Regulatory and Legislative Update - November 2022

By Dan Boaz

Contents

Regulation and Enforcement

Legislation

Advocacy and Comment

 

Regulation and Enforcement

DOL proposes to reverse Trump-era rule on worker classification under FLSA

The U.S. Department of Labor’s Wage and Hour Division last month proposed a rule to revise WHD’s analysis of determining worker classification under the Fair Labor Standards Act (FLSA). The notice of proposed rulemaking (NPRM) does not directly address trucking-specific issues, but it noted that a “high incidence of misclassification of employees as independent contractors has been documented in agriculture, construction, trucking, housecleaning, in-home care, stagecraft, and ‘sharing economy’ companies.”

The NPRM’s principal objective is to undo the final rule issued by WHD in January 2021 during the waning days of the Trump administration. That rule’s goal generally was to make it easier for employers to classify workers as independent contractors than had been the case under prior guidance and court precedent. WHD’s stated goal is to return to prior interpretations of the so-called economic reality test, which includes the following six factors:

  • The opportunity for profit or loss depending on managerial skill;
  • The investments by the worker and the employer;
  • The degree of permanence of the work relationship;
  • The nature and degree of employer control;
  • The extent to which the work performed is an integral part of the employer’s business; and
  • The worker’s use of skill and initiative.

One example of how the Trump and Biden administrations differ on classification relates to the question of whether the work is integral to the business. The Trump rule interpreted that to mean that the worker himself or herself was integrated into the day-to-day business process. Even under the Trump rule, some owner-operators in trucking might fail that factor. However, the Biden proposed rule looks at the question more broadly – i.e., whether the work performed is critical, necessary, or central to the employer’s business. This approach is closer to that in the ABC test codified in California’s AB 5 law. However, AB 5 essentially disqualifies independent contractor classification if the work is central to the employer’s business while in the economic reality test it is but one of multiple considerations.

Another issue relevant to trucking relates to the control issue. The January 2021 rule had stated that employer mandates that workers comply with safety and health standards were not to be considered an indicator of control. Moreover, on the final day of the Trump administration, WHD issued an opinion letter concluding that a motor carrier’s mandate that owner-operators use certain safety management technology or practices did not indicate control under FLSA.

The new Biden administration promptly rescinded that opinion letter, saying that it was premature since the January 2021 rule had not taken effect. The new NPRM states that safety and health standards are relevant to the analysis of control. However, it also notes that such standards would be only one consideration for the control issue and that control itself is just one of multiple factors and would not necessarily thwart or ensure an independent contractor relationship.

The NPRM had been expected for months and followed public forums in June on the issue. The Biden administration had tried to withdraw the Trump-era rule early in 2021, but a federal court earlier this year ruled that its process for doing so was invalid, thus requiring WHD to conduct formal rulemaking to reverse the Trump-era rule.

Comments on NPRM are due December 13 following an extension of the original November 28 deadline. For the NPRM, visit https://www.federalregister.gov/d/2022-21454. To comment on the proposal or review comments filed by others, visit https://www.regulations.gov/docket/WHD-2022-0003.

FMCSA’s COVID-19 emergency declaration ends

Without any formal announcement, the Federal Motor Carrier Safety Administration’s emergency declaration that had been in place since mid-March 2020 granting enforcement relief in transportation related to COVID- 19 relief ended October 15 when the latest extension expired. In September, the agency had requested comment by later that month concerning the extent to which motor carriers currently rely on the declaration to deliver certain commodities and whether there has been any impact on safety. FMCSA received 379 comments. To view comments, visit https://www.regulations.gov/docket/FMCSA-2022-0189.

FMCSA rejects SBTC exemption related to the language skills requirement

FMCSA denied an exemption requested by the Small Business in Transportation Coalition (SBTC) for an exemption that would allow carriers to use drivers who are not capable of reading and speaking the English language sufficiently to communicate with the public, understand highway traffic signs in English, to respond to official inquiries, etc. FMCSA concluded that SBTC has presented insufficient evidence to establish that not complying with the driver qualification regulations relating to the English language proficiency requirements for CMV drivers would meet or exceed the level of safety provided by complying with the regulations. For the Federal Register notice, visit https://www.federalregister.gov/d/2022-23891.

