<img src="//bat.bing.com/action/0?ti=4066564&amp;Ver=2" height="0" width="0" style="display:none; visibility: hidden;">

Regulatory and Legislative Update - May 2021

By Dan Boaz

Contents

FMCSA has extended its emergency declaration regarding COVID-19 through May 31. For the latest version and other guidance related to COVID-19 is available at www.fmcsa.dot.gov/COVID-19.

Courts

Legislation

Regulation and Enforcement

Advocacy and Comment

 

Courts

Appeals court panel rules that California can enforce AB 5 on motor carriers

The State of California may soon be allowed to outlaw motor carriers’ use of leased owner-operators within the state following a key federal appeals court decision. On April 28, a three-judge panel of the U.S. Court of Appeals for the 9th Circuit by a split decision ruled that the Federal Aviation Administration Authorization Act of 1994 (F4A) does not preempt California’s enforcement of AB 5’s ABC test on worker classification as it applies to motor carriers. The decision overturns a preliminary injunction granted by a federal judge in January 2020. Two of the panel’s judges declared that the district court had abused its discretion by granting the preliminary injunction contrary to precedent in the 9th Circuit.

Enacted in September 2019 and effective in January 2020, AB 5 codified a so-called ABC test for whether workers must be considered employees or can be treated as independent contractors. Although in many states satisfying one or more prongs is sufficient to establish an independent contractor relationship, the California test requires all three prongs to be satisfied. In effect, the “B” prong of California’s test outlaws the leased owner-operator model because it says a worker engaged in the same occupation as his or her employer cannot be an independent contractor. Since both owner-operators and the trucking companies that use them haul freight, owner-operators cannot be independent contractors under AB 5.

At issue in this case is the scope of F4A’s preemption, which bars state laws related to a price, route, or service of any motor carrier with respect to the transportation of property. In rejecting preemption, the majority ruled that AB 5 "is a generally applicable labor law that impacts a motor carrier’s relationship with its workforce and does not bind, compel, or otherwise freeze into place a particular price, route, or service of a motor carriers at the level of its customers."

The majority conceded that 9th Circuit precedent did not rule out the possibility that a generally applicable law could so significantly affect the employment relationship that it effectively bound motor carriers to specific prices, routes, or services at the consumer level. However, the appeals court has "considered and rejected predicted effects similar to those raised by CTA,"" the majority said. "We see no basis for departing from our precedent holding that a law increasing motor carriers’ employee costs, but not interfering at the point where the motor carrier provides a service to its customers, does not simply fall ‘into the field of laws’ that Congress intended to preempt."

In his dissent, Judge Mark Bennett contended that AB 5 does more than just affect motor carriers’ relationships with their workers and that the law significantly impacts the services carriers can provide to their customers. Bennett argued that – contrary to the majority opinion – the effect on motor carriers’ service is not merely "tenuous, remote, or peripheral." For example, Bennett cited a declaration from a CTA member that because of the capital costs associated with specialized equipment, employee-based motor carriers will not be able to offer services requiring such equipment.

AB 5 also will eliminate motor carriers’ flexibility to accommodate fluctuations in supply and demand because California’s wage orders require employers to supply their employees’ tools and equipment, Bennett wrote. “Again, this inability to meet temporary rises in demand will deprive motor carriers’ consumers of particular services – consumers such as farmers and retail sellers who depend on motor carriers to seasonally hire independent contractors during harvests and peak retail seasons, respectively,” Bennett wrote.

Bennett noted that the majority’s opinion conflicts with rulings in the First Circuit and Third Circuit that held or at least implied that “all or nothing” rules like California’s ABC test should be preempted. In the First Circuit case, essentially the same test in Massachusetts was found to be preempted by F4A. The Third Circuit upheld New Jersey’s ABC test, but the court in that case emphasized that the New Jersey test’s B prong allows an alternative method for establishing independent contractor status – something that was not allowed under the Massachusetts test and is not allowed under the California ABC test.

Next steps

At a minimum, nothing changes for 21 days from the date of the ruling. The California Trucking Association (CTA), which is leading the legal challenge to AB 5, has 14 days to respond with its inevitable appeal. Even if the appeals court were to deny that appeal immediately and issue a mandate to enforce the three-judge panel’s ruling, it would be another seven days before the injunction is lifted.

