Avoid (Or Evade) the Law: Just Label ‘Em Independent Contractors

By Maurice Jourdane

During the 1930s, California enacted laws protecting employees from corporate greed. Daily, on the congested Long Beach freeway, we pass processions of 18-wheel trucks delivering containers from the Long Beach and Los Angeles ports to a nearby warehouse in Wilmington or Carson, or to a railhead in East Los Angeles. In California, approximately 20,000 truck drivers, like ancient Chinese coolies, deliver shipping containers from the port.

Many of those drivers are immigrants who speak little English.

They toil 60 to 70 hours a week to provide food for their families, to join the middle class pursuing the American Dream. And most drive a truck owned by a corporate motor carrier or a subsidiary of the motor carrier. To obtain work delivering containers from the port, they had to sign a contract written in a lawyer’s language they might not speak or read, which labels them independent contractors, not employees.

By labeling drivers who deliver containers as independent contractors, corporate motor carriers avoid providing them with workers compensation insurance and all of the benefits provided to employees, such as minimum wage, breaks, unemployment compensation, state disability insurance and Social Security. Because the motor carrier does not identify the driver as an employee, it does not deduct taxes from his wages and does not provide him with a W2. As a result, port drivers are denied the benefits guaranteed to all employees since the Great Depression, and the state is losing millions, if not billions, in taxes.

Generally speaking, independent contractors – like doctors, lawyers, plumbers or building contractors – engage in a business or profession that utilizes a special skill to provide a service to someone who has a specific, short-term need that only someone with a special skill can satisfy. An independent contractor has his/her own distinct business under an owner’s control, and has the education, experience, or training that enable him/her to satisfy the given need.

Whether someone qualifies as an independent contractor or not depends on if he/she: is a distinct business or merely works under the control of another business; has a special skill required to provide the service; supplies the necessities to perform the service, like the tools and place to perform the service; provides service that is an investment other than the specific service; holds out to be a separate business; controls hours and place of work performance; profits or loses depending on his/her managerial skill; has a particular duration of a working relationship; and performs a service that is an integral part of the hirer’s business.

Most port drivers do not have or hold themselves out as a distinct business. They do not have a special skills, do not own the truck they drive and do not control the time and place of work. Their profit or loss depends on the number of hours they work, not on their managerial skill. They drive only for one motor carrier for years and perform an integral part of the motor carrier’s business.

Motor carriers are usually corporations that deliver containers from the port. They contract with the shipper or the owner of the load, companies like Wal-Mart, Sears, Target or Kawasaki, to deliver the containers. The port driver almost never talks with the owner or shipper of the load. The driver rarely knows what he or she is carrying because the containers are closed. For each delivery, the driver must report daily to the corporate motor carrier and proceed to the terminal the motor carrier instructs. At the terminal gate, the driver must wait hours until able to provide the name of the motor carrier and its operating authority. After the delivery, the driver must give the motor carrier a manifest showing how the driver spent the day. The motor carrier arranges where the load is picked up, where it is delivered, the cost and all billing and collection for the delivery. Almost never does a port driver speak with the owner or shipper of a load. He drives long hours, sometimes taking home less than the minimum wage. No matter how hard he tries to profit, he has no ability to do so because the motor carrier controls what he does and how much money he receives.

California is known for protecting workers and guaranteeing benefits like minimum wage, overtime pay, workers compensation and unemployment insurance. Port drivers are denied these benefits because lawyers have drafted contracts labeling them independent contractors rather than employees of the motor carrier.

While California has enacted laws to protect workers, to be effective, the laws must be enforced. While he was Attorney General, now-Governor Jerry Brown filed six lawsuits against trucking companies charging them with mislabeling port drivers as independent contractors. Given California’s fiscal crisis, the state lacks attorneys to pursue most of the charges. To protect workers as the Legislature intended when it passed the laws, California cannot accept the ongoing unequal treatment of those who deliver our goods.

California cannot abandon its effort to guarantee that workers are more than slaves working merely to enable their families to subsist. California must stand up to the crafty lawyers and stop motor carriers from denying workers’ benefits to port drivers who leave their homes every day to spend long days delivering containers for giant corporations. Are we no longer a land that cares about our people – a land seeking to eliminate poverty suffered by all who work hard every day? Or is our only concern making the greedy corporations richer?

Jourdane is a former Deputy Secretary of Legal Affairs in the Governor’s office, attorney with California Rural Legal Assistance, the Agricultural Labor Relations Board, the Department of Justice, Labor Commissioner; Superior Court judge; temporary juvenile court judge; and judicial council with the court of appeals. Jourdane has published several law review articles and two books: The Struggle for the Health & Legal Protection of Farm Workers: El Cortito and Waves of Recovery.

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October 4, 2012  Copyright © 2012 Eastern Group Publications, Inc.

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