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BIDEN ADMINSTRATION’S FINAL RULE REGARDING INDEPENDENT CONTRACTOR CLASSIFICATIONS HAVE SIGNIFICANT IMPLICATIONS FOR THE TRUCKING INDUSTRY

January 16, 2024: Written by Joseph G. Harraka, Jr., Esq., Anthony J. Vizzoni, Esq. & David Frankel, Esq.

Any trucking company or other business that employs independent contractors needs to be aware of and familiar with new guidelines that were recently adopted by the Department of Labor (“DOL”) which specifically employs new factors in determining a worker’s job classification under the Fair Labor Standards Act (“FLSA”). The new final rule, which becomes effective March 11, 2024, replaces the 2021 Independent Contractor Rule which identified five economic reality factors to guide the inquiry into a worker’s status as an employee versus an independent contractor. Two of the five identified factors under the 2021 Independent Contractor Rule – the nature and degree of control over the work and the worker’s opportunity for profit or loss – were designated as core factors carrying significant weight in the determination process.

Over the opposition of many influential industry associations, including national and local trucking associations, the Biden Administration has elected to rescind the 2021 Independent Contractor Rule over the more confusing and stringent final rule that may ultimately lead to confusion amongst trucking company owners as to which workers qualify as independent contractors and which workers are to be classified as employees. Notwithstanding a worker’s election to be legitimately classified as an independent contractor in performing services for a company, the worker will be classified as an employee if the worker is, as a matter or economic reality, economically dependent on the work of the company.

Effective March 11, 2024, under the FLSA, an “economic realities test” will be used to determine a worker’s classification status. That test focuses on the economic realities of the worker's relationship with the worker's potential employer and whether the worker is either economically dependent on the potential employer for work or instead is in business for himself or herself.

In rescinding the 2021 Independent Contractor Rule, the DOL noted that no one factor or subset of factors is necessarily dispositive of a worker’s classification, and the weight to give each factor may depend on the facts and circumstances of the particular working relationship that is at issue. Unlike the 2021 Independent Contractor Rule which expressly provided for two key factors, employers will now be forced to guess which of the seven factors may bear greater weight, thus creating much uncertainty for companies.

The test to determine a worker’s economic dependence on the potential employer now includes the evaluation of the seven factors set forth below to determine the economic realities of the subject working relationship.

(1) Opportunity for profit or loss depending on managerial skill.

Determine whether the worker:

• can determine or negotiate pay; 
• accepts or declines jobs and chooses when the jobs are performed; 
• engages in efforts to expand their business or secure more work; and/or 
• makes decisions to hire others, purchase materials, and equipment, and/or rent.

(2) Investments by the worker and the potential employer.

Consider whether investments by the worker are capital or entrepreneurial in nature.

(3) Degree of permanence in the work relationship.

• If the work relationship is indefinite in duration, continuous, or exclusive of work for other employers, then the worker is more likely to be classified as an employee. 
• If the work relationship is definite in duration, non-exclusive, project-based, or sporadic based on the worker being in business for themselves and marketing their services or labor to multiple entities, then the worker is more likely to be classified as an independent contractor.

(4) Nature and degree of control.

The more control by the potential employer over the following the more likely the worker will be classified as an employee:

• The setting of the worker’s schedule, 
• The supervision of the performance of the work, 
• The explicit limiting of the worker’s ability to work for others; 
• The ability of the potential employer to discipline workers, and/or 
• The control over prices or rates for services and marketing of services.

(5) Extent to which the work performed is an integral part of the potential employer’s business.

This factor weighs in favor of the worker being classified as an employee when the work they perform is critical, necessary, or central to the potential employer's principal business. This factor weighs in favor of the worker being classified as an independent contractor when the work they perform is not critical, necessary, or central to the potential employer's principal business.

(6) Skill and initiative.

• If a worker does not use specialized skills in performing the work, or where the worker is dependent on training from the potential employer to perform the work, then the worker is more likely to be classified as an employee. 
• If a worker brings specialized skills to the work relationship, and the worker uses those specialized skills in connection with business-like initiative, then the worker is more likely to be classified as an independent contractor.