CTA has several options for appeal. One would be to ask the same three-judge panel to rehear the case, but that approach almost certainly would end with the same result. Another option would be to go immediately to the U.S. Supreme Court with a petition for writ of certiorari (“cert petition”). However, the current Supreme Court term will end in June, so it probably would be this fall at the earliest before the court even decided whether to review the appeal’s court ruling and months later before the court heard arguments and ruled.

CTA’s most likely first step is to ask the 9th Circuit for an “en banc” rehearing, which would mean that a group of 11 judges would hear the case. If CTA petitions for such a rehearing, the court would have up to 21 more days to decide whether to rehear the case, although it could respond immediately. If the court were to agree to an en banc rehearing, the preliminary injunction presumably would remain in effect pending that ruling, which could be months away. If the court denies an en banc appeal, however, the injunction presumably would be lifted, and the trucking industry would have to abide by AB 5 pending an appeal to the Supreme Court. En banc rehearings are not routinely granted, but the panel’s split decision likely increases the chances for one.

A cert petition before the U.S. Supreme Court by either CTA or the State of California probably is inevitable regardless of the outcome of any further appeals before the 9th Circuit. The U.S. Supreme Court agrees to review only a tiny percentage of the cases brought to it. However, the fact that the 9th Circuit opinion conflicts with rulings in other federal appeals courts increases the chances that the Supreme Court would agree to hear the case.

For the April 28 ruling visit https://cdn.ca9.uscourts.gov/datastore/opinions/2021/04/28/20-55106.pdf.

 

Legislation

Senate Republicans float a smaller infrastructure bill; House plans action in May

The ranking Republicans on key Senate committees responsible for transportation infrastructure, policy, and financing in April announced the framework for an infrastructure bill to counter legislation contemplated by the Biden administration. The Republican proposal is much smaller at $568 billion than the White House’s $2.3 trillion proposal, but the details are key. More than half of the Republican plan – $299 billion – would go to roads and bridges. The White House plan included only $115 billion, but that appears to be new money while the Republican plan represents funds that would be provided anyway with reauthorization of the FAST Act, which expires September 30.

Money aside, infrastructure legislation is significant because it surely will be the first major vehicle for any changes to motor carrier law under President Biden, a Democratic-controlled House, and a Senate that is at least technically in Democratic control. Peter DeFazio (D-Oregon), chairman of the House Transportation & Infrastructure Committee, announced recently that his committee in May would consider surface transportation reauthorization legislation. The House T&I Committee bill likely will resemble legislation (H.R. 2) that passed the House last year but died in the Senate. As passed by the House in July 2020, H.R. 2 would require:

  • Revision of Compliance, Safety, Accountability methodology, restoration of publicly available CSA data, and implementation of a new process for issuing safety fitness determinations;
  • An increase in minimum insurance standards to $2 million and an adjustment every five years;
  • A rulemaking to establish screening criteria for obstructive sleep apnea among commercial vehicle drivers;
  • Automatic emergency braking systems to be installed and used on all newly manufactured CMVs;
  • More stringent rear underride guard standards and consideration of side underride guard standards;
  • Revised guidance for personal conveyance to establish specific mileage or time limits.
  • Establishment of a Truck Leasing Task Force to examine truck leasing agreements and their impact on the net compensation of drivers.

Another set of issues that could arise as part of the infrastructure package – although not within the T&I Committee – are pro-labor measures, such as those in the Protecting the Right to Organize (PRO) Act (H.R. 842; S. 420). The Biden administration’s infrastructure proposal referred to passage of the PRO Act as if it were considered part of the package. The PRO Act includes a provision that in essence would establish as a federal standard California’s ABC test for whether a worker is an employee or independent contractor.

Texas legislature advances reform of CMV crash litigation

The Texas House of Representatives on April 30 passed by an 81 to 49 vote legislation (House Bill 19) to reform litigation of lawsuits over CMV accidents. Among other provisions, the bill would establish that in a fault phase of the litigation, juries are presented with evidence that is directly relevant to causation and injuries. For example, House Bill 19 would allow evidence of a motor carrier defendant’s compliance with a regulation or standard to be admissible only if the evidence tends to prove that failure to comply with the regulation or standard was a proximate cause of the injury or death. Also, any consideration of negligent entrustment would be barred unless in the fault phase it was found that the carrier’s employee was negligent in operating the vehicle. For more on the bill, visit https://legiscan.com/TX/bill/HB19/2021.