School bus group receives CDL testing exemption regarding engine compartments

FMCSA has granted an application from the National School Transportation Association (NSTA) for an exemption from the “under-the-hood” testing requirement for commercial driver’s license (CDL) applicants seeking a school bus endorsement. Drivers issued a CDL under the exemption are restricted to intrastate operation of school buses only. For the Federal Register notice, visit https://www.federalregister.gov/d/2022-23346.

FMCSA renews UPS exemption from certain ELD requirements

FMCSA has renewed for five years an exemption requested by United Parcel Service, Inc. (UPS) from various provisions of the mandate to use electronic logging devices (ELD). The exemption allows (1) all motor carriers and drivers that use portable, driver-based ELDs to record engine data only when the driver is in a CMV and the engine is powered, and (2) all motor carriers to configure an ELD with a yard-move mode that does not require a driver to re-input yard-move status every time the tractor is powered off. For the Federal Register notice, visit https://www.federalregister.gov/d/2022-23312.

FMCSA renews ELD exemption for motion picture-related drivers

FMCSA has renewed for five years the exemption requested by the Motion Picture Association that exempts from the electronic logging device (ELD) requirements all commercial motor vehicle (CMV) drivers providing transportation to or from a theatrical or television motion picture production site. Drivers instead are allowed to complete paper records of duty status (RODS). For the Federal Register notice, visit https://www.federalregister.gov/d/2022-23889.

 

Legislation

House bill would repeal entry-level driver training rule

Citing a shortage of truck drivers, Rep. Bob Good (R-Virginia) and five co-sponsors introduced legislation (H.R. 9153) to repeal the entry-level driver training (ELDT) rule that was finalized in 2016 and took effect earlier this year. A recently introduced Senate bill (S. 4861) does not go as far as a full repeal, but it waives the ELDT requirements for employees of small businesses as defined in the bill. For more information on H.R. 9153, visit https://www.congress.gov/bill/117th-congress/house-bill/9153.

Bill would allow workers to choose independent status with certain protections

A bill (H.R. 8442) introduced in July by Rep. Henry Cuellar (D-Texas) and two Republican co-sponsors would authorize use of a “worker flexibility agreement,” which would be a hybrid arrangement combining features of independent contractor and employee status. Workers and entities retaining them could declare the worker an independent contractor status for tax, wage, and overtime purposes while retaining worker rights typically offered to employees, such those related to privacy and nondiscrimination, workplace safety, and Family and Medical Leave Act protections. Under such an agreement, a worker would be free to reject offers of work from the entity and could perform the same services for competing businesses unless otherwise agreed to in a bargained-for non-solicitation sales agreement. For more information, visit https://www.congress.gov/bill/117th-congress/house-bill/8442.

 

Advocacy and Comment

We delayed sending this month’s update awaiting the outcome of the midterm elections and a Small Business Administration Roundtable with the Department of Labor to discuss its proposed new independent contractor rule mentioned above. Neither event provided any clarity. The results of the midterm elections are not likely to either exacerbate or improve the pending issues affecting trucking.

Our efforts at the SBA Roundtable were aimed at highlighting the distinct importance of the owner operator / independent contractor model to the trucking industry, the need for special treatment and a carve-out from any rule of general applicability DOL proposes. We highlighted the importance of the independent contractor model as a small business opportunity, pointing out that under a one-size-fits-all “control test” the safety obligations of hiring carriers are baked into Federal Regulations and do not count against finding independent contractor status.

We emphasized the importance of the independent contractor model as the backbone of long haul trucking, the dray industry and other niches and emphasized that under rulemaking requirements, the Department of Labor is required to consider the economic effects of any new rule on small businesses and, under the National Transportation Policy, on the shipper and broker community as well.

