The Grawe Gazette – General Counsel
Protecting Independent Contractor Freedoms
By The Grawe Group, LLC, September 2021
Staying in the fight
This week we submitted an amicus brief on behalf of the Minnesota Trucking Association to the U.S. Supreme Court in the California Trucking Association’s battle against AB5. We were proud to team up with Mike Glover and the Dewitt team on the brief to keep fighting for the rights of professional drivers and motor carriers to choose independence or employment. We focused our arguments on the history of the owner-operator model in trucking, the nature of owner-operators compared to employee drivers, and the impact AB5 would have on drivers, carriers, and shippers alike.
We wrote the brief because we believe drivers and carriers should have choices, and that when independent contractor (IC) programs are done right they are good for drivers, carriers, shippers, and the motoring public. Unfortunately, some policymakers do not believe in ICs and want to see them eliminated in favor of employee drivers. That viewpoint led to AB5 and continues to lead to state and federal legislation against ICs (see e.g., New Jersey earlier this year, and who knows what might get buried in the $3.5T human infrastructure bill), state and federal agency action (see e.g., U.S. DOL’s repeal of Trump-era IC test clarification earlier this year), and misclassification litigation (see e.g., claims against final mile providers, OTR motor carriers and everything in between).
Fighting the Myths
One frustration in these efforts against ICs is they are founded on myths; myths like the drivers are forced to be independent, the drivers do not have choices, and the motor carriers classify the drivers as independent to avoid taxes. It is important that as an industry we push back on these myths, we educate policymakers with the truth, and most importantly, we maintain quality IC programs that give ICs real freedoms and choices, and real opportunities for success.
Fighting with good IC programs
Good IC programs that produce successful ICs make for the best ammunition in the fight to preserve IC freedom. Here are a few tips to keep in mind for your program:
- Make sure the IC can turn down freight. Yes, the IC needs to accept freight generally in order to be successful, but the IC must have the freedom to reject loads. Document rejections so you can prove the IC had the right and was not penalized.
- Make sure the IC has choices. The IC should have choices when it comes to equipment, fuel, maintenance, schedule, routes, tools, etc. Incentives to encourage some choices can be okay (in moderation), but the IC must maintain as much freedom to make business decisions as possible.
- Make sure the IC can use the truck outside of your operation. This one is tricky under the Federal Truth-In-Leasing regulations, but there are a few ways to do it. The key is to make sure you do not forbid the IC to use the truck outside. And if you have some kind of a non-compete provision in your contract, get rid of it.
- If you have a lease purchase program, make sure the IC has a realistic path to owning the truck. When carriers get in trouble with misclassification programs the trouble often involves the lease purchase program.
- Limit your controls. Every IC legal test has a control factor. Make sure you limit your controls to regulatory controls (e.g., an IC that drives the truck must be in your DOT drug and alcohol testing program), shipper controls (e.g., the shipper requires the load to be delivered by 5 pm today), and limited administrative controls (e.g., to get paid the proof of delivery must be turned in to firstname.lastname@example.org). Be careful with other controls. Needles can be threaded, but make sure you limit unnecessary controls.
- Respect the IC’s business freedom from Day 1 through contract cancellation. Make sure your social media posts, your website, your ads, your recruiting messages, your orientation messages, your dispatching, your coaching, your conversations, your forms, your administration, your safety program, your maintenance practices, your cancellation, etc. all reinforce the notion the IC is independent. Focus on the result you need – safe, timely, professional pick-up and delivery of freight. Make sure the IC knows that is what you care about most. Let the IC decide how to get that result for you.
Notice that the contract with your independent contractor is not on that quick hitter list. Yes, the contract is important, especially for some technical points, but your day-to-day practices are far more important when it comes to maintaining a good IC program and protecting their right to choose independence.
If you want to discuss IC programs, or if you want help reviewing your program contact us today. We are happy to help.
The Grawe Group, LLC is here to bring peace of mind to you and your business. We are a professional services firm focused on the transportation industry. With a team of experienced executives, we provide general counsel, executive leadership, and people development services for trucking and logistics companies. From legal and risk management matters, to operational, financial, and leadership challenges, the Grawe Group has the practical expertise in trucking and logistics to help you build sustainable success. www.thegrawegroup.com.
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