 

Regulation and Enforcement

Joshi nominated as FMCSA administrator

President Biden has nominated Meera Joshi to be FMCSA administrator. Joshi has served as deputy administrator and acting administrator since Biden was inaugurated in January. She must be confirmed by the Senate before she formally becomes administrator. The Senate Commerce Committee has yet to schedule a confirmation hearing. FMCSA has had only acting administrators since Raymond Martinez left the agency in October 2019.

Joshi most recently was principal and New Your general manager with transportation planning firm Sam Schwartz. From 2011 until 2019, Joshi held senior positions with the New York City Taxi and Limousine Commission, first as deputy commissioner and general counsel and then as CEO and commission chair.

FMCSA proposes to extend deadline related to medical examiner certification

FMCSA proposes to amend its regulations to extend the compliance date from June 22, 2021, to June 23, 2025, for several provisions of its April 2015 medical examiner’s certification Integration final rule. The agency said the action is being taken to provide FMCSA time to complete certain information technology (IT) system development tasks for its National Registry of Certified Medical Examiners and to provide the state driver’s licensing agencies (SDLAs) sufficient time to make the necessary IT programming changes. For the Federal Register notice, visit https://www.federalregister.gov/d/2021-08238.

FMCSA’s Medical Review Board to meet May 19-20

FMCSA’s Medical Review Board Advisory Committee (MRB) will meet via videoconference May 19-20. The meeting will be open to the public. The meeting will address three topics: (1) Finalizing recommendations on updates to the Medical Examiner Handbook; (2) conducting a review of the medical assessment form for CMV drivers with noninsulin-dependent diabetes mellitus; and (3) evaluate for medical sufficiency comments and the vision assessment form from January’s proposed rule on vision standards. Advance registration is recommended via the FMCSA website at www.fmcsa.dot.gov/mrb. Requests to submit written materials to be reviewed during the meeting must be received by May 12. For the Federal Register notice, visit https://www.federalregister.gov/d/2021-09271.

 

Advocacy and Comment

As the above analysis shows, 100 days into the new Administration there are fewer but more significant issues facing the trucking industry.

The future of the owner operator / independent contractor model is in jeopardy before all three branches of Government. The Ninth Circuit decision concerning AB-5 was not particularly surprising. Only the dissenting Judge appeared to comprehend the importance of the independent contractor model on routes, rates and services. As noted, the PRO Act which passed the House and is teed up for consideration by the Senate, possibly as part of the infrastructure bill. If the 60 vote filibuster requirement does not apply, this could result in reclassification of owner operators as employees for federal labor purposes. On the Executive level, the new Department of Labor is signaling it will revisit independent contractor rules for purposes of the Fair Labor Standards Act as a matter of regulation if the PRO Act does not prevail.

Moreover, as noted above, the House Committee considering the infrastructure bill continues to address other anti-trucking provisions of noted concern. OOIDA has issued a press release outlining its concerns including:

  • Increasing federal liability insurance requirements from $750,000 to $2,000,000
  • Time and/or distance caps on personal conveyance
  • Expansion of tolling authority via congestion pricing and diversion of revenue to non-highway programs
  • Sleep apnea screening and testing rules
  • Republication of flawed CSA safety data

Clearly there is an immediate need for concerted efforts by the industry to oppose the attack on the owner operator / independent contractor model and to oppose other pending anti-trucking legislation mentioned above. The case is yet to be made for the importance of the independent contractor model to small businesses and the continued stability of interstate trucking.

The time has come for a coordinated effort to counter the continuing rhetoric which mischaracterizes the trucking industry.

Read More »

Regulatory and Legislative Update - April 2021

By Dan Boaz

Contents

FMCSA has extended its emergency declaration regarding COVID-19 through May 31. For the latest version and other guidance related to COVID-19 is available at www.fmcsa.dot.gov/COVID-19.

