At the end of September, U.S. District Court Judge Beverly Reid O’Connell held that truck drivers who move cargo containers to and from California port facilities for STE, a trucking and logistics company, are “employees” who can pursue wage-and-hour claims under state law, and are not independent contractors. Taylor v. Shippers Transp. Express, Inc., No. 2:13-cv-02092 (C.D. Cal. Sept. 30, 2014) (slip op. available here).
The defendants initially contended that the plaintiffs’ claims under the Labor Code were preempted by the Federal Aviation Administration Authorization Act (“FAAAA”), but the Ninth Circuit recently rejected this argument in Dilts v. Penske Logistics, LLC, No. 12-55705 (9th Cir. Sept. 8, 2014) and the Taylor court denied the defendant’s motion for summary judgment accordingly. The court granted plaintiffs’ motion for partial summary judgment, finding that STE’s ability to terminate drivers on short notice and its control over their daily work strongly indicated that the drivers were employees rather than independent contractors. A certified class of 300 former and current drivers alleged that drivers who leased trucks from STE were misclassified as independent contractors, and were thus denied minimum wage, business expense reimbursements, and itemized wage statements. The principal test of an employment relationship developed by the California Supreme Court turns on “[w]hether the person to whom service is rendered has the right to control the manner and means of accomplishing the result desired.” Slip op. at 23 (citing S.G. Borello & Sons, Inc. v. Department of Industrial Relations, 48 Cal. 3d 341, 350 (1989)). Citing Borello’s secondary indicia of employment, the court also found that “strong evidence in support of an employment relationship is the right to discharge at will, without cause,” a factor which was present here. Id.
For example, under the leases, STE “effectively retains the right to terminate any Driver’s agreement without cause provided it gives the Driver thirty days’ notice,” which showed STE had a right to control and is thus indicative of an employer-employee relationship. Slip op. at 18. Although STE maintained that it did not control drivers (i.e. they could work when they wanted and could choose which loads to accept), the court found that the evidence in the record undermined these claims, citing company policy statements that drivers were required to contact dispatchers daily, that drivers needed to be there “on time when required,” and that STE had the capacity to track driver’s speed via GPS and occasionally sent employees to monitor drivers and verify they were driving safely. Stating that it is the “right to control, and not the actual exercise of control, which drives this analysis,” the court said the drivers had satisfied their burden of establishing they were employees of STE. Slip op. at 22.