United States: Impact Of Driver-Tracking Technology On Wage And Hour Litigation

(March 2019) -  Technology has made monitoring and tracking drivers and loads more streamlined than ever. Trucking companies have more options than ever to monitor drivers, loads, and fleet performance. For example, mobile communication systems including telematics hardware and software bundles help trucking companies monitor the fleet, comply with state and federal regulations, and understand a driver’s driving behavior. These same systems can also help form the basis for an adverse wage and hour opinion.

For years, truck drivers have been litigating the matter of whether a truck driver should be classified as an employee or an independent contractor. The lawsuits are nothing new. Trucking companies should anticipate an increase in litigation in light of the United States Supreme Court’s New Prime Inc. v. Oliveira decision in which the Court held that the truck drivers designated as independent contractors were exempt from the Federal Arbitration Act because the term “contract of employment” as used in the Act means contract to perform work and not contract to be an employee.

Recently, the California Labor Commissioner ruled in favor of 24 truck port drivers, granting the truck drivers a $6 million settlement. In this decision, the Commissioner decided that the trucking firm did not meet its burden of proving the affirmative defense that the truck drivers were independent contractors. The Commissioner concluded, “Defendants retained pervasive control over the operation as a whole, and Plaintiffs’ services were an integral part of Defendants’ business. Substantial evidence supports the finding that Plaintiffs were functioning as employees rather than as true independent contractors.” The Commissioner’s conclusion rested primarily on its finding that the fleet company managed the truck drivers through a “dispatch system” that relied primarily on electronic communication.1

While this is hardly the first decision finding that truck drivers had been misclassified as independent contractors, this marks the first occasion where the general manager for the trucking company has been held individually liable under Cal Labor Code §558.1 for misclassifying the drivers as independent contractors.

Also, currently on appeal before the Ninth Circuit Court of Appeals is a United States District Court for the District of Arizona decision which held that a large trucking firm misclassified multiple drivers as independent contractors. In reaching its decision, the district court’s opinion noted the various ways the trucking firm monitored the drivers, including the use of a telematics communication systems. The court further noted that the trucking firm had the “ability to know where all drivers are and what their availability is at frequent intervals.” The fact that the trucking firm rarely used its ability to monitor did not seem to carry the weight with the court as much as the fact that the trucking firm could monitor the drivers.2

Moving forward, it is important for trucking firms to understand the relationship between wage and hour litigation and the monitoring capability of telematics packages. Trucking fleets that use sophisticated telematics tracking devices to monitor, assign, and check in on independent or owner-operated drivers are at a higher risk of an adverse wage and hour decision. The availability and use of sophisticated telematics packages may show, in the right (or wrong) set of circumstances, that the trucking fleet is exercising significant control over the owner operator. And while the test to determine whether a driver is an employee or independent contractor varies depending on the jurisdiction, nearly every court considers the degree of control the company exercises over the driver. New technology simply makes it easier for a driver to show trucking company control, even if the driver signed a document identifying him as an independent contractor.

Footnote

1 See CA Labor Commissioner’s Decision on 12/28/18 regarding Cal Cartage Express and CA Labor Commissioner’s Decision on 12/26/18 regarding California Multimodal

2 See John Doe 1 v. Swift Transportation Co. Inc., et. al, Case No. 10-CV-00899 (D. Ariz. 2017), currently pending on appeal in Case No. 17-15102 (9th Cir.).

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