Regulation and Enforcement

Legislation

Advocacy and Comment

 

Regulation and Enforcement

DOL proposes to withdraw rule on worker classification

Comments are due April 12 on a notice of proposed rulemaking (NPRM) to withdraw a Trump administration rule regarding independent contractor status. The U.S. Department of Labor’s Wage and Hour Division (WHD) had already delayed the effectiveness of the rule until May 7 while it reviewed the regulation. The Trump administration regulation, which was issued in January and originally scheduled to take effect in March, adopted a new “economic reality” test to determine whether a worker is an employee or an independent contractor under the Fair Labor Standards Act (FSLA).

In the NPRM, WHD said that courts and the department have not used the new economic reality test and that neither the text of the FLSA nor longstanding case law support the test. WHD said the rule would narrow or minimize other factors that courts have traditionally considered, making the economic test less likely to establish that a worker is an employee under the FLSA. For the NPRM, visit https://www.federalregister.gov/d/2021-05256.

DOT rescinds Trump administration’s changes on rulemakings, guidance

The U.S. Department of Transportation (DOT) issued a final rule that rescinds policies and procedures related to rulemaking, guidance, and enforcement that DOT had implemented in December 2019. The rule affects not only department-level proceedings but also those within its agencies, including the Federal Motor Carrier Safety Administration.

The 2019 changes largely wrote into DOT regulations (49 CFR part 5) some of the reforms that had been ordered by various executive orders issued by President Trump. Those included regulatory reform policies on regulatory budgeting, the “2-for-1” plan (repealing two rules for every one new rule), and the Regulatory Reform Task Force.

In its latest action, DOT said it was responding to two recently issued executive orders that (1) revoke several Trump administration executive orders relating to rulemaking, guidance, and regulatory enforcement (E.O. 13992) and (2) direct executive departments to review regulations that conflict with the objectives concerning protecting public and the environment (E.O. 13990). However, the new rule rescinds more than just provisions directly attributable to now-revoked executive orders. The department also has rescinded regulations in 49 CFR part 5 that:

  • Solely apply to the department's internal operations “and thus need not be codified in the Code of Federal Regulations;”
  • Are duplicative of existing procedures contained in internal departmental procedural directives; and
  • Are derived from the Administrative Procedure Act and significant judicial decisions “and thus need not be adopted by regulation in order to be effective.” 49 CFR part 5, subpart D – Enforcement Procedures was rescinded in its entirety for that reason, DOT said.

DOT said removing these provisions “ensures that the Department is able to effectively and efficiently promulgate new Federal regulations and other actions to support the objectives stated in E.O. 13990.” However, the department said the regulations would continue to include provisions related to the public’s ability to interact with DOT on rulemaking matters and activities. For example, DOT retained procedures for the public to petition for rulemakings and exemptions. Although the new rule rescinds language that explicitly provided for retrospective reviews and guidance document petitions, “the Department will nevertheless accept and process these types of petitions,” it said.

DOT issued the new rule without a notice-and-comment process on the grounds that Administrative Procedure Act requirements do not apply to an action that is a rule of agency organization, procedure, or practice. The same was true for the December 2019 rule that this rule largely overturns.

For the Federal Register notice of the final rule, visit https://www.federalregister.gov/d/2021-06416. For DOT’s December 2019 rule, visit https://www.federalregister.gov/d/2019-26672.

CVSA to hold enforcement events in May and July

The Commercial Vehicle Safety Alliance has scheduled its annual Operation Safe Driver Week for July 11-17 with an emphasis on speeding. During Operation Safe Driver Week, law enforcement personnel will be on the lookout for commercial motor vehicle drivers and passenger vehicle drivers engaging in risky driving behaviors in or around a commercial motor vehicle (CMV).

CVSA previously announced that its annual International Roadcheck enhanced inspection event would be held May 4-6. The emphasis of this year’s Roadcheck will be lighting and hours of service. Roadcheck traditionally has been held in early June, but CVSA moved it up a month because its research has shown that weather tends to be better in early May than in early June.

Bus operator seeks exemption from full clearinghouse query in hiring

FMCSA is requesting comments by April 15 on an application by FirstGroup plc for an exemption to allow it to use a limited pre-employment query of the drug and alcohol clearinghouse as a screen when hiring school bus and transit drivers rather than having to conduct a full pre-employment query as required under the regulations. FirstGroup says the requirement for a full query is hindering its ability to hire at the speed and level needed to keep pace with the demands of the contracted school and transit transportation industry and is resulting in hundreds of thousands of dollars of increased costs.

