The Grawe Gazette – General Counsel
Two Wins for Transportation
By Doug Grawe, The Grawe Group, LLC, January 2021
January 2021 has already brought a flurry of case and policy developments for motor carriers. Earlier this month we covered the U.S. DOL’s new independent contractor rule. Two new positive developments came in the past week.
Win #1 = U.S. DOL’s New Opinion Letter for Trucking Owner Operators
First, today the U.S. Department of Labor issued an opinion letter specifically addressing whether various owner operator and motor carrier arrangements were independent contractor relationships or employment relationships. The letter, through its examples clarifies that motor carriers do not turn owner operators into employees just because they require cameras in owner operator trucks, put speed governors on trucks, or put owner operators through safety classes. The DOL comes to an obvious conclusion: everyone has a personal stake in safe roadways, and motor carriers should be able to err on the side of safety when worrying about whether a safety “requirement” might tip the scales on a worker classification claim.
The Lawyer’s Caveats:
- To be clear, the DOL did not give motor carriers free reign to exercise unlimited safety controls, but they did clarify that some safety controls designed to help owner operators comply with the law may be reasonable without jeopardizing independent contractor status.
- It must also be noted the opinion letter only relates to the DOL’s interpretation of the Fair Labor Standards Act. This opinion letter has no bearing on state claims, the ABC test, the IRS, or any of the other myriad ways worker classification issues arise.
- Last, but not least, it must also be noted this an opinion letter, not a rulemaking. The incoming Biden administration could rescind the letter or issue a different letter down the road.
If I were running a motor carrier though, and I was still on the fence about cameras for owner operators or some other safety programs for owner operators this opinion letter, the huge insurance premium increases going on everywhere in the industry, and the absurd jury verdicts coming down, I would take a fresh look at my safety program and my owner operator program to look for solutions that improve safety and still respect independent contractor freedom.
Win #2 = 9th Circuit Upholds FMCSA Pre-emption of California Meal & Rest Break Laws
It is hard to believe, but the 9th circuit court of appeals (the federal court of appeals that oversees the West Coast states) issued a tremendous decision for the trucking industry last week. California has a meal and rest break rule for employees that is incredibly difficult for any trucking company to meet because of the law’s strict requirements and trucking’s unpredictable, remote management nature. A few years ago, the FMCSA issued a rule stating California’s meal and rest break rules did not apply to interstate trucking operations. As you might imagine the FMCSA’s rule was instantly challenged by California.
Last week, the 9th circuit rejected California’s challenge and upheld the FMCSA’s pre-emption. Under the decision if you are hauling interstate freight in California, California’s arduous meal and rest break rules do not apply to you and your drivers. California may appeal yet again, but last week’s decision is a strong win that stands a very good chance of holding up.
[There was a third notable win in the 5th circuit court of appeals (Texas, Louisiana, Mississippi) last week. The court threw out a low standard for plaintiffs to reach to make a claim a class action claim and the court adopted a higher, more traditional threshold for class action status instead. The case is not trucking specific and thick with boring legalese so for brevity’s sake I am leaving it at that.]
Wins like this are encouraging. I think we all can agree we do not need rules that heavily favor us; we just want rules that are balanced, reasonable, and take into consideration the practical realities of what is going on in the world. These two wins are wins for reasonableness. Let’s hope this can be an ongoing trend.