These issues are not adequately addressed in the Agency’s rulemaking for which comments are now due on December 13. Over 19,000 comments have already been filed, most of which are anecdotal complaints by disgruntled workers in other industries. It is important that we set the record straight and file a coordinated presentation which makes the case for recognition of the owner operator / independent contractor model as a unique essential small business and transportation issue which cannot be ignored.

Owner operators, affected motor carriers both large and small, and shippers and brokers which foresee supply chain interruption if the independent contractor model is lost should contact the sponsors of this newsletter for further information.

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Regulatory and Legislative Update - September 2022

By Dan Boaz

Contents

FMCSA has extended its emergency declaration regarding COVID-19 through October 15, 2022. For the latest version and other guidance related to COVID-19 is available at www.fmcsa.dot.gov/COVID-19. Note that use of the declaration now requires monthly reporting by carriers.

Regulation and Enforcement

Courts

Advocacy and Comment

 

Regulation and Enforcement

NLRB proposes joint-employer rule to undo Trump-era rule

The National Labor Relations Board has issued a notice of proposed rulemaking that would make it easier for workers to claim joint employment, reversing a February 2020 rule that made it more difficult for workers to make such a claim. The current rule states that employees could only claim to be employed by companies holding “substantial, direct and immediate control” over their employment. The proposal would loosen that standard to include employers that exercised such control over essential terms and conditions “directly or indirectly.”

Under the proposed rule, two or more employers would be considered joint employers if they “share or codetermine those matters governing employees’ essential terms and conditions of employment,” such as wages, benefits and other compensation, work and scheduling, hiring and discharge, discipline, workplace health and safety, supervision, assignment, and work rules. The NLRB proposal, therefore, would make it easier for employees of contractors or staffing firms. In announcing the proposal, NLRB said the proposal would ground the joint-employer standard in established common-law agency principles consistent with board precedent and guidance from the U.S. Court of Appeals for the District of Columbia Circuit. The proposal was advanced by a 3-2 vote of the board.

Comments on the NLRB proposal are due November 7. For the Federal Register notice, visit https://www.federalregister.gov/d/2022-19181. Comments replying to comments submitted during the initial comment period must be received by the Board on or before November 21.

Trucking Alliance seeks exemption for including hair testing results in clearinghouse

FMCSA is requesting comments by September 23 on an application from The Trucking Alliance – a group representing 11 mostly large trucking companies – for an exemption to amend the definition of actual knowledge of drug us to include the employer’s knowledge of a driver’s positive hair test. Because the Department of Health and Human Services has yet to clear hair testing as an alternative to urine testing, hair test results cannot be reported to the drug and alcohol clearinghouse. In the Federal Register notice, FMCSA declared that it lacks statutory authority to grant the Trucking Alliance’s requested exemption until HHS amends its mandatory guidelines, but the agency said it is requesting public comment on the application as required by statute. For the Federal Register notice, visit https://www.federalregister.gov/d/2022-18257.

FMCSA seeks comments on use and benefits of COVID enforcement relief

FMCSA is seeking comments by September 21 on the extent to which motor carriers currently rely on the COVID-19 emergency declaration and whether there has been any impact on safety. The agency has extended the emergency declaration through October 15, but it has signaled that it is at least questioning whether the declaration is still necessary.

Last September, FMCSA has asked carriers to report on the number of trips conducted under the declaration and the commodities transported. Based on a review of the carriers’ self-reported information, the primary categories transported are (1) food, paper, and other groceries for emergency restocking of distribution centers or stores; and (2) livestock and livestock feed. Meanwhile, two categories that have seen usage drop by almost 50% between October 2021 and July 2022 were (1) medical supplies and equipment related to the testing, diagnosis, and treatment of COVID-19; and (2) supplies and equipment necessary for community safety, sanitation, and prevention of community transmission of COVID-19. For the Federal Register notice, visit https://www.federalregister.gov/d/2022-19304.

ELDorado ELD removed from list of registered ELDs

FMCSA has removed ELDorado ELD from the list of registered electronic logging devices (ELD) and placed it on the revoked devices list do to the company’s failure to meet the minimum requirements. The revocation is effective September 7. Carriers most immediately discontinue using the ElDorado ELD and revert to paper logs or logging software to record hours of service and must replace the device with a compliant ELD by November 7. The list of registered devices is available at https://eld.fmcsa.dot.gov/List.

