Insights - February 2016 - (Page 11)
Caution Urged on California
Driver Reclassification
From the desks of Benesch Transportation & Logistics Practice Group
(c) the amounts paid to each reclassified driver for misclassification,
On Oct. 10, 2015, Governor Jerry
Brown signed a state law based on the
California bill AB 621 which provides an
option to relieve a motor carrier performing drayage services of liability for
misclassification of commercial drivers
as independent contractors.
Under the Motor Carrier Employer
Amnesty Program of California established by the new law, carriers who
misclassified drivers can apply for relief,
provided an eligible motor carrier enters into a settlement agreement with
the Labor Commissioner and agrees to
reclassify its drivers as employees. Then,
the carrier may be relieved of liability
for certain statutory or civil penalties
associated with its classification of the
reclassified commercial drivers as independent contractors.
With any government program,
however, the devil is in the details,
which in this case relate to compliance
and to exceptions to the protection the
law provides.
In fact, that the enacted bill was
born of a partnership between the California State Legislature and the California Teamsters calls for a double-dose of
careful consideration.
(d) the pre-reclassification time
periods for which each payment to
reclassified drivers applied,
Qualifying for Protection
To enjoy the protections of the amnesty program, an eligible carrier must
submit an application to the Labor
Commissioner establishing its eligibility, and report the results of a self-audit
consistent with the Commissioner's
guidelines.
Carriers that reclassified drivers
prior to Jan. 1, 2016, either voluntarily
or as a result a "final disposition" in a
civil proceeding, must also submit the
following:
(a) documents proving the worker
reclassification, including when the
reclassification commenced,
(b) the identity of each driver
reclassified,
(e) a self-audit for all reclassified
drivers, and
(f) a separate self-audit for any drivers
subject to reclassification that are
not identified under (b) above.
Exceptions to Protection
An eligible carrier's performance
under a settlement agreement acts as
a shield against civil or statutory penalties that might have become due and
payable for the time period covered
by the settlement. However, there are
exceptions.
In addition, compliance with the
settlement agreement relieves the carrier of liability for any unpaid penalties
or interest resulting from the misclassification and reclassification of its
drivers for the tax reporting periods
for which the agreement is applicable.
Nevertheless, penalties and interest
resulting from any pre-agreement assessments are not waived.
Reclassified drivers will receive the
recovery obtained by the Commissioner pursuant to the settlement agreement so long as the driver executes a
release of all claims existing against
the carrier for the misclassification.
A driver does not have to accept the
agreement; however, the driver will
still be reclassified and will be barred
from pursuing a claim for civil or statutory penalties for the period covered
by the agreement, and the carrier is
excused from paying the amount due
to the driver under the settlement
agreement.
Carrier Concessions
As renowned economists have often quipped, though, "there is no such
thing as a free lunch." Participation in
the Program requires eligible carriers
to agree to certain painful concessions.
Among the concessions, the
settlement agreement must include a
vague representation providing that
the carrier will "perform any other
requirements or provisions the Labor
Commissioner and the department
deem necessary to carry out the intent
of [the] section, the program, or to
enforce the settlement agreement."
If the carrier contracts with any
workers in the future as independent
contractors, the carrier has a virtually
insurmountable burden to prove "by
clear and convincing evidence" that
the workers are not employees.
The statute of limitations for a misclassification claim asserted against
a carrier will be tolled from the date
of the application through the date
of denial, or noncompliance with the
settlement agreement.
If the Commissioner commences a
civil action to enforce the settlement
agreement, judgment may be entered
within 60 days, plus costs and attorneys' fees. The judgment does not preclude an action to recover additional
civil and/or statutory penalties.
If Amnesty is Denied
The Program provides that if an
application is denied, neither the application nor its submission shall be
treated as an admission by the motor
carrier that it misclassified drivers as
independent contractors. However,
this purported "safe harbor" provision does not preclude the use of
the application, or its submission, as
evidence in any proceeding involving
the employment status of a carrier's
drivers.
So, while California has provided
some protection for carriers reclassifying drivers as employees, the story
doesn't end there. Carriers will need
to proceed cautiously to gain what
protections they can and to minimize
any liabilities resulting from driver
misclassification.
February 2016 | Intermodal Insights 11
Table of Contents for the Digital Edition of Insights - February 2016
Insights - February 2016
FMCSA Proposes Fitness Revisions
IANA Announces Expanded Sponsorship Package
IANA’s Chair Discusses Association’s 2016 Priorities
Container Weight Verification a 2016 Reality
Freight Reports
Sustainability News
Caution Urged on California Driver Reclassification
Port News
In Brief
People in the News
Welcome New Members
Intermodal Calendar
Insights - February 2016
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