Header image by photographer: Joe Ravi, license CC-BY-SA 3.0
After a decade-long class action lawsuit, the large trucking company Swift has settled out of court regarding an owner-operator misclassification lawsuit, Van Dusen v. Swift Transportation.
Swift, one of the largest trucking companies in the United States, will pay out $100 million to 19,000 truck drivers in a settlement. Most of its operations are dry van, but Swift also participates minimally in the car hauler trucking niche.
The Background: Misclassification of “contractors” has been happening across the country in many industries, especially as the gig economy has taken off in recent years. Lawsuits have been cropping up everywhere, but the trucking industry seems to be leading the conversation due to its unique operations. In Van Dusen v. Swift, a group of 19,000 truckers claimed that Swift was working them as employees without the benefits and taxes awarded to employees, and? with all the liabilities of contractors.
This is yet another lawsuit fought in the last decade regarding employment and federal classification in trucking. Due to the dynamics of the trucking industry where there are huge trucking companies with thousands of employees, numerous small businesses (known as owner operators) and a constantly changing volume of freight, misclassification is common.
Contractor, Owner Operator or Employee?
For instance, in car hauling, a new car hauling business can start up with a single Owner Operator who is the owner and driver. For him to fill his trailer with cars to haul, he needs to find a dispatcher, a broker or a load board. For ease, he might get a “dispatcher” at Company A to avoid a brokerage fee. This dispatcher might hire him as a 1099 “contractor.” This Owner Operator has started his own business and has an authority – he is not a W-2 employee. But if Company A needs him to haul for them 40 hours a week. Additionally, he is not allowed to pick up loads from other companies while in this contract, and/or he is not allowed to turn down loads from Company A. This places undue restrictions on his employment, and categorizes him as an employee instead of a contractor.
Contractors can cost less to employ than an employee, because they pay their own employee taxes and benefits – being that they are their own business. But as they are their own business, they are entitled to certain freedoms, from dress code to hours worked. The Department of Labor has a detailed list and some fun infographics on what differentiates an employee from a contractor.
Does this matter for car hauling?
Super Dispatch has written in the past about a recent trucking Supreme Court case affecting us in the car hauling industry. This case will have a slightly larger impact.
Not only does Swift specifically operate in car hauling, but other car hauling giants face similar court cases – some are already in litigation.
While all of these court cases may not be directly linked to each other (arbitration, leasing issues, job misclassification) they are all a sign of the changing landscape in the American economy and trucking more specifically.