UPCOMING / Battle over “independent contractor” versus “employee” legal status for truck drivers: Bill New Jersey legislature sent to Gov. Christie making it much harder for drayage and parcel delivery drivers to have status as “independent contractors”. Comment: Huge issue for motor carrier cost structures, and Teamsters and their allies in legislatures and state and federal labor agencies.

Question is whether or not Gov. Christie will veto.

News stories here and here.

Copy of bill here.

MOTOR CARRIER (OWNER-OPERATOR AND TITLE VII) / Title VII case alleging sex discrimination for motor carrier’s termination of an owner-operator agreement with plaintiff following a period when such plaintiff had been an “employee” of such motor carrier – held: Title VII does not govern contract relations between a motor carrier and an owner-operator where, applying agency principles provided by state law, such owner–operator relationship truly denotes independent contractor status for the owner-operator. In particular, the fact that owner-operator opted under her contract to elect to receive multiple additional services offered to her by motor carrier did not evidence such motor carrier’s “control” as she had in fact chosen to take them – they were not a precondition of being an owner-operator.

Zents v. Baylor Trucking Co., No. 5:11CV1941, Slip opinion (U.S. District Court for the Northern District of Ohio, April 11, 2013). Free copy of opinion available here.

Court relied heavily on two precedents applying state agency law to determine owner-operator / independent contractor versus employee truck driver status:

Laredo v. CRST Malone, Inc., 820 F.Supp.2d 698 (E.D.N.C. 2011). Free copy of opinion available here

Taylor v. BP Express, Inc. 2008 WL 5046071 (S.D. Ga. 2008). Free copy of opinion available here.

Case Study: The Ongoing Battle Over “Employee Misclassification” versus the Right to Act as Independent Contractor. There is a lot to keep track of and a lot to understand – but unless your have no other choice or FedEx type resources try to stay away from such situations altogether if possible. COMMENT: This seems to be a lot more about labor union politics at the federal and state administrative level than about regulation according to developed principles of independent contractor versus employee. And unless you have a deep pocket like FedEx (and corresponding economic commitment to the independent contractor business model like FedEx Ground) – this battle is something to avoid at (almost) all costs.

Last week the Wall Street Journal published a news feature on what some in the U.S. Department of Labor and similar officials in state labor agencies refer to as “employee misclassification”. (Wall Street Journal Monday March 4, 2013 story available here [partial access free; full access requires subscription]).

The news feature cites a federal decision upholding the right of Gate Guard Services, L.P. to hire contractors to serve as gate attendants at energy extraction and construction sites. Gate Guard Services L.P. v. Solis, Slip copy, 2013 WL 593418 (U.S. District Court for the Northern District of Texas, February 13, 2013). Free copy available here.

Overturning a U.S. Department of Labor assessment of $6 million for what that Department had characterized as employee “misclassification” – because the court ruled that the workers in question were in fact independent contractors under applicable legal standards.

On the other hand, last week saw a victory in this area for State of California Labor Commissioner Julie A. Su in which a California Superior Court held that Port of Long Beach truck drivers working for Seacon Logix were “misclassified” employees as the department contended – not independent contractor as Seacon Logix argued. This court case was an appeal from a ruling of the California Department of Industrial Relations’ Division of Labor Standards Enforcement (Labor Commissioner’s Office). (I cannot find a copy of any order or opinion on WestLaw or elsewhere on the web – but attached please find a copy of the Labor Commissioner’s press release).

Legal Take-away:

The employee “misclassification” battle continues.

My own rule of thumb is that if you find yourself dealing with either the U.S. Department of Labor or authorities in a state like California, Minnesota, New York or Massachusetts – adherence to traditional independent contractor principles in the last few decades’ case law will not suffice. In such settings it is most prudent to assume that the new organized labor orthodoxy on this has supplanted what is in the case law.

To the extent you have the resources to get to court then such case law might well work – as in Gate Guard Services L.P. v. Solis. Also, FedEx Ground has had some success in this field – again in the courts.

But if you can avoid becoming a U.S. Department of Labor target and place your business operations in a so-called “Red” or Right-to-Work state then the more traditional application of “independent contractor” may prevail. Perhaps.

But for the long haul in transportation the real action here is independent contractor versus employee in multi-district litigation consolidated in the U.S. District Court for the Northern District of Indiana before Judge Robert L. Miller, Jr., its Chief Judge. E.g., In re FedEx Ground Package System, Inc., Employment Practices Litigation, 283 F.R.D. 427 (U.S. District Court for the Northern District of Indiana, April 24, 2012).

Practical Take-away:

If you are FedEx it may well be worth it to fight these battles in court and in the labor departments of the states.

But otherwise I would try to avoid getting into this area in the first place if at all feasible. Unless you have a soft spot in your heart and budget for lawyers.

MOTOR CARRIERS (INSURANCE) / Declaratory judgment action by insurance carrier against trucking company – held: Insurance carrier had no duty to indemnify trucking company for accident involving trucking company’s independent contractor’s truck while that truck was being driven by an employee of trucking company (driving on behalf of independent contractor and not on behalf of trucking company).

“Although Congress required motor carriers to obtain public-liability insurance, it did not require carriers to obtain insurance for their employees. The regulations expressly provide that this public-liability insurance “does not apply to injury to or death of the insured’s employees while engaged in the course of their employment.” 49 C.F.R. § 387.15.”

“The district court held that the policy contains an exclusion for employees of the insured and that because Olivas was an employee, there was no coverage for his injuries….”

Canal Indemnity Co. v. Rapid Logistics, Inc., Slip copy, 2013 WL 657665 (U.S. Court of Appeals for the 5th Circuit, February 22, 2013). Free copy available here.