(7) Additional factors.

Additional factors may be relevant if they provide insight as to in whether the worker is in business for himself, as opposed to being economically dependent on the potential employer for work. 

This change in the laws may lead to independent contractors being reclassified as employees for FLSA purposes. As the trucking industry relies heavily on the use of independent contractors, we are anticipating trucking companies may be on the high priority list for DOL scrutiny on worker classifications under the new final rule. This is unfortunate and concerning as a determination of misclassification can result in severe consequences, notwithstanding the important role that independent contractors play in the success of trucking companies throughout the country.

Knowing that the worker classification of status can be a daunting situation for trucking company owners and their management teams, establishing and following best practices based on the final rule criteria is essential. For further guidance, please feel free to reach out to the Trucking and Logistics Team at Becker LLC: Michael Bartels, Chief Development Officer and T&L Team Member: mbartels@becker.legal

CLICK HERE for a .pdf copy of article.

Governor Phil Murphy today announced the State of New Jersey’s request to add constitutional claims against the Metropolitan Transportation Authority (MTA) and the Triborough Bridge and Tunnel Authority (TBTA) and to add two individual plaintiffs to its congestion pricing lawsuit.

The State’s original complaint in the lawsuit, filed in July 2023 against the U.S. Department of Transportation and the Federal Highway Administration, alleges that the federal government violated the National Environmental Policy Act and the Clean Air Act by approving plans for congestion pricing without adequate environmental review. The claims against the federal government are still pending, and New Jersey filed its most recent brief in support of those claims on Friday. 

Today’s proposed amendments to the complaint add the MTA and the TBTA as defendants and allege that their proposed congestion pricing tolling scheme violates the U.S. Constitution’s dormant Commerce Clause and unconstitutionally burdens the right to travel. The complaint also adds co-plaintiffs who live in New Jersey, travel for work in the Central Business District (CBD), have lower incomes, and will not be eligible for the CBD tax credit since they do not live in New York. 

“The tolling scheme currently being pursued by the MTA fails to address our greatest concerns,” said Governor Murphy. “Compounding the federal government’s failure to subject the MTA’s proposal to the full environmental review it warranted, it’s now clear that the MTA’s plans will also result in a scheme that unfairly tolls and discriminates against New Jerseyans, especially low-income New Jersey drivers. The federal government and the MTA can no longer be permitted to fast-track a proposal that solely benefits New York’s transportation system at the expense of hardworking New Jerseyans.” 

The individual plaintiffs in the proposed amended complaint, Timothy Horner of East Orange and Eric Grossman of Union City, are represented by their own private counsel.

PLANO, Texas, Jan. 9, 2024 – Drivewyze, a technology leader with innovative safety and productivity solutions for fleets, drivers, and transportation agencies, has announced the launch of a free service that delivers essential in-cab safety messages to all commercial truck drivers. The announcement was made today, during the Transportation Research Board (TRB) annual meeting, which is being held in Washington, D.C.

The new service, called Drivewyze Free, allows fleets and drivers — using telematics devices, tablets and smartphones — to receive an essential set of in-cab safety alerts and advisories in advance of potentially risky areas on the roadway. Drivewyze operates the largest connected truck network in North America, with over 125 telematic service provider partnerships and the largest cross-platform deployment of in-cab, always-on, software in the trucking industry.  The core message sets are available across North American freight corridors and include a Drivewyze-sponsored set of alerts and advisories including heads-up warnings for High-Rollover risk areas, Low Bridges,  Mountain alerts (steep grade ahead; chain-up/brake check stations; and runaway ramps), and Rest Area information (truck parking availability).

