A search for the word “trucking” embedded in comments on the Labor Department’s proposed independent contract rule leads mainly to criticism of the proposal, but it’s far from unanimous.
Most comments on the rule read by FreightWaves had the same basic message: The independent owner-operator model as it exists in the US today was profitable and resulted in financial success for its practitioners, but is guided by the proposed rule would threaten decisions by the Labor Department’s Wages and Hours Division.
But there are also dissenting voices.
When a proposed rule is listed in the Federal Register and a comment period opens, there are often contributions written by a third party and then submitted verbatim multiple times by different commenters.
This is also the case with the DOL rule. “Increasingly, employers are misclassifying employees as gig workers to evade their responsibilities in everything from employer-sponsored health insurance to paying employer Social Security contributions,” read a comment seen in several filings. “At a time when companies are making record profits while workers’ wages remain unchanged, it is critical that the Department of Labor implement policies that support workers’ rights and put more money in the pockets of working people.”
But personal stories may also be included in these submissions.
For example, a commenter named Phillip Hult from Illinois, who submitted this form letter, added that he was classified as an independent contractor by his employer, “but they violated the terms of the contract many times.”
“The contract said I had to provide a vehicle capable of delivering the packages on the route,” he said. “But they refused to allow me to buy a truck for my route on the grounds that it didn’t fit our fleet.”
Rather than whether his account is true, he focuses on the issue of “control” which is at the heart of the proposed rule.
The Biden administration’s proposal, like that of the Trump and Obama administrations before it, calls for the six-part “test of economic realities” to guide the payroll and hours department in deciding independent contractor or employee status conduct. But the Trump administration rule — enacted just before Joe Biden took office, torn down by the Biden administration, and then reinstated by a federal judge — relied heavily on two core factors in testing economic realities: an employee’s control over yourself work and the chance of gain or loss.
However, the Biden administration’s proposal provides that all of the principles of the economic reality test be considered on an equal footing, with no major weight given to any of the six parts.
As a trio of attorneys from the Littler law firm wrote in an analysis, the proposed rule would “broadly define an employee as any person who an employer ‘suffers, permits or otherwise employs to work,’ and is intended to include all employees who ‘as a matter of economic reality, are economically dependent on an employer for work.’ The proposed rule further explains that an independent contractor is just an employee who, in economic reality, runs ‘a business for himself’.”
This is seen by labor lawyers as a definition of control that would make the payroll department more likely to classify a worker as an employee.
A commentator named Gerald Ingham’s observations and experiences led him to support the proposed rule and would likely be welcomed by its writers at the Department of Labour.
“Many companies will label a driver/owner as an independent contractor just to avoid having to pay the driver proper compensation,” he wrote. “My current employer is a prime example. Yes, I own my truck but I am forced to work 65-70 hours a week. I have a fixed schedule. I have [a] mandatory real-time tracking device installed in my truck. I get paid by the hour. I can’t go out and get a second job because HOS rules limit the hours I can work. An independent contractor is someone or a company who is hired to do a very specific job and does not do the same thing every day for years.”
Another critic of the current setup was Kieran Donahue. A driver who purchases a truck through his lease agreement is “simply an employee,” Donahue wrote, “and should receive all government protections as an employee.”
Many of the rule’s opponents see an apocalypse coming when it passes: the end of their days as independent owners.
It is often referred to as the “law” by the critics in their commentaries. If implemented, it is not a law, it is a guide. But it’s a guideline that most corporate lawyers would suggest their clients follow as if it were law, although it’s not specific and likely will require some legal action taken by the payroll and hours department to enforce one A company must create a code of laws in order to classify its employees correctly.
Among the truck industry’s critics of the proposal were many who cited the California AB5 test, although the DOL specifically said it considered and rejected the use of the AB5 definitions when writing its proposal.
The three-pronged AB5 test used in California is particularly problematic for truck traffic because of the B prong. The B-Strand states that a worker can be considered independent if he or she “performs work outside the usual course of business of the hiring company”. A trucking company that hires an independent owner-operator to transport cargo risks being found in violation of the B Pen. But the ABC test is not included in the DOL proposal, despite the many comments that seemed to indicate it.
But there were also more thoughtful comments that did not necessarily see the rule as the end of the independent owner-operator model, but might question its continued existence.
A comment from NEW Transportation Group – no individual’s name was provided – sets out the case that the current relationship between independent owners and operators and the companies to which they are leased presented drivers with an opportunity to win and that the relationship in general independence was allowed.
“[Drivers] suffer a win/loss as they are responsible for all repairs, fuel, insurance, tolls and own their own trucks and trailers and are licensed to do so,” the company wrote. “They are rented under a contract exclusively to the company they run for. The trucking company allows them to drive under their DOT/MC number in exchange for a percentage of the gross sales of each load the owner ships. The owner benefits from a working relationship with the trucking company by receiving a decent amount of well-paid loads, all billing handled by the trucking company, weekly payout for work completed, and many DOT and trucking compliance compliances be taken over by the forwarding company itself.”
It is unclear whether such a close relationship would be defined as independent under the proposed Biden rule. And NEW Transport seemed to recognize that possibility. “If these rules are revised so that merely working for just one company makes you an employee, it will do great harm to the industry as a whole,” the company wrote. “It’s pretty unclear how we could even make these drivers hourly when they are responsible for all of their expenses.”
Labor lawyers have said that one of the most important parts of the proposed rule is that the DOL would see “control” as potentially established when the employer requires the worker to meet certain safety standards.
“For example, compliance by an employer with legal obligations, safety or health standards, or requirements to meet contractual or quality control obligations may in some cases indicate that the employer exercises control, indicating that the worker is economically dependent on the employer,” the wrote DOL in its proposed rule.
That drew a response from Phoenix trucking attorney James Mahoney, who suggested it was a broad interpretation of the word “control.”
“In other parts of the regulations, auto transport companies employing owners and operators understand that they have a non-delegable duty of public safety and must control the operation of the driver, whether that person is an employee of the company or an independent contractor.” , Mahoney wrote. “There is no middle ground. The transport company has to enforce a significant number of controls, e.g. B. Operating hours, operation in bad weather, inspection requirements before and after driving, maintenance of trucks and trailers, routing. All of this requires control and instructions to the driver.”
Mahoney recommended an alternative: the Arizona Independent Contractor Act. He wrote that a contractor in that state “must affirmatively state … that he/she prefers to be a contractor and waives any claim against the UIB, Workers’ Comp, and he/she expressly accepts responsibility for the operation of his /takes over her own company. Just like the true entrepreneurs they want to be.”
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