FMCSA names members of Women of Trucking Advisory Board

FMCSA in late August announced the appointment of members to the Women of Trucking Advisory Board (WOTAB), which was established by last year's infrastructure package to encourage the recruitment, retention, support, and safety of female commercial motor vehicle (CMV) drivers. The WOTAB will provide recommendations to FMCSA. For the list of WOTAB members, visit https://www.fmcsa.dot.gov/advisory-committees/wotab/wotab-members.

Community colleges receive funds to train veterans as truck drivers

FMCSA has awarded $3.1 million to community colleges and training institutes through the Commercial Motor Vehicle Operator Safety Training (CMVOST) grant program. Grants will assist current and former members of the Armed Forces who want to pursue careers in trucking to get commercial driver’s licenses (CDLs) and the training they need to enter the profession. Changes to the program in fiscal 2022 allowed educational institutions to apply for funds without providing a local match. For a list of colleges receiving grants, visit https://www.fmcsa.dot.gov/mission/grants/cmvost-grant-recommendation-summaries.

Small carrier seeks HOS exemption to deliver dry and bulk food grade products

FMCSA is requesting comments by October 3 on an application from Flat Top Transport LLC, a nine-truck carrier based in Holland, Michigan, for a four-month exemption from the hours-of-service regulations for “immediate and emergency delivery of dry and bulk food grade products to locations that supply stores and distribution centers nationally.” The carrier said that its main focus would be food-grade flour, corn meal, and salts used for the production of cereals, baked goods, canned goods, and meat processing. It said tight availability of those products is threatening food chain supply and producing shutdowns. For the Federal Register notice, visit https://www.federalregister.gov/d/2022-18935.

FMCSA reaffirms denial of driver training exemption for UPS

FMCSA on reconsideration has again denied an application by United Parcel Service for an exemption from a provision in the entry-level driver training rule that requires two years of experience for training instructors. UPS argued that its process of preparing driver trainers exceeds any skill set gained merely by operating a tractor-trailer for two years. FMCSA said it has determined that the application lacked evidence that UPS’ alternative would ensure that an equivalent level of safety or greater would be achieved. For the Federal Register notice, visit https://www.federalregister.gov/d/2022-19133.

ELD exemption renewed for short-term truck rentals

FMCSA has renewed, subject to conditions, the Truck Renting and Leasing Association’s exemption from the ELD installation and use requirements in situations where driver of property-carrying CMVs are rented for 8 days or less, regardless of reason. Drivers remain subject to the standard hours-of-service limits and must maintain a paper record of duty status (RODS) if required. For the Federal Register notice, visit https://www.federalregister.gov/d/2022-19556.

 

Courts

Court formally dissolves AB 5 injunction; case to proceed on other grounds

U.S. District Judge Roger Benitez on August 29 officially implemented the U.S. Court of Appeals for the Ninth Circuit’s mandate overturning his preliminary injunction against enforcement of AB 5 against motor carriers. The order was a formality after the U.S. Supreme Court declined to review the appeals court’s decision.

Although the California Trucking Association and other plaintiffs in the case no longer can argue that the Federal Aviation Administration Authorization Act (FAAAA) preempts AB 5, they originally had argued other grounds for the law’s application to trucking. Because the judge had granted the preliminary injunction on FAAAA grounds, he did not consider the plaintiffs’ argument that California was barred from enforcing AB 5 due to their dormant Commerce Clause claim. The court now will consider that claim, giving plaintiffs until October 11 to file a renewed motion for a preliminary injunction. However, nothing prevents California from enforcing AB 5 on trucking in the interim.

 

Advocacy and Comment

NLRB’s proposed new rule could increase liability for carriers using fleet owners

Under the new proposed National Labor Relations Board rule, companies across industries could be held responsible for their contractor’s violation of labor laws. The proposed rule could have a far-reaching effect on franchisees, agents of all types and in particular fleets and owner operators which employ their own drivers and in turn lease their equipment with drivers to licensed carriers under the truth in leasing regulations.

