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California Alleges Trucking Firms Improperly Avoid Workers’ Compensation Coverage

September 11, 2008
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Related Topics: Workers' Compensation, Medical Benefits Law, Benefit Design and Communication, Compensation, Latest News
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California Attorney General Edmund Brown Jr. last week filed two lawsuits against trucking companies that classified their drivers as independent contractors, allegedly to avoid paying workers’ compensation premiums and state taxes.

The suits against Pac Anchor Transportation Inc. and its business associate Alfredo Barajas, and Jose Maria Lira, a fleet operator, were filed in Los Angeles Superior Court. Both companies transport cargo from the ports of Los Angeles and Long Beach and are the first in what Brown said would be a series of lawsuits against trucking companies in California.

According to court documents, Long Beach, California-based Pac Anchor misclassified its drivers as independent contractors. By doing this, the suit alleges, Pac Anchor can fire its drivers without cause at any time and does not have to claim them as employees, which allows the company to avoid paying mandatory state employment taxes and providing workers comp.

“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.”

The suit seeks at least $4.16 million in penalties against Pac Anchor. The suit against Lira alleges that the fleet owner also unlawfully listed his drivers as independent contractors. The suit also alleges that drivers worked for Lira exclusively, logging more than 60 hours per week, which should entitle them to legal protections and benefits under state law. The state is seeking a penalty of no less than $50,000 in that case.

Filed by Jeff Casale of Business Insurance, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.

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