California’s Labor Commissioner and its Division of Labor Standards Enforcement (DLSE) recently ruled against logistics company XPO Cartage determining that it misclassified four drivers as independent contractors instead of employees. The ruling shows DLSE’s willing to enforce a 2016 state law which requires companies to pay piece-rate workers for meal and rest breaks, and other “nonproductive time.” Companies face potential pitfalls when trying to comply with this new law and determine how to pay workers based on the law’s compensation requirements.
In the XPO case, the drivers alleged they were not allowed to decide when to take lunch and rest breaks, were required to stay in their trucks during breaks and were not allowed to work for other companies. They also claimed they were not paid for “nonproductive time,” such as participating in inspections and waiting for dispatch. The DLSE determined the workers were employees of XPO and ordered XPO to pay more than $855,000 in compensation for these alleged wage violations. The drivers were awarded between $171,939 and $279,416 each.
XPO is appealing the DLSE’s ruling to California’s Superior Court. The outcome of XPO’s appeal and ones filed by other companies may have a substantial effect on whether this 2016 law is overturned.
This case emphasizes the importance of carriers and brokers operating in compliance with California laws. Your company can take steps to protect itself from misclassification claims and lawsuits, but using properly prepared lease agreements and creating corporations and LLCs is vital for compliance. Chauvel & Glatt can help your company engage in best practices and advise of new changes in the law. Contact its experienced attorneys today.