The proposed “Co-Employer” rule could be used to facilitate collective bargaining and eliminate any barrier to tagging mega carriers with employee taxes and benefits in the event their independent contractors fail to comply or otherwise default.

Unfortunately, this new proposed rule tracks other pending administrative actions before the Department of Labor which evidence a partisan agenda that affects the opportunities currently available to small businessmen, and in our industry, owner operators in particular. ATRI’s recent studies show an overwhelming preference of independent contractors for the freedom of dispatch and entrepreneurial opportunities the independent contractor model provides.

As noted before, trucking is a unique industry which has traditionally enjoyed a carve-out for independent contractors under federal regulation. Changes in labor laws could de-incentivize entrepreneurial opportunities and result in less, not more, trucks and drivers, as the ATRI study suggests. Under the administrative process, small businesses have the opportunity to be heard and must be considered in promulgating any new rule. Now, before the mid-term elections, is the time for the industry to make clear to regulators that eliminating the independent contractor model and facilitating collective bargaining is against public policy and will exacerbate, not facilitate, the recruitment of more drivers.

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Regulatory and Legislative Update - August 2022

By Dan Boaz

Contents

FMCSA has extended its emergency declaration regarding COVID-19 through August 31, 2022. For the latest version and other guidance related to COVID-19 is available at www.fmcsa.dot.gov/COVID-19. Note that use of the declaration now requires monthly reporting by carriers.

Courts

Regulation and Enforcement

Legislation

Advocacy and Comment

 

Courts

Appeals court upholds the latest changes to HOS rules

The U.S. Court of Appeals for the District of Columbia Circuit late last month rejected a challenge to the September 2020 changes in the federal hours-of-service rules for truck drivers. Three truck safety advocacy groups and the Teamsters Union had challenged two of the revisions. The parties argued that FMCSA had failed to adequately explain its conclusion that the new short-haul exemption was safety neutral with respect to collision risk and driver health and would not negatively impact regulatory compliance. They also argued that the agency had insufficiently explained how the modification to the 30-minute break requirement was safety neutral and would not impact driver health. The parties did not challenge other rule changes, including the split options for split rest and increased flexibility afforded drivers when operating in adverse conditions.

Although the 43-page appeals court opinion goes into much more detail, the fundamental ruling was simple. “Because the modifications to the hours-of-service rules were sufficiently explained and grounded in the administrative record, we deny the petition,” the court said. For the opinion, visit https://www.cadc.uscourts.gov/internet/opinions.nsf and search 20-1370 under “Quick Search.”

Appeals court overturns ruling for Schneider in classification case

The U.S. Court of Appeals for the 7th Circuit has reversed a U.S. district court ruling in favor of Schneider National in a worker classification case and sent it back to the lower court for further proceedings. The district court had granted Schneider’s motion to dismiss all claims, which were that the carrier (1) violated minimum wage requirements under the federal Fair Labor Standards Act and Wisconsin law; (2) unjustly enriched itself under Wisconsin law; and (3) violated federal Truth-in-Leasing regulations.

The appeals court ruled that the district court had erred by giving decisive effect to the terms of Schneiders contracts. “In many areas of the law, the district court’s approach would be sound, but not under the Fair Labor Standards Act,” the appeals court said. “As explained below, in determining whether a person is an employee under the Act, what matters is the economic reality of the working relationship, not necessarily the terms of a written contract.” The appeals court concluded that the plaintiff’s allegations about the economic reality of his working relationship state a viable claim under FLSA and the other laws relies upon. For the opinion in the case, visit http://media.ca7.uscourts.gov/opinion.html and search for case No. 21-2122.

 

Regulation and Enforcement

Registration now open for younger driver apprenticeship program

About six months after publishing the requirements for the program, the Federal Motor Carrier Safety Administration has opened the Safe Driver Apprenticeship Program for carriers to apply for participation. The program, which was established by last year’s infrastructure legislation, allows 18- to 20-year-old individuals to drive commercial motor vehicles in interstate commerce under certain conditions. At any given time, FMCSA can allow only 3,000 drivers to participate. For more information and a link to the carrier application portal, visit https://www.fmcsa.dot.gov/safedriver.

