The Quest
Inside this issue:

Single transaction bonds required for suspected AD/CVD shipments

Appeals court reverses case involving ‘independent contractor’

$5.2 million verdict against a transportation broker and driver in negligent hiring case

C-TPAT and AEO to be mutually recognizable in June 2012

Goods from Argentina to lose GSP benefits

Claims Review:
International Coverage





Appeals court reverses important case involving ‘independent contractor’

The U.S. Court of Appeals for the Ninth Circuit recently struck down a lower court’s ruling in Ruiz v. Affinity Logistics Corp., which has a significant effect on trucking and courier companies.

In this case, a driver sued a trucking company under the Fair Labor Standards Act and California law. The driver had entered into an “Independent Truckman’s Agreement” with the trucking company, which stated the driver was an independent contractor and any dispute would be governed by Georgia law (the company’s headquarters). When the lawsuit was filed in California, the district court applied California’s choice of law framework and found that Georgia law prevailed. The driver appealed the decision.  

Appeals Court
The appeals court reversed the district court’s judgment and found that California law did apply. Because the drivers lived and worked in California, the court stated that California had a greater interest in determining employee status. The Court noted that Georgia law assumes independent contractor status, unless disproven by the driver.   Under California law, however, the driver is considered to have an employer-employee relationship unless the employer (not the driver) demonstrates otherwise. The court argued that Georgia’s law is contrary to a key California policy to “protect workers.” In 2010, the appeals court issued similar ruling that chose California law instead of Texas law in Narayan v. EGL, Inc., which was also cited in this case.  

Independent Contractor Issue
While classifying drivers as independent contractors is common in the trucking and courier industries, doing so remains a hot button issue. You should always consult with an attorney to determine the best business model for your operations and for legal review of your employment contracts.  

If you are operating under an independent contractor model, Avalon offers Occupational Accident Coverage for these drivers if they are injured while under dispatch. You can offer this plan to help provide a safety net to your drivers, while reinforcing their status as independent contractors. Whether you run a full-sized trucking operation or a delivery company with just two vehicles, Avalon offers the coverage you need.

For more information, please contact your local Avalon office or Andriana Davis at (847) 700-8087 or at adavis@avalonrisk.com. A list of our offices may be found at www.avalonrisk.com.

Avalon Risk Management


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