On September 11, 2011, the Federal Motor Carrier Safety Administration ("FMCSA") will eliminate the practice of allowing non-motor carrier registrants to obtain registrant-only USDOT numbers. The "registrant-only" USDOT number was developed by the FMCSA as a way to identify registered owners of commercial motor vehicles ("CMVs") that are not motor carriers, but lease their CMVs to entities that are motor carriers.
Ultimately, the FMCSA determined that the registrant-only USDOT numbers were having an adverse affect on its ability to track motor carriers' safety violations. In too many cases, law enforcement personnel were being presented with registrant-only USDOT numbers during inspections and crash investigations. As a result, the data that should have been assigned to the record of the offending motor carrier operating the CMV was being erroneously assigned to the registrant-only USDOT number - a number that should have no safety events assigned to it.
The American Trucking Associations ("ATA") continues to press the Federal Motor Carrier Safety Administration ("FMCSA") on CSA crash accountability. In our previous post dated June 24, 2010, we noted that one of the concerns voiced by the ATA about the current CSA system was that accidents enter the system without the recognition of fault. Dave Osiecki, senior vice president of policy and regulatory affairs at ATA, sent a letter to the FMCSA this week requesting the agency remove the following types of crashes from the safety measurement system: crashes involving a vehicle traveling in the wrong direction; crashes involving a vehicle rear-ending a truck while legally stopped at a traffic light; crashes involving a vehicle striking a truck while legally parked off the road; and documented suicides. According to Osiecki, these types of crashes should be removed as a matter of agency policy because it is reasonable to presume that the commercial driver and carrier in these types of crashes have no accountability for the crash.
Final revisions to the DOT regulations governing drug and alcohol testing requirements have been announced. The revisions require testing for additional substances and lower a number of existing thresholds for positive results.
The list of additional substances to be tested for are derived from recently adopted HHS requirements, and add three amphetamine type substances--MDMA, MDA, and MDEA -- as well as 6–Acetylmorphine (6-AM), a marker for heroin use, to the list. In addition, the DOT is adopting the HHS-lowered laboratory testing cutoffs for cocaine, amphetamines, and methamphetamines. The DOT stated that it expects “a significant number of confirmed positive test results for cocaine” and “a 40% increase in screening and a 30% increase in confirmation rates" for amphetamines and methampetamines. The revised DOT regulations, contained in Part 40 of Title 49 of the Code of Federal Regulations, become effective October 1, 2010. The complete announcement appears at 75 Fed. Reg. 49850 (Aug. 16, 2010).
A federal judge presiding over the FedEx Ground Package System Inc. (“FedEx”) multidistrict litigation (“MDL”) proceeding ruled this week that the class of Kansas drivers who originally filed an action against FedEx in a Kansas federal district court are independent contractors, not employees, under the Kansas Wage Payment Act, Kan. Stat. Ann. § 44-313 (the “Wage Act”). In re MDL-1700 FedEx Ground Package Sys. Inc., Employment Practices Litig., No. 3:05-MD-527 RM (MDL 1700) (N.D. Ind. Aug. 11, 2010). The MDL court’s 103-page decision is available here: FedEx MDL SJ Order 8 12 10. The ruling by Judge Robert L. Miller Jr. of the U.S. District Court for the Northern District of Indiana came in response to cross-motions for summary judgment on the issue of the employment status of FedEx’s Kansas drivers. The ruling does not end the FedEx MDL proceeding. Rather, the parties have been directed to file supplemental briefing explaining whether the employment classification issue should come out the same way in the other cases in which similar summary judgment motions regarding driver employment status are pending. Those briefs are due 30 days from date of the Court’s order. We will continue to follow the impact of this decision in the FedEx MDL and in the numerous other similar wage and hour cases filed by independent contractor drivers against transportation providers around the country.
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.
The U.S. Department of Transportation's Federal Motor Carrier Safety Administration ("FMCSA") announced yesterday its next step in the phased rollout of Comprehensive Safety Analysis 2010 now simply called ("CSA “). Starting August 16, 2010 the FMCSA will allow motor carriers to see how they are performing in each of the seven Behavior Analysis and Safety Improvement Categories ("BASICS").
