2022 Winning Essay
Lucas Becerra
International Business & Political Science Washington State University
Contractor or Employee? Question of the Decade
The alarm rings, and rings, it’s five in the morning, and while it is still dark outside, people are asleep peacefully in bed but not you; you are a truck driver—considered by some to be the backbone of the American Economy. You get up and sit in your driver’s seat because you sleep in the back of your sleeper cab. You start the engine of your truck (which also serves as your home), twelve cylinders of pure diesel might roar to life, and you pull onto the I-80 starting the second leg of your California to Detroit trip. According to the United States Department of Transportation, there are two million semi-trucks in the United States, and only 350,000 are owner-operators. The rest are either owned by the company whose freight it is or a third-party shipping company; However, many truck drivers are independent contractors, but should they be? No, not only does it inhibit the ability of companies to enforce safety regulations, since they cannot control how their drivers conduct their work. It also leads to drivers being undercompensated and not being given medical insurance and other benefits from their employer. It also limits drivers’ ability to organize to ensure safe and fair working conditions with a union or other collective bargaining agreement.
For example, in California, the state Supreme Court issued a decision, Dynamex Operations West, Inc v. Superior Court of Los Angeles. This case offers a practical test for whether drivers are to be considered employees or contractors: 1) that the worker is free to perform the work on their conditions, not the hiring entity 2) the work is outside the hiring entity’s usual course of business and 3) that the worker regularly engages in the trade (truck driving) that it is being hired to perform for the entity. This case has made independent trucking a dying (and soon to be dead) breed in California. While some may cry that this limits truckers freedom let’s consider that being classified as an employee has benefits, the most pressing being health insurance which currently for a PPO from United Healthcare costs an average $800 per month, add in a spouse/domestic partner and kids the price is closer to $2400 per month, with an employer plan the cost drops to $45 for the employee and $300 for a family, a much more reasonable figure1 ; Additionally being classified as employees allows drivers to participate in employer retirement plans often with matching or pre-tax deduction, which are required to be offered at all employers in California in accordance with state law, as an independent driver one could still participate in a IRA or Roth IRA but wouldn’t benefit from employer matching or the convenience of pay check deductions; Additionally, some may argue that truck drivers can enroll in retirement plans on their own however, this presupposes that drivers have both enough disposable income to contribute the same amount that they would have been contributed if they used employer plans, and that they have the investment knowledge to match the levels of Fidelity, Schwab, or the many other firms that employers contract employee plans to.
Another point to consider is drivers’ working conditions and ability to organize successfully. According to the Teamsters website (one of the largest trucking unions in the United States), union employees make on average 27% more than non-union employees2 , which all independent contractors would be as the right to organize is only afforded to those who are classified as employees, considering union contracts also afford greater employment protection, such as requiring just cause for employment which is essential since the vast majority of employees in the United States are considered at-will employees, meaning they can be fired for any reason or no reason at will (excluding protected classes, such as race, sex, and age). Furthermore, union contracts can specify working conditions such as maximum miles per day driven and a mandatory resting period that is more protective than federal or state requirements. This benefits both the company and the driver as exhaustion can cause limited inhibition, which may result in costly accidents, injury, or death.
Even when not considering the benefits or ability to organize labor, being classified as employees gives employers more control, which can make employee drivers more productive than independent drivers, such as limiting driver’s personal trips while on the road, which put more ware on the truck. As well as allowing drivers to take vehicles into places not designed for the vehicle opening them up to increased risk and if an accident occurs, delays in shipping time. XPO Logistics had previously exercised so much control over its truck drivers that in June, the National Labor Relations Board ruled that the drivers were not independent contractors because of the extent of control exercised by XPO Logistics.3 XPO’s control stemmed from the fact that to meet their business goals, they needed to maintain constant control over the drivers, something that the NLRB rules made them employees.
Overall, I believe in the case of drivers in California; the issue has been almost settled, as the tests offered by the California Supreme Court make it near impossible for independent truck drivers to exist in the state. This issue needs to be reviewed more by the courts or the federal legislature. Since truck driving is, almost always by definition, interstate commerce, it would be within Congress’s power to codify a law on this issue that occurs that affects every truck driver in every state. In turn, this will open many other questions along a similar vein, Will Uber or food delivery drivers be classified as employees or contractors since the app decides which route, passengers, and orders drivers receive? Only one thing is sure the courts or legislature will answer this, but when? One can’t be sure but hopefully, sooner rather than later before one state, or another’s policies affect our national economy.