A motor carrier may adjust compensation to its owner-operators to address its cost of insurance, the Seventh Circuit Court of Appeals confirmed on August 9. The insurance issue emanated from a claim by the Owner-Operator Independent Drivers Association that a motor carrier, Mayflower, made illegal chargebacks from owner operators that amounted to a mandatory purchase of insurance from the motor carrier, which is prohibited by the Federal Leasing Regulations governing motor carrier lease arrangements with owner-operators.
A motor carrier may adjust compensation to its owner-operators to address its cost of insurance, the Seventh Circuit Court of Appeals confirmed on August 9. The insurance issue emanated from a claim by the Owner-Operator Independent Drivers Association that a motor carrier, Mayflower, made illegal chargebacks from owner operators that amounted to a mandatory purchase of insurance from the motor carrier, which is prohibited by the Federal Leasing Regulations governing motor carrier lease arrangements with owner-operators.
Senate Hearing on Employee Misclassification Emphasizes State Efforts
Monday, June 21, 2010 by
Transportation Lawyer
The Senate Health, Education, Labor, and Pensions hearing committee stressed the importance of state efforts to combat employment misclassification of independent contractors in a hearing on the proposed Employee Misclassification Prevention Act last week. Senators Sherrod Brown (D-Ohio) along with Sens. Tom Harkin (D-Iowa), Dick Durbin (D-Ill.), Patty Murray (D-Wash.), Bob Casey (D-Pa.), Jeff Merkley (D-Ore.), Barbara Mikulski (D-Md.) and Al Franken (D-Minn) proposed the legislation that would create a duty on employers to set up additional record keeping requirements if using independent contractors. Penalties would also increase for employers found to have misclassified employees as independent contractors.
According to some individuals who testified at the hearing, the proposed legislation may stop employers from using independent contractors, the majority of whom operate legitimate businesses, because the recordkeeping costs and concern over potential penalties are too high. The attack on the independent contractor business model that has long been an important component of every segment of the transportation industry is not new, and this proposed legislation is another reason to assess your company's independent contractor model now to spot particular problem areas and correct them.
According to some individuals who testified at the hearing, the proposed legislation may stop employers from using independent contractors, the majority of whom operate legitimate businesses, because the recordkeeping costs and concern over potential penalties are too high. The attack on the independent contractor business model that has long been an important component of every segment of the transportation industry is not new, and this proposed legislation is another reason to assess your company's independent contractor model now to spot particular problem areas and correct them.
Wisconsin Passes Employee Misclassification Law
Friday, May 28, 2010 by
Transportation Lawyer
On May 12, 2010, Wisconsin Governor Jim Doyle signed into law legislation concerning the misclassification of employees. Effective January 1, 2011, Senate Bill 672 requires the Department of Workforce Development ("DWD") to establish a system ensuring the proper classification of workers under unemployment insurance, worker’s compensation and labor standards laws. The Wisconsin bill is yet another example of the ever changing landscape of independent contractor/employee misclassification issues.
The DWD is charged with, among other things, educating employers, employees and the public about classification of employees and receiving and investigating complaints alleging misclassification. The bill further permits the DWD to require an employer to provide proof of maintaining proper employee records, including wage and hour information, and sufficient worker's compensation coverage for its employees. Failing to provide the requested information may result in the DWD serving a notice on the employer of the DWD's intent to issue an order requiring the employer to stop work at the locations specified in the notice. The employer will then have three business days to provide the requested information, and failure to do so may result in the issuance of an order requiring the employer to stop work at the location. The order is appealable.
LLCs and Diversity Jurisdiction
Friday, January 22, 2010 by
Transportation Lawyer
When litigation arises, motor carriers, brokers, freight forwarders, and other transportation companies are often faced with the issue of whether to remove a state court case to federal court. Removal is permitted if the amount in controversy exceeds $75,000 and "complete diversity" among all parties exists, i.e. no party to the litigation has the same citizenship as any party on the other side. What affect does a motor carrier's status as an LLC have on diversity of citizenship? Quite a bit. While the citizenship of a corporation is determined by the place of incorporation, the citizenship of LLCs is that of their members. Consequently, an Ohio logistics company formed as a limited liability company whose members are citizens of three different states takes on the citizenship of all three states, regardless of whether work is done in those other states. Taking it one step further, if the Ohio LLC's members are LLCs too, citizenship is traced through multiple levels, meaning each LLCs' members must be accounted for in determining diversity, which ultimately could immunize an LLC from being hauled into federal court. Whether you are the suing party or the one being sued, understanding the nuisances of federal procedure will reduce costs associated with either filing the Complaint or seeking removal.
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