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US labor enforcers scrutinize 'independent' workers, truckers
Thursday, 18 February 2010 00:00

WASHINGTON—The Obama administration plans to crack down on companies that blur the lines between employees as independent contractors, including owner-operators in the trucking industry.

Facing significant budget shortfalls, officials could soon increase enforcement of misclassified workers in an attempt to uncover additional sources of revenue while also appealing to unions that oppose independent worker status in some sectors.

According to a report today from the N.Y. Times, President Obama's 2010 budget estimates that such measures would yield at least $7 billion over 10 years.

The administration will hire 100 more enforcement personnel and the IRS has begun auditing 6,000 companies.

Meanwhile, more than two dozen states have already stepped up enforcement, by enacting stricter penalties, according to the paper.

The Labor Department estimates that up to 30 percent of companies misclassify employees, many of which are in the trucking or construction industries.

In many of these cases, companies treat independent contractors the same as payroll employees, who perform many of the same functions. Both types of workers are frequently given similar instructions and duties and have access to the same equipment and facilities.

Companies that pass off employees as independent contractors may do so to avoid paying Social Security, Medicare and unemployment insurance taxes.

The attention federal and state officials are now paying to the issue is significant on another front, as it could bolster unions that are attempting to collectively bargain for owner-operators contracted to for-hire fleets.

FedEx, for example, has spent years fending off large-scale unionization efforts by the Teamsters.

In that campaign (which has since expanded to Canada), the Teamsters are lobbying Congress to change how the carrier is governed under federal law and force FedEx's independent drivers to be recognized as company employees.

The Teamsters, interestingly, are backed by FedEx's main competitor, UPS, whose workforce is represented nationwide by the same union.

FedEx's argument—one often made by trucking companies in similar situations—is that owner-operators own or lease their own equipment and can choose which lanes to take.

But if Canadian precedent is anything to go by, that argument could be a tough sell to officials sympathetic to union interests if the company exercises any degree of control or direction on nonemployee drivers.

As Today's Trucking has documented over the last few years, the Canada Industrial Relations Board and independent arbitrators have routinely certified unions to collectively bargain for owner-ops—whether the truckers wanted it or not.

Issuing uniforms or company mailboxes to owner-ops; or allowing them to share facilities with company workers and inviting them to company functions are all actions that have been cited to define the carrier as the "true employer" of an independent worker or agency driver.

Whether auditors and labor tribunals in the U.S. interpret things as arbitrarily remains to be seen.

Although, according to the Times, White House and state officials deny they are doing it as a favor to the unions.

TodaysTrucking.com, 2/18/2010