Under the requested exemption, in lieu of a full query, FirstGroup would conduct a limited pre-employment query of the clearinghouse. If the limited query indicated that information about the driver existed, the company would then conduct a full query of the clearinghouse with the driver-applicant providing consent in the clearinghouse as required. FirstGroup also would conduct a second limited query within 30 to 35 days of the initial limited query and conduct multiple limited queries on all its CDL drivers each year thereafter. For the Federal Register notice, visit https://www.federalregister.gov/d/2021-05328.

Armored car operation seeks exemption to weld front doors shut

FMCSA is inviting comments by May 7 on an application from Loomis Armored US, LLC for an exemption to allow the driver and passenger doors of the cab of its specialized armored vehicles to be welded shut. Loomis believes that welding shut the cab doors and adding two new doors behind the cab will maintain safety while allowing secure armored car operations with reduced staff. For the Federal Register notice, visit https://www.federalregister.gov/d/2021-07102.

FMCSA grants windshield exemption to Bendix

FMCSA granted an exemption to Bendix Commercial Vehicle Systems to allow its advanced vehicle safety systems, which are equipped with cameras, to be mounted lower in the windshield on CMVs than is currently permitted. For the Federal Register notice, visit https://www.federalregister.gov/d/2021-06982.

 

Legislation

West Virginia law allows clear path to independent contractor status

LegislationWest Virginia Gov. Jim Justice last month signed legislation (Senate Bill 272) intended to provide a clear framework for establishing when a worker is an independent contractor or employee. The findings section of the new law notes that legal standards are not only often subjective but also often vary depending on the particular law at issue. The goal of the legislation is to provide certainty and clarity for all involved.

Under the new law, a person is an independent contractor if there is a written contract stating such and the person satisfies any three of nine specified conditions that indicate an independent contractor relationship. Of particular interest in the trucking context is a provision that explicitly allows firms using the services of an independent contractor to specify safety-related devices, procedures, or training. For the text of the West Virginia law, visit http://bit.ly/WVA-IC.

Biden infrastructure plan envisions passage of the PRO Act

The Biden administration’s proposed American Jobs Plan – a $2.3 trillion broadly defined infrastructure package – apparently contemplates enactment of various pro-labor measures, including the Protecting the Right to Organize Act, or PRO Act. An endorsement of the PRO Act is contained in a White House fact sheet on the American Jobs Plan, specifically in a section that proposes measures aimed at promoting union organization and collective bargaining.

The U.S. House of Representatives has already passed the PRO Act on a party line vote. Among a host of pro-labor provisions, the bill (H.R. 842) includes language that would mandate a federal ABC test for worker classification similar to that in California’s AB 5. The bill also would explicitly declare misclassification of workers a violation of the National Labor Relations Act.

Although broadly billed as an infrastructure plan, the American Jobs Plan allocates relatively little money for highways – just 5% of the total cost. Most of the funding goes into construction and retrofitting of buildings and into investments in Biden administration priorities, such as promoting adoption of electric vehicles. Almost as controversial as the labor provisions are the financing measures, including an increase in the corporate tax rate to 28% and the sunset of various tax benefits for companies that operate overseas. The bill also would eliminate tax preferences held by the petroleum industry. To view the fact sheet on the American Jobs Plan, click on the “Learn More” button at https://www.whitehouse.gov/american-jobs-plan.

Bills reintroduced to allow 18-year-old interstate drivers under specific conditions

Legislation (S. 659, H.R. 1745) that would establish an apprenticeship program allowing for interstate drivers aged 18 to 20 was reintroduced in both the House and Senate last month. The Developing Responsible Individuals for a Vibrant Economy Act, or DRIVE Safe Act, would require separate probationary periods of 120 hours and 280 hours, each with specific performance benchmarks. A driver could not transport hazardous materials until after completing the 120-hour probationary period hauling non-hazmat freight.

The legislation would allow 18- to 20-year-olds to drive interstate only if the CMV is governed at 65 mph and equipped with automatic manual or automatic transmissions; active braking collision mitigation systems; and Forward-facing video event capture. The legislation has been introduced in the past two Congresses but failed to advance. For more information, visit https://www.congress.gov/bill/117th-congress/senate-bill/659 and https://www.congress.gov/bill/117th-congress/house-bill/1745.

