70 Commercial Truck Driver Employees Fired and Told to Return as Independent Contractors

Just days before Christmas and weeks before a new California labor law becomes effective, Universal Logistics Holdings fired 70 commercial truck driver employees from three of its subsidiaries.

Management allegedly told several drivers to buy their own trucks if they wish to return to work as independent contractors for Universal Intermodal Services, Universal Truckload Services and Roadrunner Intermodal Services.

Universal Logistics’ layoffs affect employees who worked at the Ports of Los Angeles and Long Beach, and were announced just weeks after 28 of Universal Intermodal’s employee drivers voted to become members of Teamsters Local 848, a union in Long Beach. All of those drivers were among those laid off.

Freightwaves.com reports a letter from Roadrunner Intermodal to its drivers said that “soft freight conditions in 2019 have necessitated that we evaluate our current staffing levels” as they begin the year 2020.

The letter allegedly went on to say, “As a result, with much consideration, we regret to inform you that Roadrunner Intermodal Services is reducing all company driver positions effective Friday, Dec. 20, 2019.”

Headquartered in Warren, Mich., Universal Logistics just acquired Roadrunner Intermodal in November. The companies had been competitors for years, according to a press release by Universal.

Commercial Truck Driver Classification and AB5

The state of California passed Assembly Bill 5, known as AB5,  a law that will go into effect Jan. 1, 2020, forcing companies to reclassify many independent contractors as employees, who will be eligible for benefits and labor law protections.

A California Supreme Court decision in April 2018 led to a three-question test that determines whether or not a person is an employee or an independent contractor. Known as the ABC test, all workers at a business are employees and not independent contractors unless a) the worker is not under the direction or control of the hiring company; b) the worker performs work outside the usual course of the hiring company’s business; and c) the worker performs the work “in an independently established trade, occupation, or business of the same nature” as the work performed for the business that hired them.

If even one of the ABC statements is false, the worker must be classified as an employee.

California lawmakers wrote AB5 to turn the ABC test into law and strengthened it with worker protections such as unemployment insurance, disability insurance and workers’ compensation.

According to the Los Angeles Times, misclassifying workers as independent contractors has been costing the state around $7 billion annually in payroll taxes.

Freightwaves reports even before Universal Logistics bought Roadrunner, Roadrunner Intermodal had been accused of independent contractor misclassification. Roadrunner and 896 truck drivers reached a $9.25 million settlement regarding allegations the company misclassified its drivers as independent contractors. The settlement was approved by a California federal court in early 2019.

By announcing the requirement that laid off employees buy their own trucks and return as a commercial truck driver with independent contractor status, Universal Logistics appears to violate Section 6 of AB5, which says, “No provision of this measure shall permit an employer to reclassify an individual who was an employee on January 1, 2019, to an independent contractor due to this measure’s enactment.”

Join a Free Trucker Overtime Class Action Lawsuit Investigation

If you have worked as a contract truck driver and believe your carrier has failed to pay you minimum wage or overtime, or otherwise might not have honored a contract with you, you may qualify to file a truck driver lawsuit or class action lawsuit.

Learn More