Contract drivers for DHL to claim employee benefits

Three local drivers are challenging DHL delivery company’s reliance on independent contractors with a lawsuit that says they should have received the benefits of being classified as employees for the package delivery company.

Filed in Sacramento Superior Court this week, the lawsuit, which seeks class-action status, is the latest challenge to the spread of independent contractor arrangements throughout the courier industry.

“It’s ridiculous that they’re doing this to workers who make poverty wages, earn no benefits, no sick leave, no holidays,” said Jason Rabinowitz, the lawyer who filed the suit and who works for the Teamsters Union, which has been trying to organize drivers at DHL’s Mather Airport facility.

DHL spokesman Richard Gibbs declined to comment extensively on the lawsuit, saying it’s against company policy to discuss pending litigation. He did say, however, that the suit is without merit since the named drivers aren’t DHL employees.

Because of the way DHL is structured, DHL delivery drivers at Mather don’t work directly for the German-based company, but rather for contractors who hire the drivers. At Mather, some contractors classify their drivers as employees, Rabinowitz said. He said others, including those who work for DNM Delivery Solutions, a DHL contractor also named in the suit, are independent contractors.

The independent contractors, he said, earn between $170 and $190 a day, but must pay for leasing their vans, gas, use of a scanner and other business expenses. The wages and working conditions of the drivers are strictly controlled, the lawsuit alleges.

At least in theory, independent contractors are self-employed business people who pay their own workers’ compensation and payroll taxes. But state regulators worry that independent contractors are sometimes wrongfully treated as employees, meaning that their bosses control day-to-day aspects of their job without granting them the protections and benefits given to employees. A state task force is looking into the misclassification of workers in a number of industries in California.

The incentives to hire independent contractors instead of employees are strong: Companies save on overhead costs and can exercise greater flexibility in managing their workforce.

Another delivery company, FedEx Ground, has faced numerous similar lawsuits across the country, including one in Los Angeles Superior Court, in which a judge ruled in July that drivers should have been treated as employees.

The company is appealing the decision and argues that independent contractor arrangements are both legal and help foster an entrepreneurial spirit among drivers.

DHL spokesman Gibbs echoed a similar sentiment in a statement about the company’s use of independent contractors: “Independent contractors offer — efficiencies (that) often result in lower overhead costs and savings which are passed along to DHL customers.”

What makes the FedEx and DHL cases different, however, is that FedEx independent contractors report directly to FedEx. At DHL, the independent contractors are retained by the contractors, who in turn report to DHL.