Employer Unlawfully Denies Truck Drivers Reimbursement by Misclassifying Them as Independent Contractors

Seacon Logix, Inc. (Seacon) transports cargo from the Port of Long Beach and the Port of Los Angeles to warehouses or other facilities. Seacon hired and unlawfully classified its truck drivers as independent contractors rather than employees. Seacon had its drivers complete and sign various documents, including an agreement which provided that the drivers were independent contractors or subcontractors.

Seacon then leased its trucks to the drivers. Because the company classified the drivers as independent contractors, it deducted lease and insurance payments, and fuel and repair expenses from the truckers’ paychecks.

The truck drivers filed a class action lawsuit against Seacon. The plaintiffs alleged that they should have been classified as employees and that Seacon should not have deducted truck lease payments or insurance premiums from their paychecks. The trial court found for the truckers and entered judgment in their favor. Seacon appealed, arguing that the trial court’s finding was not supported by substantial evidence. The Court of Appeal affirmed the decision.

The plaintiffs’ testimony demonstrated that Seacon directed and controlled the manner of the truckers’ work. The company dictated start times, routes, and delivery assignments. Seacon not only required its drivers to lease its trucks, but drivers were restricted to transporting solely for Seacon. Seacon had possession of the truck’s keys, registered the trucks in Seacon’s name, and insured the trucks. Seacon paid its drivers on a weekly basis, deducting on average $450 for lease payments and $200 for insurance payments each week. The company also approved or disapproved absences and terminated its drivers without notice.

The Court found that the drivers should have been classified as employees, not independent contractors. The Court considered various factors, including: 1) Seacon controlled the manner and means of the drivers’ work; 2) Seacon had the right to discharge its employees; 3) the drivers were a regular and integrated part of the business operation; 4) the drivers required a Class A license, but little other skill; and 5) the leased trucks could only be used for work performed for Seacon.

Even though Seacon’s drivers were paid on a weekly basis based on each job they performed (rather than on an hourly basis), a factor that may suggest they should be have been classified as independent contractors, the Court reasoned that this alone, given the other factors, was not enough. The agreement Seacon had its drivers sign that designated them as independent contractors was also not dispositive, according to the Court.

Because Seacon’s drivers were employees, they should have been reimbursed for all “necessary expenditures incurred in the course of performing [ ]duties or while carrying out the requests of an employer.” California Labor Code § 2802.

Many employers misclassify their workers as independent contractors, thereby denying those workers important legal rights. Hunter Pyle Law has handled numerous cases involving employees who were misclassified. If you have questions about your work situation, please feel free to call Hunter Pyle Law for a free consultation at (510)-663-9240 or inquire@hunterpylelaw.com.