FMCSA denies ELD exemption for elevator maintenance firm

FMCSA has denied an application submitted in 2019 by Harris Companies, Inc. for an exemption from the electronic logging device (ELD) rule for all its employees who are required to prepare records of duty status (RODS). The exemption would have included elevator technicians, electricians, other general laborers, and welders who operate commercial motor vehicles in interstate commerce. FMCSA said that the applicant has not demonstrated that it would likely achieve a level of safety that is equivalent to, or greater than, the level that would be achieved absent the requested exemption. For the Federal Register notice, visit https://www.federalregister.gov/d/2022-15224.

School bus association seeks CDL testing exemption regarding engine compartments

FMCSA is requesting comments by September 12 on an application from the National School Transportation Association (NSTA) for an exemption from the “under-the-hood” testing requirement for commercial driver’s license applicants seeking a school bus endorsement. Drivers issued a CDL under the exemption would be restricted to intrastate operation of school buses only. For the Federal Register notice https://www.federalregister.gov/d/2022-17228.

FMCSA proposes to incorporate CVSA procedures into hazmat permit regs

FMCSA is requesting comments by September 7 on a proposal to incorporate by reference into the hazardous materials safety permit regulations the updated Commercial Vehicle Safety Alliance (CVSA) handbook containing inspection procedures and Out-of-Service Criteria (OOSC) for inspections of shipments of transuranic waste and highway route-controlled quantities of radioactive material. For the Federal Register notice, visit https://www.federalregister.gov/d/2022-16510.

 

Legislation

Clean energy law includes tax credits for electric trucks

President Biden has signed into law the so-called Inflation Reduction Act (H.R. 5376), which includes various measures related to clean energy and health care. Among the legislation’s clean energy provisions is a “qualified commercial clean vehicle credit,” which provides a tax credit of up to $40,000 for qualified heavy commercial electric vehicles, or up to $7,500 for qualified commercial electric vehicles weighing less than 14,000 pounds. A separate provision provides a tax credit of up to $100,000 for installation of charging stations needed to support those vehicles.

For details of the legislation, visit https://www.congress.gov/bill/117th-congress/house-bill/5376. The provisions outlined above are Sections 13403 and 13404.

T&I Committee approves bill to fund truck parking expansion

The House Transportation & Infrastructure Committee has advanced legislation (H.R. 2187) that would authorize $755 million over five years to build additional commercial truck parking facilities. The bill not only would cover construction of commercial truck parking spaces at rest areas and weigh stations along highways but also would cover expansion of parking adjacent to truck stops and travel plazas, at publicly owned freight facilities such as port terminals. For more information on the bill, visit https://www.congress.gov/bill/117th-congress/house-bill/2187.

Rep. Mast introduces a package of bills to loosen restrictions, taxes on trucking

Rep. Brian Mast (R-Florida) has introduced five bills that to address the supply chain crisis by reducing regulatory burdens and taxes on the trucking industry, linking them as steps to address the ongoing supply chain crisis. The tax-related bills include one (H.R. 8413) that is similar to bills that have been introduced by others in Congress over the years. H.R. 8413 would repeal the 12% federal tax on truck chassis, which Mast says would “lower the cost of entry for aspiring truckers and get more trucks on the road.” For more information, visit https://www.congress.gov/bill/117th-congress/house-bill/8413. The other tax-related bill (H.R. 8413) would repeal the 24.3-cent excise tax on diesel fuel. For more information, visit https://www.congress.gov/bill/117th-congress/house-bill/8414.

The other three bills address issues that are more controversial, even within the trucking industry itself. H.R. 8411 would extend the permissible length of each twin semitrailer from 28 to 33 feet to allow truck combinations to haul more cargo. For more information, visit https://www.congress.gov/bill/117th-congress/house-bill/8411. The idea of allowing longer doubles became a big issue about seven years ago and sharply divided truckload and LTL carriers.