The FMCSA also said it has improved the system to address certain trucking industry concerns. For example, exposure under two of the BASICS - Unsafe Driving and the Crash Indicator - will no longer be based on only the number of power units, but will instead use a calculation based on a combination of power units and miles driven. In addition, Carriers will now be grouped by the number of inspections with a violation (for Unsafe Driving) and the number of crashes (for the Crash Indicator); the number of power units will be replaced by the number of relevant inspections when grouping under the Controlled Substances/Alcohol BASICS; etc.
Finally, despite speculation to the contrary, the FMCSA confirmed its intention to proceed with CSA 2010 implementation in accordance with its published schedule available at: http://csa2010.fmcsa.dot.gov/about/csa_when.aspx
This week, in Murray v. Principal Fin. Group, Inc., __ F.3d __, No. 09-16664, 2010 WL 2902512 (9th Cir. Jul. 27, 2010), the Ninth Circuit held that an insurance agent was an independent contractor and not an employee for purposes of Title VII.
In its opinion, the court specifically addressed Title VII, but generally referred to its analysis as a clarification of the appropriate test to apply in the federal statutory context, mentioning ERISA and the ADEA in addition to Title VII. The court found the appropriate test to apply is the “common law agency approach.” Id. at *2. As such, when determining whether an individual is an independent contractor or employee in this context, the court found it must apply a twelve-factor test, placing emphasis on whether the hiring party has the right to control the manner and means by which the work is accomplished. Id. (citing Nationwide Mut. Ins. Co. v. Darden, 503 U.S. 318 (1992).
The U.S. Department of Labor recently issued an Administrator's Interpretation that expands employees’ entitlement to leave under the Family and Medical Leave Act (“FMLA”). The FMLA grants up to 12 weeks of job-protected unpaid leave per 12-month period to certain employees in companies that have 50 or more employees working within a 75-mile radius of the work site. Under Administrator’s Interpretation No. 2010-3, covered employees eligible for leave under the FMLA now include those employees who assume the role of caring for a child, even if no legal or biological relationship exists between the employee and the child.
The interpretation, made for the purpose of clarifying the term “son or daughter” under the FMLA, came after what the DOL called “several requests for additional guidance” to the Wage and Hour Division as to whether an employees without a biological or legal relationship with a child may take FMLA leave for birth, bonding, or to care for the child. In answering the question affirmatively, the DOL attempted to clarify the circumstances that should be considered when determining whether an employee stands in the position of a parent, otherwise known as “in loco parentis.” The interpretation makes clear that, for the purposes of the FMLA, even the existence of a biological parent in the child’s home will not prevent a finding that the child is still the son or daughter of an employee who has no biological or legal relationship with the child, if the employee intends to assume the responsibilities of a parent.
The DOL stated “It is the Administrator’s interpretation that the regulations do not require an employee who intends to assume the responsibilities of a parent to establish that he or she provides both day-to-day care and financial support in order to be found to stand in loco parentis to a child.” The full text of Administrator’s Interpretation No. 2010-3 is available at http://www.dol.gov/whd/opinion/adminIntrprtn/FMLA/2010/FMLAAI2010_3.htm.
The Motor Carrier Protection Act of 2010 (Senate Bill S. 3483) was introduced and referred to the Senate Committee on Commerce, Science and Transportation on June 14, 2010. If passed, Part 139 of Title 49 of the United States Code would be amended to add more regulation and oversight of transportation brokers and freight forwarders, with the purported goal of protecting smaller carriers from fraudulent or abusive brokers.
The bill imposes a number of new requirements on carriers, brokers and forwarders. Among other things, the bill:
- Increases the broker bond from $10,000 to $100,000 and applies the bonding requirement to freight forwarders;
- Clarifies that trucking companies must have broker authority or freight forwarder authority in addition to their motor carrier authority to arrange freight through another carrier for compensation; and
- Creates an annual operating authority renewal requirement for brokers and freight forwarders; and requires the FMCSA to revoke operating authority that is not renewed annually.
