Drivers Who Leased Trucks From Shipping Company Are Employees, Not Independent Contractors, Says NLRB

In Intermodal Bridge Transport, the Board held that the Company did not meet its burden of establishing that delivery drivers were independent contractors. Applying its decision in SuperShuttle – which we discussed here – the Board concluded that drivers who leased their trucks are employees, and, thus, enjoy the protections of the National Labor Relations Act.

Background: The Company operates a logistics and storage container business that services ports in Southern California. The Company engaged truck drivers, who transport goods in storage containers. The drivers whose status was in controversy leased their trucks from the Employers.

In analyzing whether the drivers were independent contractors, the Board applied the common law agency test viewed through the prism of “entrepreneurial opportunity,” as required by SuperShuttle. The Board found that the drivers had limited entrepreneurial opportunity and that the common law factors weighed in favor of finding that the drivers are employees:

Lack of Entrepreneurial Opportunity: Drivers did not have meaningful opportunity for economic gain through their own efforts or initiative. The Company set the drivers’ compensation rate and operational costs. Thus, the only way for a driver to earn more was simply to work more hours. Customers, not the drivers, negotiated the per-load rate directly with the Company. The drivers paid a daily lease rate and fuel surcharge, and received cleaning assistance payments, all of which were set by the Company. Importantly, the drivers could not use the leased trucks to perform work other than to perform work for the Company.

Limited Control of Work: Drivers did not have their own routes. Moreover, the drivers had little control over when they worked, the loads they hauled, or the customers they serviced. While drivers could pick what days they worked, and what time they started, the Company determined whether the driver worked the day or night shift. Drivers could select between two and four assignments determined exclusively by Company dispatchers. The dispatchers then controlled the flow of the drivers’ work during the shift and communicated directly with customers. Finally, the Company controlled drivers’ terms and conditions of employment through application of policies and procedures, including a detailed progressive disciplinary policy.

Other Factors: The Board found that other factors also supported the conclusion that drivers were employees. For example, the Company provided the drivers’ tools and instrumentalities. In addition, approximately 80% of the drivers had worked for the Employer for more than six years, suggesting the drivers were a permanent workforce.

In short, drivers had limited discretion in when they would work, less discretion to decide which loads to haul, and no discretion to decide to work beyond the end of their shift. The Board, however, found that the mere misclassification of the drivers was not an unfair labor practice.

Lessons for Employers: This case underscores that the Board will closely scrutinize an alleged independent contractor’s opportunity for entrepreneurial opportunity. Where an employer exercises significant control over an individual’s working conditions, and the individual has limited entrepreneurial opportunity or risk of loss, the Board is likely to conclude the individual is an employee, not an independent contractor.