H.R. 8412 would increase the permissible weight of a semitrailer from 80,000 pounds to 97,000 pounds. For more information, visit https://www.congress.gov/bill/117th-congress/house-bill/8412. While generally supported by shippers and some major private fleets, the idea of allowing heavier trailers has been controversial within the truckload industry because many carriers fear that customers would pressure them into replacing existing trailers without adequate compensation and also while rendering the prior trailers obsolete.

The final bill, H.R. 8417, would permanently repeal the hours-of-service regulations, although it would require carriers to allow truck drivers to take at least 10 hours off duty “when such driver informs the motor carrier or motor private carrier that such driver needs immediate rest.” For more information, visit https://www.congress.gov/bill/117th-congress/house-bill/8417. This bill is most controversial of all, although Mast argues that FMCSA’s actions to rescind HOS rules during the height of the pandemic demonstrate that the regulation is unnecessary.

Senate bill would loosen requirements for VA funding of commercial driver training

Sen. Deb Fischer (R-Nebraska) has introduced legislation (S. 4766) that would exempt commercial driver training from some of the requirements governing allocation of funds for veterans educational assistance by the Department of Veteran Affairs (VA). For details on the legislation, visit https://www.congress.gov/bill/117th-congress/senate-bill/4766.

 

Advocacy and Comment

Dispatch Services

Exhaustive comments were filed by 13 stakeholders in the FMCSA’s open docket considering the future of “dispatch services.” Most commenters supported the retention of the existing definition of “Broker” which includes third parties who arrange for transportation for compensation and are not exclusively representing one carrier.

The 13 areas of inquiry presented by the Agency opens the door for an analysis of DOT’s obligations to enforce the National Transportation Policy and prevent identity theft, larceny by fraud, and double brokerage scams, all of which are serious demonstrative problems that are currently unaddressed. Unlike the Federal Maritime Commission which exercises its regulatory authority over unreasonable practices in ocean freight, other than record industry complaints, the FMCSA does not actively investigate and police fraudulent and felonious conduct notwithstanding statutory and regulatory authority to do so.

The explosive growth in spot market booking of freight has increased the opportunity for “catfishing” where the internet persona of the potential logistics partner cannot be trusted.

At the Department level it is DOT’s responsibility to enforce the National Transportation Policy and ensure that all stakeholders can rely on a competitive marketplace in which properly licensed, authorized and insured brokers and carriers can be identified and used. Maybe the dispatch service docket will afford the industry the opportunity to demonstrate a more active policing of the industry, not less in the public’s interest and that a special appropriation and task force should be set up by DOT to readdress these issues.

AB5 Goes Viral – Infects New Jersey

As predicted, the Supreme Court’s decision not to hear the appeal of AB5 has already resulted in increased virulence. In the past week, the State of New Jersey has issued two unfavorable decisions. In one, its Department of Labor has refused to apply a decade old carve-out from employee status for independent contractors which are paid based on productivity (i.e., either by the mile or on percentage). This legislation, which was intended to track the federal owner operator leasing rules, has been declared ineffective because the carrier augmented the owner operator’s base pay with pass through payments and deductions contemplated by the very federal rules the carveout was intended to facilitate.

The same week, the New Jersey Supreme Court, in a rush to facilitate the ABC Test, ruled that there would be no court appeal of a New Jersey DOL ruling in favor of application of the ABC test in an unrelated industry.

Wow! So much for due process and judicial appeal in New Jersey. By now, it should have become obvious that the ABC test endorsed by CA in AB5 is a killer of small business opportunities and that there is no easy way to contain its spread. Isn’t it ironic that two states, California and New Jersey, with among the highest state tax burdens and great dependence on the owner operator model for intermodal port traffic should be the first in line to stifle blue collar entrepreneurship.

Unfortunately the decision of the 7th Circuit in the Schneider case may be a harbinger of things to come. Hopefully the Court’s remand will not encourage a renewal of vexatious class action suits alleging that retention of owner operators under the federal leasing regulations somehow violates well established precedent.

Stay tuned! Clearly there is more to come on this issue.

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