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TRANSPORTATION LAW: Transporting in California - An Employment Law Overview

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Recent history has made it abundantly clear that California is determined to be on the forefront of employee rights in the nation. In 2016 alone, California enacted no less than twenty (20) laws impacting employer obligations to employees and applicants. This is in addition to ongoing appellate and California Supreme Court decisions which clarify the extent of employee rights in the state. Unfortunately, local cities and counties have further added to the treacherous waters by establishing ordinances applying to individuals employed locally, or who spend a specified amount of time completing services within an area. These overlapping obligations are in addition to requirements mandated by Federal law. Simply put, California is one of the most complex states to navigate for traditional employers, but is exponentially more difficult for employers of truck drivers and common carriers. Recently, this hodgepodge of laws resulted in the settlement of a wage and hour class action suit against a major carrier due to its alleged misclassification of drivers as independent contractors, instead of employees. (Edwin Molina v. Pacer Cartage, Inc. (2016) Case No.: 3:13-cv-02344-LAB-JMA.) The $2.7 million settlement resulted from allegations of misclassification, where drivers were not paid minimum wages, were not provided meal and rest periods, and were not reimbursed for necessary business expenses. Although there are a multitude of factors to be considered in properly and accurately dealing with the employment of truck drivers, we wanted to provide a brief introduction to two hot issues currently being litigated in California: overtime compensation and meal and rest periods.

Overtime

In California, the general rule is that all employees are entitled to overtime for work in excess of eight (8) hours per day and/or forty (40) hours a week, unless they can fit within a specified exemption. As to truck drivers, California has laid out a specific exemption for payment of overtime requirements if a driver's hours are regulated by the U.S. Department of Transportation under Title 49, Sections 395.1 to 395.13, or regulated by Title 13 of the California Code of Regulations, subchapter 6.5, section 1200 et seq. If a driver and/or their haul fails to fall within any of the exemptions, overtime payment under California's requirements must be provided.

Generally, in California, a driver is exempt from state overtime requirements if: (1) the truck being driven has a gross weight rating of 26,001 lbs. or more; (2) the truck being driven has a gross weight rating ranging from 10,000 lbs. to 26,000 lbs. and is driven in interstate commerce; (3) if the truck driven is a farm labor vehicle or transporting hazardous waste; (4) if the truck driven, combined with the trailer, has a combined length exceeding forty (40) feet; (5) if the truck is regulated by the California Public Utility Commission; or (6) if the truck tows a regulated trailer with a total gross weight rating of more than 10,000 lbs.

One of the key issues regarding the above categorization relates to the definition of interstate commerce. In regards to truck drivers, the term "interstate commerce" relates to the origin and destination of the haul rather than whether a specific driver has crossed state lines. As such, if a shipment originating from out of state is destined for California, each truck driver who participates in the delivery/haul falls into the above-identified exemption regarding interstate commerce. However, if a driver is to deliver a haul originating in one part of California with a destination in another part of California, state overtime laws could come into effect . The precise calculations for overtime under "intrastate commerce" would vary depending on whether or not the haul enters through certain cities or counties with regulations beyond the state's minimum requirements. Specifically, cities like San Francisco, Santa Clarita, and San Diego have minimum wages above that set forth by the state. Accordingly, when intrastate commerce comes into play, there must be due consideration that any carriers are compensating their drivers at a rate above the minimum for the area with any overtime being calculated as one and one-half (1.5) times the proper wage rate. Undoubtedly, these calculations alone can be a cumbersome task requiring precise information as to the location, route, and duration of the work shift.

Meal and Rest Periods

Although the application of overtime laws for truck drivers in California will vary wildly depending on the type and destination of the shipment, California has not exempted employers of drivers from the state's meal and rest period requirements.

Under California Labor Code § 512, an employee is entitled to an uninterrupted/off-duty meal period of not less than thirty (30) minutes if he or she is working for more than five (5) hours per day, which may be waived by mutual consent of employer and employee only if the employee is working for no more than six hours. Additionally, a second uninterrupted meal period of thirty (30) minutes must be given if the employee works more than ten (10) hours per day. However, this second meal period may be waived, but only if a statutorily compliant first meal period was taken.

In the instance that a full uninterrupted/off-duty meal period is not taken or provided, the employee is entitled to a one hour premium wage rate for each missed meal period. Furthermore, pursuant to Brinker Restaurant Corporation, et al. v. Superior Court of San Diego County (2012) 53 Cal.4th 1004, if an employer's records fail to show that a meal period was given, there is a rebuttable presumption that the employee was not relieved of all duty and no meal period was provided.

Regarding rest periods, California Industrial Welfare Order 4-2001 requires that an employer authorizes and permits a ten (10) minute rest period for each four (4) hour work period, or major fraction thereof. These rest periods are counted as "time worked," and therefore, the employer is required to pay for such periods.

The issue of meal and periods for truck drivers has been a longstanding battle in California. In 2008, Schneider National Carriers Inc. was sued by drivers who alleged they were not properly compensated for their meal and rest breaks, or while waiting at docks for their cargo to be loaded and unloaded. On October 13, 2016, eight (8) years after initiating the suit, the U.S. District Court in Oakland issued a final approval Schneider's $28 million settlement for 7,700 current and former Schneider employees. Recently, in Bluford v. Safeway Stores, Inc. (2013) 216 Cal.App.4th 864, the Third Appellate District in California concluded that rest breaks were "non-productive time" for which compensation had to be provided separately and apart from any piece-rate pay plan. The Bluford decision even resulted in the governor signing AB 1513 in 2015, severely limiting piece-rate compensation in the state and expanding obligations upon an employer to provide compensation above and beyond an agreed upon rate. However, California allowed a grace period until December 15, 2016 for employers to attempt to comply with the ordinance by providing appropriate back pay to its employees for breaks and non-productive time not separately compensated between July 1, 2012 and December 31, 2015. Should a carrier fail to do so, the employer may not raise compliance with AB 1513 as an affirmative defense and in essence, will face liability.

As noted above, navigating California employment law is an arduous task involving consideration of a multitude of overlapping and concurrent laws, especially for employers of truck drivers. Even the classification of drivers as independent contractors brings forth a myriad of considerations and issues that will be delved into further in a future publication. Regardless of the classification of the driver, it is highly recommended that an attorney with extensive knowledge about the interaction of local, state, and federal employment law be consulted to assist in limiting violations and curbing liability.

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