House and Senate bills would require underride protection rulemaking

Sen. Kirsten Gillibrand (D-New York) and Rep. Steve Cohen (D-Tennessee) reintroduced legislation (S. 605, H.R. 1622) that would mandate regulations to require installation and retrofit of rear, side, and front underride guards on all CMVs with gross vehicle weight ratings of more than 10,000 pounds. The bill also would specify performance standards for each type of underride guard as well as require rules on inspection, maintenance, and repair of the devices. Essentially the same bills were introduced in the past two Congresses. For more information, visit and https://www.congress.gov/bill/117th-congress/senate-bill/605 and https://www.congress.gov/bill/117th-congress/senate-bill/659.

House bill would authorize $755 million to expand commercial truck parking

Reps. Mike Bost (R-Illinois) and Angie Craig (D-Minnesota) have reintroduced legislation (H.R. 2187) that would establish a set-aside source of funding to expand more commercial truck parking throughout the U.S. The bill would authorize $755 million total in annual increments. The funds could be used at a variety of locations, including construction of public rest areas and commercial vehicle parking facilities and parking capacity next to commercial truck stops, weigh stations, and public and private freight facilities. For more information, visit https://www.congress.gov/bill/117th-congress/house-bill/2187.

Sen. Fischer reintroduces bill to loosen restrictions on agricultural hauling

Sen. Deb Fischer (R-Nebraska), the ranking Republican on the Senate subcommittee that oversees trucking regulations, has introduced legislation (S. 792) to modify certain agricultural exemptions for HOS requirements. The bill would eliminate the limitation that applies ag and livestock HOS exemptions only during state-designated planting and harvesting seasons. The bill also would amend and clarify the definition of “agricultural commodities” and authorize a 150 air-mile exemption from HOS requirements on the destination side of a haul for ag and livestock haulers. For details of S. 792, visit https://www.congress.gov/bill/117th-congress/senate-bill/792.

Senate bill would establish federal working group on electric vehicles

Sen. Catherine Cortez Masto (D-Nevada) introduced legislation (S. 508) that would establish a federal working group to make recommendations on the development, adoption, and integration of light and heavy-duty electric vehicles into the transportation and energy systems of the U.S. The working group would include federal and private sector members, including at least one representative of the trucking industry. For more information, visit https://www.congress.gov/bill/117th-congress/senate-bill/508.

 

Advocacy and Comment

Easy Come, Easy Go

Advocacy and CommentLast year, the Department of Transportation issued internal rules providing needed clarity and due process applicable to FMCSA investigations, safety ratings and civil forfeitures. The Agency’s decisions got little publicity but were reviewed with approval approximately a year later in a transportation lawyers’ journal.

Unfortunately, the ink was not dry on the article before incoming Secretary Pete Buttigieg issued a 19-page document largely countermanding the previous findings and eliminating administrative restraints on regulatory abuses the earlier rules were intended to address.

The formal rulemaking process, which was not followed, includes an opportunity for notice and comment, the development of a record for appeal, and the provision for due consideration concerning the effect of the regulations on small carriers. Unfortunately, neither the Trump Administration’s findings nor Buttigieg’s reversal were based on any opportunity for notice or comment. Both must be viewed as “Rules du Jour” (rules of the day).

All too frequently, administrative agencies have grown accustomed to publishing guidance documents masquerading as rules which themselves offer no due process as the FMCSA’s touting of SMS methodology has poignantly demonstrated.

The formal rulemaking process, while cumbersome, is an important procedural protection against unvetted material changes in regulations. The first 100 days of the new administration indicate that there may be many new regulatory and legislative developments to be covered in the coming months.

Owner Operator Update

As previously noted, the PRO Act passed by the House would, along with other pro-labor provisions, eliminate independent contractor treatment of owner-operators. The chance of passage in the Senate may be increased by the parliamentarians’ decision that revenue bills are not subject to a 60-vote filibuster. The FAST Act has been tied to the infrastructure funding bill, which could thus result in a greater chance of passage.

