The California Supreme Court has ruled unanimously that drivers signed on as independent contractors for trucking company Anchor Transportation were wrongly misclassified, since the state’s Unfair Competition Law (UCL) is not blocked by the Federal Aviation Administration Authorization Act of 1994 (FAAAA).
As a result of their misclassification, drivers were denied benefits normally given to full-time employees such as unemployment, overtime, disability and workers’ compensation, as well as reimbursement for business expenses, among other things, the court said.
By avoiding these expenses, the carrier gained an unfair advantage over its competitors and “deprived employees of benefits and protections to which they are entitled,” according to the State of California who filed the suit.
Anchor Transportation Inc., based in Long Beach, CA, argued that the FAAAA preempts the law and classifying its drivers would drive up the cost of doing business, as well as affect the quality and price of the company’s transportation services. The California Supreme Court disagreed.
It said that even though the regulations would affect the price and cost of its services, the UCL was a law of general application and did not specially address the “price, route, or service of any motor carrier… with respect to the transportation of property.”
Therefore, drivers at Pac Anchor are misclassified and entitled to be put in the same category of other similar employees and granted full-time status.
The drivers “invest no capital, own no trucks and do not use their own tools or equipment,” court documents note. “Drivers are often employed for extended time periods, but they can be discharged without cause, have no operational control, have no other customers, take all instruction from defendants and have no Department of Transportation operating authority or permits to engage independently in cargo transport,” the ruling said.
In the last couple of months, there have been two other rulings in favor of drivers battling carriers over FAAAA regulations in court. In July, A California federal appeals court bypassed the FAAAA and sided with drivers from Penske Logistics, ruling that they are entitled to paid meal breaks and rest periods. In June, a U.S Court of Appeals ruled that Georgia-based carrier Affinity Logistics misclassified employees by making them sign lease agreements.