Transportation news: Risks, penalties rising for carriers in labor employment lawsuits
John D. Schulz, Contributing Editor -- Logistics Management, 10/15/2008
LAS VEGAS—Transport companies face the greatest litigation risks in employment and labor issues, top transportation lawyers and human relations experts are predicting.
“When do transportation companies stand up and say, ‘We’re mad as hell and we’re not going to take it anymore?’” asked Thomas P. Krukowski, a veteran labor attorney with Krukowski & Costello, a Milwaukee-based law firm, at the 22nd annual meeting of the North American Transportation Employee Relations Association (NATERA) earlier this month. Krukowski has represented both labor and management for more than 20 years in hundreds of transportation cases.
Transport attorneys are expecting more discrimination cases as a result of the Americans with Disabilities Act Amendment Act, which was signed by President Bush on Sept. 25 and takes effect next Jan. 1. It greatly expands the scope of the original Americans with Disabilities Act by expanding the definition of a disability.
Already, age discrimination cases are clogging the courts. Overall there are more than 50 age discrimination cases filed every day, Krukowski said.
With the economy tanking and more layoffs looming, that increases the chances of transport employers being sued in age discrimination cases. In a case, Meacham v. Knolls Atomic Power Labor, the Supreme Court ruled last June 19 in a way that changes the manner in which employers review reduction in force decisions involving employees and age.
In that case, the Supreme Court ruled that the employer must convince a jury that the justification for a reduction in force move was reasonable.
“A jury trial is a show,” Krukowski said. “Sometimes jury members are more interested in what’s going to be on their pizza at lunch than the merits of the case.”
Transportation is rife for age discrimination cases. The average age of a Teamster in trucking is about 61. Older workers tend to be less physically able to do perform certain transport jobs. Technology demands also affect older workers, who, at times, are not as proficient in those areas.
Krukowski recommends transport companies audit their processes and do a proper statistical analysis to help defend in age discrimination cases.
All this can affect shippers in their bottom line. If transportation companies are sued, that raises their operating costs, which can usually only be recouped through higher rates paid by shippers.
Court decisions can raise transport companies’ costs through thoroughness of investigations, discover in litigation, motions before the trial and higher rates of risk insurance. Many transport cases involve punitive awards that have no caps, further increasing risks and costs for carriers.
Transport companies are also vulnerable in retaliation cases, according to Rebecca S. Davies, an employment attorney with Foster Swift law firm in Michigan. A recent 6th Circuit Court of Appeals ruling expanded the grounds for which companies can be sued for retaliation in employment cases.
But the greater threat is coping with the requirements of the Americans with Disabilities Act, Davies said. That requires “reasonable accommodation” for persons with disabilities, That might include modifying job responsibilities; modifying policies; providing auxiliary aids; transferring to a vacant position; and providing time off from work.
“This is the law,” Davies said. “Not having an interactive process with workers can in fact lead to liability.”
Davies recommended carriers update job descriptions of their employees that accurately describe what employers believe are the essential functions of that position. If overtime is required on a seasonable basis, Davies says carriers should include that in the job description.
“You should not do this on an ad hoc basis,” Davies said. “You should document, document, document.”
James H. Hanson, a highly respected Indianapolis-based labor attorney, said some recent state court rulings have threatened the viability of the owner-operator model in trucking.
Some 19 states have statutes that say owner-operators are independent contracts; two have unclear statutes; and seven states (North Carolina, Colorado, Massachusetts, Nevada, New York, New Jersey and South Carolina) have ruled that owner-operators should be considered as employees for labor-relations and tax purposes.
Some states are requiring owner-operators to be considered employees if they are subject to operational aspects such as forced dispatch, equipment ownership, details about routing, delivery time deadlines, protocols for hiring or firing other workers, personal appearance standards (such as wearing standardized uniforms or shirts) and discipline protocols.
“You’ve got to make sure that managers are not exercising that manner of control (over owner-operators),” Hanson said.
Courts are likely to consider workers independent contractors if they work long-haul, irregular routes with a Class 1 tractor-trailer, dry van truckload, own their own trucks and are incorporated as a business entity.
Conversely, courts may determine workers are company employees if they run short, regular routes with a small or low-cost vehicle, with strict delivery schedules with strict customer requirements, operate with no special licensing requirements and are not incorporated.
“The verdict is still out on whether there is still room for owner-operators in the trucking industry,” Hanson said.
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