Trucking Company Ordered to Pay ‘Misclassified’ Drivers Almost $175K in Back Wages
San Marcos, TX – A Texas trucking company was ordered to pay nearly $175,000 it owed to drivers in back wages after a U.S. Department of Labor (DOL) investigation found it had misclassified them.
The DOL’s Wage and Hour Division (WHD) says it investigated Rami Transportation Inc. based in San Marcos, Texas and determined it owed $173,426 in back wages to 66 employees to resolve overtime violations of the Fair Labor Standards Act (FLSA).
WHD investigators found that the general freight hauler incorrectly classified some of its drivers as independent contractors and paid them based on a percentage of their weekly hauling revenue regardless of the number of hours they worked.
The company violated federal law when it failed to pay overtime when employees worked more than 40 hours in a workweek, officials determined.
WHD also cited the employer for record keeping violations.
“Truck drivers must be paid every dollar they earn,” said Wage and Hour Division District Director Nicole Sellers in Austin, Texas. “Other employers should use the resolution of this case as an opportunity to review their own pay practices to ensure they comply with the law.”
According to data from the Federal Motor Carrier Safety Administration (FMCSA), the carrier operates 27 power units and employs 27 drivers.
The company also specializes in sand and gravel hauling.
Misclassification has been a major issue in trucking for years, but it has recently dominated headlines after lawmakers in California passed the controversial Assembly Bill 5 (known as A.B. 5) last September.
The law imposes a stringent “ABC test” to determine the status of an independent contractor.
Specifically at issue is the the so-called “B prong,” which classifies a worker as an “employee” of the company unless that worker “performs work that is outside the usual course of the hiring entity’s business.”
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Critics such as the California Trucking Association (CTA) say the affect of enforcing such a statute would all but eliminate the owner operator model in California.
Multiple recent court rulings have placed a temporary restraining order (TRO) on enforcement of the law regarding the trucking industry.
Photo courtesy of Rami Transportation