Read More »

Regulatory and Legislative Update - March 2021 Addendum

By Dan Boaz

Contents

Legislation

Advocacy and Comment

 

Legislation

House passes PRO Act with strict ABC test

The U.S. House of Representatives on March 8 passed on a party line 225 to 206 vote legislation that would mandate a federal ABC test for worker classification similar to that in California’s AB 5. The Protecting the Right to Organize (PRO) Act (H.R. 842) now moves to the Senate. The same legislation passed the House in the 116th Congress but died in the Republican-controlled Senate.

Although Democrats technically control the Senate by virtue of Vice President Harris’ tie-breaking vote, H.R. 842 faces an uphill battle owing to the filibuster. Some observers believe that killing the filibuster altogether would be the only path to final passage of the entire PRO Act, although it is more feasible that individual pieces could pass as riders to other legislative vehicles. Regardless, House passage coupled with Democratic control of the Senate means that this is the closest Congress has ever come to essentially outlawing the leased owner-operator model.

The PRO Act contains a host of pro-labor provisions, but for the trucking industry, the most problematic measure is section 101(b), which includes a definition of an employee stating that an individual performing any service shall be considered an employee and not an independent contractor unless:

  • A. the individual is free from control and direction in connection with the performance of the service, both under the contract for the performance of service and in fact;
  • B. the service is performed outside the usual course of the business of the employer; and
  • C. the individual is customarily engaged in an independently established trade, occupation, profession, or business of the same nature as that involved in the service performed.

In addition to imposing a federal ABC test, the PRO Act would explicitly declare misclassification of workers a violation of the National Labor Relations Act (NLRA). As such, the legislation would overturn the National Labor Relations Board’s August 29, 2019 decision in Velox Express, which held that misclassification is not a violation of the NLRA. For more on the PRO Act, visit https://www.congress.gov/bill/117th-congress/house-bill/842.

 

COVID RELIEF ALERT – New Legislation Could Provide Additional Relief for Small Carriers and Brokers

President Biden is set to sign the American Rescue Plan (“ARP”) this evening that will provide an additional $1.9 trillion in COVID-19 relief.  The relief is in addition to the trillions that the Trump administration funded over the course of the past year. $50 billion will be used to fund new and existing relief programs for small businesses that are administered by the Small Business Administration (“SBA”).  Some these programs include:

Paycheck Protection Program (PPP)

  • ARP will give $7.25 billion funds for the existing PPP.
  • Recent changes to PPP rules have been made by the Trump and Biden administrations making access to PPP loans more equitable, specifically for sole proprietors, independent contractors, and smaller businesses with up to 10 employees.  If fall into one of those categories and haven’t taken advantage of this program, contact your bank before the latest deadline for the program of March 31, 2021.
  • 2nd draws are available for eligible businesses if you have previously received a PPP loan.

Economic Injury Disaster Loan

  • Provides grants for businesses up to $10,000.

Information on the above programs and other relief programs administered by the SBA is available on the following SBA website: https://www.sba.gov/page/coronavirus-covid-19-small-business-guidance-loan-resources.  Note, the new law will also provide $1.32 billion in administrative funding to the SBA for resources necessary to further implement these relief programs.

 

Advocacy and Comment

This mid-month update reflects how quickly important legislation is moving through the new Congress.

Although the above analysis of the effect of House passage of the PRO Act is hopefully correct, the prospect of it becoming law is deeply concerning, particularly for owner operators and their carrier partners. The importance of the model to the trucking industry and to small businesses has still not gained traction and is a “hot topic” of general industry concern. (See March Regulatory and Legislative Update)

As predicted, the new Department of Labor has formally repudiated the “Economic Realities” rule promulgated by the former DOL. In doing so, it suggests that based upon existing precedent it might have denied employee benefits to existing workers that could have been reclassified as independent contractors. In turn, any change contemplated by the new Administration which would require reclassification of owner operators would deprive blue collar entrepreneurs of their long held right to be treated on equal footing with other independent businessmen.

Secondly, included is a description of the possible effect of the $1.9 trillion COVID-19 legislation on additional stimulus funding. The dysfunctionality of the earlier PPP grants is hopefully over, and funds will be available to needy small businesses and independent contractors. If you missed out on earlier funding and have questions, please email us at info@transportationlaw.net.

Read More »