In addition, Drivewyze Free includes access to agency-sponsored real-time traffic slowdowns and other safety alerts generated in partnership with select state transportation and enforcement agencies through the Drivewyze Smart Roadways highway safety program for connected trucks. Participating DOTs include New Jersey, New York, North Carolina, Georgia, Delaware, Connecticut, Ohio, Texas, Arkansas, and Virginia.  In addition, the Pennsylvania Turnpike is participating, as is the Colorado State Police, and Wyoming Highway Patrol. Currently, real-time message sets can include warnings for sudden and unexpected slowdowns, virtual safety signs, and public emergency broadcasts. The Smart Roadways program is expected to grow with additional transportation agencies announcing their participation in the near future. 

“This is a monumental day for our company, our safety partners, and the industry,” said Brian Heath, CEO of Drivewyze. “In collaboration with our telematics and transportation agency partners, we are excited to be giving this essential safety service to the trucking industry at no cost. There are no strings attached. We’re a safety-driven company joined by like-minded agencies and telematics partners to leverage vehicle-to-infrastructure networks to improve highway safety for everyone. We know many of our Essential Alerts and Advisories modify behavior – drivers slow down and apply less hard braking. It makes them safer behind the wheel. We’re hoping all fleets will utilize this free offering to give their drivers technology that can truly make a difference to their safety.”

According to Heath, studies have shown that Essential Safety Alerts and Advisories do foster safer roadways. “Unsafe driving behavior is a leading cause of truck crashes,” he said. “Messaging delivered in the vehicle, where and when drivers need it most, shows the power of connected truck technology to positively affect driving behavior. For instance, when approaching a high-rollover area, we have data that shows our alerts have reduced speed by an average of 7.3 mph for those that are going more than 5 mph over the posted speed limit. That’s an impactful difference and an example of the power of in-cab messaging to improve driver behavior and highway safety.”

What’s more, a NHTSA study showed crashes on interstates represent nearly 30% of all collisions, and many are secondary incidents where a truck or car rear-ended a vehicle that was in a queue from an initial crash. Forty-six percent of secondary crashes occurred over an hour after the initial crash.

Drivewyze is partnering with individual state transportation and enforcement agencies to tackle this challenge by delivering sudden and unexpected slowdown alerts along freight corridors in participating jurisdictions. “Advance notice for routes experiencing sudden or unexpected traffic slowdowns give truck drivers time to prepare,” said Heath. “In North Carolina, where we partnered with the North Carolina DOT, studies found that 70% of drivers that received an alert slowed down ahead of an incident. And the slowdown was significant  — on average by 11 mph compared to 2 mph in a control group.”

Many fleets already subscribing to Drivewyze services, such as the PreClear weigh station bypass service or the Drivewyze Safety+ driver coaching service, have been receiving free in-cab safety alerts as part of an optional bundle called Drivewyze Safety Notifications.  That service will now be renamed Drivewyze Free and expanded to include truck parking information and additional Smart Roadway state programs.  Additional Drivewyze Free features and alerts will be added on a regular basis, automatically, without any interruption to a driver’s in-cab experience, and with no action required from a participating fleet.   

Drivers and fleets interested in enrolling in the Drivewyze Free service can do so at www.drivewyze.com. Drivewyze is also the provider of North America’s largest weigh station bypass service, Drivewyze PreClear, and Drivewyze Safety+, their premium safety service.

About Drivewyze Inc.: Drivewyze Inc. is a leader in the transportation technology industry that builds innovative solutions for commercial vehicle fleets, drivers, and transportation infrastructure owners & operators. Drivewyze delivers best-in-class in-cab services to commercial truck fleets and drivers, like Drivewyze PreClear weigh station bypass service, Drivewyze Free, and the patented Safety+ proactive driver-coaching solutions. Drivewyze infrastructure services provide solutions to state agencies, including Smart Roadside commercial vehicle enforcement (CVE) electronic screening, Central Park truck parking management, and Smart Roadways connected truck solutions.

