Owner-operator model analyzed at a legal conference
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For decades, the trucking industry’s use of independent owner-operators has been a delicate, yet successful, dance between the business and personal needs of motor carriers and contractors.
Now, the future of the entrepreneurial model is in the hands of the Supreme Court of the United States.
Greg Feary, managing partner of Indianapolis-based Scopelitis, Garvin, Light, Hanson & Feary, PC, told a recent legal conference that it will likely be more than a year before a California Trucking Association legal challenge. a state law to reclassify owner-operators as employees of carriers is decided by the country’s High Court.
That is, if the court first agrees to hear the case which, according to the OTC, involves an important legal question which has been the subject of contradictory court decisions during challenges before the courts of law. federal appeal.
CTA filed for a hearing in the High Court on August 9, after a three-judge panel of the U.S. 9th Court of Appeals ruled against CTA in April.
“We’re probably six to eight months away from the Supreme Court reviewing the case to determine whether or not they’re going to hear it,” Feary told trucking executives attending the Scopelitis 2021 Transportation Law Seminar. ” If they hear it, it will be another year before we probably get some kind of ruling. “
If the court decides not to hear the case, it could mean that California law, known as AB 5 after its legislative designation, would move the current test to what is known as the “ABC” test to determine. whether an owner-operator needs to be reclassified. as a transport employee.
This would turn the trucking industry’s basket of apples upside down, as it is widely believed that the ABC test makes it virtually impossible to continue contracting out.
While the AB 5 law is widely viewed as reprehensible to the trucking industry, it has also been fiercely opposed by the Independent Driver and Owner Association, which has 150,000 members.
– CA Trucking Assoc. (@Caltrux) August 9, 2021
“AB 5 would do away with a long-established business model in which hundreds of thousands of independent entrepreneurs have invested their blood, sweat and treasure to start their own businesses and be their own bosses,” OOIDA wrote in a memoir by “amicus curiae” support during the 9th Circuit case. “Complying with AB 5 will force both California highway carriers and those across the country who now serve the California market to either choose to adopt a new business model – forcing them to end their contracts with owners.” -operators, to incur increased hiring costs. employees and pay the cost of buying, maintaining, and insuring trucks for their use – or to stop hauling goods in California. “
Owner-operator issues were a hot topic at the Scopelitis conference August 25-27.
“Historically, in the trucking industry, many carriers have developed this model of independent contractor,” said Michael Kneller, vice president and general counsel of Landstar System Inc. at a luncheon conference. “This allows flexibility, innovation and entrepreneurship”.
Landstar contracts with nearly 12,000 owner-operators.
“I would say our industry is as flexible and dynamic as it has ever been,” Kneller said.
Anthony Spalvieri, Managing Director of Regulatory Affairs at FedEx Ground, said, “We’ve been part of this fight since I crossed the FedEx doorstep 15 years ago. What I’m trying to make is that what we’ve seen is that there has been a changing regulatory environment on this point for a long time.
“And what I saw is that the industry has changed, has been able to adapt to solve this problem so that it doesn’t reject the whole entrepreneurial model.”
This is certainly not to say that even today the challenges do not remain with the model.
During a session based on 40 questions asked by the estimated 350 seminar participants, a number of dos and don’ts were suggested by Scopelitis lawyers, including:
• Carriers can examine contractors’ uniforms, but cannot prohibit them from having tattoos or nose rings.
Fleet managers find that happy and healthy drivers are the key to business success. Stephen Kane of Rolling Strong explains that driver health begins with “being vulnerable enough to listen to someone knowledgeable about health.” Listen to a sample above and get the full schedule by going to RoadSigns.TTNews.com.
• If you have a mixed fleet, usually hold separate safety meetings between contractor drivers and employees.
• On the one hand, an employer cannot direct and control what entrepreneurs do. But on the other hand, employers are responsible for the negligence of their contractors.
• Clearly specify in a contract with an owner-operator how you will remunerate them.
• It is probably a bad idea for carriers to enter into non-compete contracts with contractors.
On average, owner-operators now travel just over 100,000 miles and earn about $ 70,000 per year, said ATBS President Todd Amen. The company provides tax, accounting, bookkeeping and consulting services to truck driver-owners.
Top contractors’ employees – about 10% of all contract drivers – earned about $ 225,000, Amen said.
“Owner-operators are doing it for the freedom and the money,” said Amen. “But they will say freedom all day rather than money.”
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