California sues firms over contractors

The State of California has launched its own assault on some companies that use owner-operators. California Attorney General Jerry Brown on Sept. 5 filed lawsuits in Los Angeles Superior Court against two trucking companies he charges misclassified owner-operators serving the two ports and said other lawsuits would follow.

“We are cracking down on these two companies and investigating several others that are taking advantage of their workers and cheating the state out of payroll taxes,” Brown said in a statement. “These are low-paid truck drivers working long hours under onerous conditions who are not getting the benefits they deserve.”

Brown said an investigation it began in February uncovered numerous state labor law violations by several trucking companies. The lawsuits allege that the two trucking companies have an unfair advantage over their competitors in violation of California Business and Professions Code 17200 by depriving employees of benefits and protections entitled to them under California law. These companies also are cheating the State of California out of thousands of dollars in state payroll taxes, Brown said.

The two operations in question are Jose Maria Lira and Pac Anchor Transportation. The state charges that Lira controlled all aspects of his drivers’ work, yet classified his employees as independent contractors and made them sign documents stating that they were independent. The drivers worked exclusively for Lira, working 60 hours or more per week, delivering cargo in Lira company trucks.

Brown charged that Pac Anchor and Alfredo Barajas were involved in an arrangement in which Barajas supplied Pac Anchor with 38 trucks and drivers. Pac Anchor directly paid Barajas’ truck drivers, providing them with 1099 tax forms at the end of the year. The investigation found that the drivers should be classified as employees because they do not own the trucks they drive, do not have a business independent of Pac Anchor or Barajas, have no real opportunity for “profit” other than compensation on a piecework basis delivering loads, and can be terminated at will.