclassify an employee as an independent contractor.

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