The full text of the bill can be viewed at: http://www.govtrack.us/congress/billtext.xpd?bill=s111-3483.
Whether a carrier needs interstate authority depends on a number of things but begins with the threshold question whether any of the shipments it is handling are in "interstate commerce." What constitutes "interstate commerce" can sometimes be a difficult question to answer with certainty. As a general rule, all legs of shipments moving between different states or between a state and a foreign country without "coming to rest" (in itself a complex determination) are considered to be in "interstate commerce." A motor carrier performing any part of the transportation services on such shipments --even if that carrier's particular services are performed entirely within one state--must (unless an exception applies) have appropriate interstate authority.
Since the SAFETEA-LU Technical Corrections Act of 2008, interstate authority may be required regardless of the size of the motor vehicle used for transportation. So motor carriers using smaller vehicles, such as delivery companies and messenger services, are also subject to this concern. Carriers who believe they are subject only to state regulations because they never leave their home state should review whether their services include handling of shipments in "interstate commerce." If so, they should determine whether an exception applies, or obtain the required authority and as needed come into compliance with the Federal Motor Carrier Safety Laws and the Federal Motor Carrier Leasing Regulations.
The 9th Circuit reversed the decision of the lower court in the case of Narayan v. EGL on July 13, disregarding the choice of law provision contained in the contract between EGL and its contractors. The provision specified that Texas law applied and the Northern District of California court used Texas law to find that the drivers were independent contractors. The 9th Circuit reversed the finding of summary judgment, noting that California law must be applied, despite the choice of law provision in the contract, because the contractors were largely operating in California and should be subject to the California Labor Code.
California’s Senate Transportation and Housing Committee unanimously approved a bill – SB1156 – that would make available $20 million for drayage trucks that have yet to comply with the California Air Resources Board’s (CARB) drayage truck regulation. The bill is particularly helpful for small fleet owners and trucking operations. SB 1156 is intended to address the economic difficulties truck drivers face complying with CARB standards. The bill was routed to the Senate Appropriations Committee and is on its way to the Senate floor for further consideration.
The Federal Motor Carrier Safety Administration's "roadability" rule on intermodal container chassis goes into effect June 30.
49 C.F.R. §§ 390.40 and .42 govern chassis “roadability” and require, among other things:
- Registration by Intermodal Equipment Providers (“IEP”) with the Federal Motor Carrier Safety Administration (“FMCSA”);
- Written, driver-signed pre-trip reports on the condition of each chassis, as the chassis is delivered to an equipment provider,
or their agent; - Copies of driver reports, available for FMCSA audit, to be accessible at every IEP;
- Numbering of each chassis to conform to federal regulations, regardless of the current chassis numbering system;
- Annual chassis inspections; and
- IEP repair and maintenance record-keeping systems;
These regulations were meant to originally take effect on December 17, 2009, but, because of concerns expressed by industry groups, the deadline for compliance has been pushed back. Now, partial compliance is required by June 30th (i.e., IEPs must have a database to track and report the condition of each chassis, etc.) with full compliance due by December 17, 2010 (i.e., IEPs must have the chassis properly marked, etc.).
Springfield, Massachusetts passed a home-rule petition on June 7th that would ban texting while driving. The ban would allow police to fine anyone who sends or receives text messages while behind the wheel of a vehicle. Fines will run up to $100 for first-time offenders, $200 for the second offense and $300 for a third or subsequent offense. The measure must next meet the approval of both the mayor and the state legislature.
A hearing was held yesterday on the Federal Motor Carrier Safety Administration's ("FMCSA") new enforcement program, CSA 2010. While there is general support for the program, some of the concerns deal with timing, data quality and funding. For example, one concern voiced by Keith Klein, executive vice president and chief operating officer of Transport Corporation of America, who spoke on behalf of the American Trucking Associations, was that under the FMCSA's current CSA 2010 system, accidents enter the system without the recognition of fault. In other words, there is no way to recognize the difference between preventable and non-preventable accidents. In response, