Court decision impacting Illinois could snare any carrier crossing the state

A federal court decision involving an Illinois trucking company and that state’s employment law could bring about a “slew” of lawsuits against any carriers that operate in the Land of Lincoln, a trucking-focused law firm warns.

The decision last week by Judge Manish Shah in U.S. District Court for the Northern District of Illinois looked to the B prong of the ABC test that determines whether a worker is an employee or an independent contractor. While the test is most closely associated with California’s AB5 independent contractor law, it is also part of Illinois’ Wage and Payment Collection Act.

In a note to clients, Scopelitis law firm said the finding in the case that there is no minimum number of miles that must be driven in Illinois to bring a carrier under the state’s Wage Act could have impact well beyond what is typical when a federal court rules on the provisions of one state’s law.

The lead plaintiff in the case is Andrey Prokhorov, who was a driver for an Illinois-based company, IIK Transport. The case also was granted class status so the plaintiffs include a much larger group of drivers who worked for IIK Transport.

Shah, summing up the issues in the case, said the plaintiffs alleged that IIK had incorrectly taken deductions from drivers’ pay and had not reimbursed drivers for expenses in violation of the Wage Act. IIK was able to do this, according to the summary, by “misclassifying drivers as independent contractors, who are not protected by the Act.”

Regarding the risk of increased litigation against trucking companies, Scopelitis zeroed in on a part of the decision dealing with the IIK’s argument that “Prokhorov and other defendants did not perform enough work in Illinois to claim protection under the Act.”

Shah said that an earlier decision on the subject “did not … establish a minimum threshold for coverage” under the Wage Act.

And that could be a problem, according to Scopelitis. Any trucking company that operates in Illinois, even if it isn’t based in the state and drives only a small number of miles there, could find itself subject to the provisions of the act, the firm said in its note.

“Although a decision by a federal district court concerning the application of Illinois law is not binding on other courts, the plaintiffs’ bar will point to this opinion as persuasive authority,” Scopelitis said. “And we anticipate that this decision may prompt a slew of claims against interstate motor carriers that operate in Illinois.”

ABC test cited in decision

While the focus has been on California, observers note that there appears to have been no significant enforcement action or court case in California targeting a trucking company’s potential violation of AB5 and its definition of an independent contractor under the ABC test.

Charles Andrewscavage, a Chicago-based partner with Scopelitis, said the ABC test becoming a key part of Illinois litigation was not unique to the Prokhorov case. It has been used by litigants previously.

Shah brought up the test over the question of whether deductions taken from driver paychecks were permitted under the Wage Act. That complicated issue, which ended with the court permitting some deductions but not others, first needed to address the question of whether the IIK drivers like Prokhorov were employees or independent contractors. The two classes of workers face different regulations regarding deductions.

Drivers at IIK were hired as independent contractors, according to the lawsuit summary. They were not considered employees at the time of hiring.

“All drivers were required to sign the same independent driver agreement with IIK on behalf of their corporate entities,” Shah wrote. “Drivers were paid either on a per-mile basis or based on the weight of the freight they delivered.”

The B prong of the ABC test proved key to Shah’s decision. The B prong is similar across states where the ABC test is part of employment law, though the wording is not always identical.

In Illinois, the B prong wording under the Wage Act is that a worker can be considered an independent contractor if he or she “performs work which is either outside the usual course of business or is performed outside all of the places of business of the employer.”

The lawsuit would have been hobbled over the issue of improper deductions if the court had found that the drivers were in fact independent, given the different status under the act’s regulation of deductions and reimbursements.

Judge is clear: workers were employees

There was little ambiguity in Shah’s ruling on the question of employee versus independent contractor for the IIK drivers.

“Class members were truck drivers who performed work in IIK’s usual course of business (freight delivery) and they did not perform work outside of IIK’s place of business, which includes delivery routes,” the judge wrote. “So, class members cannot be classified as independent contractors under the Act. They were IIK’s employees.”

The court’s multilayered decision on the question of deductibility mostly tipped the scale in favor of the plaintiffs, Scopelitis wrote. Many of the deductions were deemed “unauthorized,” the law firm said, due to lack of written consent.