July 2, 2014 – Josh Haffner and Drew Ferrandini wrote an article discussing Ruiz v. Affinity Logistics Corporation, a case that was decided on June 16 by the 9th Circuit Court of Appeals which ruled that Affinity Logistics Corporation’s truck drivers were employees, despite ostensibly being independent contractors because they signed independent contractor agreements. Essentially, the court ignored the company’s label and looked to actual work done by the truckers and the amount of the control Affinity exerted over the drivers.
The plaintiff in the case, Fernando Ruiz worked as a driver for Penske Logistics Corporation, a furniture delivery company that had a contract with Sears. During this time he was an “employee.” However, in November 2003, Sears told its drivers that Affinity would take over the Penske’s contract. Ruiz was then advised by Affinity that he needed to become an “independent contractor.”
The court’s decision has serious implications for many trucking companies operating out of California ports. The fact of the matter is that almost all of the trucking companies working out of California’s ports engage in similar practices that led the 9th Circuit to find an employee-employer relationship. They control the drivers pay and manner of work, and force their drivers to lease trucks from the company, deduct expenses related to maintenance of the trucks from the drivers’ wages, and require them to sign these sham independent contractor agreements. While this setup is certainly favorable to the trucking companies, it represents the worst of both worlds for the drivers. They are deprived of any true autonomy that comes from working as independent contractors, yet they are without of protections afforded to employees under California law. These trucking companies operating out of the ports are currently being faced with a deluge of individual and class claims for misclassifying drivers as independent contractors.
This ruling is another brick in the wall which will likely prove insurmountable and will require trucking companies operating out of the ports to realize that simply forcing employees to sign “independent contractor” agreements cannot be used an end-run around the Labor Code.
Many port trucking companies may have to change their business practices, in part, as a result of this ruling. But when a business model places the financial responsibility of maintaining expensive company equipment on employees who are barely making ends meet, all to simply avoid paying employees the wages they are legally due, perhaps change is a good thing.