Washington – American Trucking Associations President and CEO Chris Spear issued the following statement today after the Biden Administration published a final rule on independent contractor classification and renominated Julie Su to lead the U.S. Department of Labor:

“I can think of nothing more un-American than for the government to extinguish the freedom of individuals to choose work arrangements that suit their needs and fulfill their ambitions. More than 350,000 truckers choose to work as independent contractors because of the economic opportunity it creates and the flexibility it provides, enabling them to run their own business and choose their own hours and routes. That freedom of choice has been an enormous source of empowerment for women, minorities, and immigrants pursuing the American Dream. 
 
“The trucking industry has used independent contractors since the inception of interstate trucking, and court decisions over the last 90 years have continually reaffirmed the legitimate role ICs play in the economy. It's unfortunate that the Administration has chosen to replace a clear and straightforward standard with a tangled mess that weakens our supply chain and undermines the livelihoods of hundreds of thousands of truckers across the country.
 
“The coordinated release of this rule with the renomination of Julie Su to lead the Department of Labor is proof positive that the Administration is doubling down on destructive policies that eliminate choice and opportunity for our workforce. Had Su actually taken the time to talk to independent contractors, she’d know firsthand what a misguided rule this really is. That is exactly why we opposed her nomination before and why we will continue to oppose it now. Radical California agendas have no place in federal policy. 
 
“ATA will work with members of Congress and other stakeholders to defeat this ill-advised rule.”

Rescinds 2021 independent contractor rule; replaces it with analysis consistent with caselaw

WASHINGTON – The U.S. Department of Labor today announced a final rule to help employers and workers better understand when a worker qualifies as an employee and when they may be considered an independent contractor under the Fair Labor Standards Act.

The rule provides guidance on proper classification and seeks to combat employee misclassification, a serious problem that impacts workers’ rights to minimum wage and overtime pay, facilitates wage theft, allows some employers to undercut their law-abiding competition and hurts the economy at-large. 

“Misclassifying employees as independent contractors is a serious issue that deprives workers of basic rights and protections,” explained Acting Secretary of Labor Julie Su. “This rule will help protect workers, especially those facing the greatest risk of exploitation, by making sure they are classified properly and that they receive the wages they’ve earned.” 

The guidance provided by the final rule aligns with longstanding judicial precedent on which employers have previously relied to determine a worker’s status as either an employee or independent contractor. The new rule will preserve essential worker rights and provide consistency for entities covered by the Fair Labor Standards Act. 

The new “independent contractor” rule restores the multifactor analysis used by courts for decades, ensuring that all relevant factors are analyzed to determine whether a worker is an employee or an independent contractor. The rule addresses six factors that guide the analysis of a worker’s relationship with an employer, including any opportunity for profit or loss a worker might have; the financial stake and nature of any resources a worker has invested in the work; the degree of permanence of the work relationship; the degree of control an employer has over the person’s work; whether the work the person does is essential to the employer’s business; and a factor regarding the worker’s skill and initiative.

The rule separately rescinds the 2021 Independent Contractor Rule that the department believes is not consistent with the law and longstanding judicial precedent. 

In crafting the new rule, the department’s Wage and Hour Division considered feedback provided by stakeholders at forums in the summer of 2022 and during the comment period after the proposal’s announcement in October 2022. The final rule takes effect on March 11, 2024.

DOL Additional Information

• FAQs
• Proposed Rule: Employee or Independent Contractor Classification Under the Fair Labor Standards Act
• Press Release

ATA is now accepting submissions for its 2024 Driver Compensation Study!

Participants are eligible for the following exclusive benefits:

•Full 2024 Driver Compensation Study for $100($1,500 for non-participants).

•Free Advanced Executive Summary of the 2024 Study.

•Access to a participant-only webinar to discuss survey results and answer questions.

Don’t wait! Survey submissions are due by Friday, March 29^th.

To learn more, visit: https://www.trucking.org/driver-compensation-study

The American Transportation Research Institute (ATRI) today launched a new survey to identify what both women and men truck drivers believe to be the barriers to entry for women truck drivers.  The research will also capture other challenges that truck drivers encounter while training, on the road, and at parking facilities.  The research will utilize responses from both women and men drivers to identify and contrast the unique challenges faced by women drivers.

