Misclassified Truck Drivers and Junk Work Injury and Disability Policies Under California Law

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Truck drivers who work at the ports in California, primarily in Los Angeles, Long Beach and San Diego, have been in the news over the last few years because of the refusal of trucking companies to treat them as employees, rather than independent contractors.

One of the many ways these drivers are left more vulnerable as a result of their misclassification as independent contractors is that, if they are injured or disabled on the job, they do not have access to worker’s compensation.  Instead, the trucking companies usually obtain and charge drivers for “occupational accident” insurance policies.  However, these policies are often junk policies, providing little if no actual coverage, and nothing comparable to the workers compensation system, if a driver is disabled or injured on the job.

The way it works is that the trucking companies usually get a group, or “master” policy, from an insurance company.  Certificates of coverage pursuant to the master policy are then “issued to the individual . . . persons who are insured thereunder.’” (Reiner v. U.S. Life Ins. Co. in the City of New York (10th Cir. 2003) 69 Fed.Appx. 965, 969 (internal citations omitted).)  The cost of the policies is usually deducted by the trucking companies from the drivers’ paychecks.  The drivers usually never receive a copy of the  policy, and have no notice of what coverage they actually have.  The failure to deliver actual copies of the policy violates California law, which requires that disability policies be disclosed, which disclosure “shall include . . . the principal benefits and coverage . . . [and] the exceptions, reductions, and limitations that apply to such policy.”  (Insurance Code §§10604 -10605.)

It is usually only after they are injured or disabled, and attempt to obtain compensation, that drivers find out how illusory the coverage is under these occupational accident policies.  It is at that time, when their claim is denied, that the drivers first learn of the actual limited coverage, and broad exclusions. Moreover, the policies often work in tandem with the trucking companies’ effort to misclassify, and explicitly provide for no payment of policy benefits if the driver challenges his misclassification and files a worker’s compensation claim.

Thus, drivers are often caught in a classic Catch-22, and left with no means of compensation for work-related injuries.  They are denied worker’s compensation because they are labeled independent contractors, and the policies sold to them through the trucking companies fail to provide meaningful coverage.

In this way, insurance companies are working with trucking companies, to assist in their misclassification, and profit while evading providing actual coverage and benefits to injured and disabled truck drivers.  This practice, however, is highly vulnerable to challenge.  California Courts have refused to “allow a master policy to prevail over an inadequate Certificate,” where the insurer’s disclosures provide “inadequate information” regarding the actual coverage provided. (Hall v. Nat’l Union Fire Ins. Co. of Pittsburgh, PA(S.D. Cal. 2010) 2010 WL 2650271, *9.) Drivers are almost never provided with advance notice of the limited coverage that is provided under these master policies.  Under California law, “an exclusion or limitation contained in a policy which the insured has never seen cannot possibly provide adequate notice . . .”  (Russell v. Bankers Life Co. (1975) 46 Cal.App.3d 405, 413-14.)  The lack of notice provided by drivers about the limited coverage under these accidental occupation policies provides a strong basis for challenging any denial of benefits.