This research was identified as a top priority by ATRI’s Research Advisory Committee to address workforce shortages, safety concerns for women drivers, and identify steps the industry can take to increase the percentage of women drivers. 

The survey asks for driver perspectives and experiences:

• when considering a career as a truck driver;
• while obtaining their CDL;
• regarding challenges encountered as a truck driver; and
• for those who no longer drive a truck, why they left the industry.  

“Once again ATRI is providing truck drivers the opportunity to provide input on critical research that will ultimately make our workplace better.  I strongly encourage my fellow drivers to take a few minutes to complete ATRI’s survey and make our collective voice heard,” said Rhonda Hartman, a truck driver for Old Dominion Freight Line and an America’s Road Team Captain.

Truck drivers can complete the confidential survey online here.  This survey will remain open until February 2, 2024.

ATRI is the trucking industry’s 501c3 not-for-profit research organization.  It is engaged in critical research relating to freight transportation’s essential role in maintaining a safe, secure and efficient transportation system.

The Commercial Vehicle Safety Alliance (CVSA) has set the dates for next year’s Human Trafficking Awareness Initiative (HTAI) for each of its three member countries. In the U.S., the initiative is scheduled for Jan. 8-12, 2024. 

CVSA’s annual five-day human trafficking awareness, outreach, identification and prevention initiative aims to educate commercial motor vehicle drivers, motor carriers, law enforcement officers and the general public about the crime of human trafficking, the signs to look for and what to do if you suspect someone is being trafficked.

According to the United Nations, human trafficking is the recruitment, transportation, transfer, harboring or receipt of people through force, fraud or deception with the aim of exploiting them for profit. Men, women and children of all ages and from all backgrounds can become victims of this crime, which occurs in every region of the world, including North America. Human traffickers often use violence, fraudulent employment agencies, and fake promises of education and job opportunities to trick and coerce their victims.

In preparation for the 2024 Human Trafficking Awareness Initiative, CVSA is offering human trafficking awareness resources to its membership and working with Truckers Against Trafficking to distribute wallet cards, posters and window decals. Fill out our online form to order complimentary outreach materials.

During the five-day awareness initiative in each country, CVSA jurisdictions will note human trafficking awareness and outreach efforts and projects and submit that data to the Alliance. The results will be released in summer 2024.

The Human Trafficking Awareness Initiative is part of CVSA’s Human Trafficking Prevention Program. The program seeks to reduce human trafficking throughout North America through coordinated enforcement and investigative and educational awareness measures within the commercial motor vehicle industry.

View last year’s HTAI results.

Tomorrow is the big day! Sleep coach Kali Patrick will be joining Association Member Trust via Zoom to deliver her webinar,  "AMT Lunch and Learn: Stop Chasing Remedies: How to Finally Get Refreshing Sleep". In this session, Kali will cover a range of topics related to sleep health.

Here's a sneak peak of what Kali will cover in this one-hour session:

·         Why most remedies don't work & can even make sleep problems worse.

·         An overlooked, natural way to increase energy

·         Why it's difficult to quiet a racing mind long enough to fall asleep or fall back to sleep at 3am

·         How to permanently overcome sleep &energy challenges

We encourage all members to attend this informative and engaging webinar. Whether you're looking to improve your overall sleep health, increase your energy levels, or simply learn more about sleep science, you're sure to benefit from Kali's expertise. Association Member Trust will see you online tomorrow at 12pm!

Register in advance for this webinar: Webinar Registration - Zoom

The Montgomery – Russell Bridge along I-90 is currently under construction through 2025. The bridge is located at approximately mile marker 36 and spans US Route 20, CSX Railroad, and the Westfield River.

Due to the necessary repair work, construction staging, construction equipment loads, and travel lane shifts, it is necessary to limit the loads over the bridge and implement an overweight truck detour beginning Monday, December 4, 2023, and lasting through 2025.

Click Here for map and more information.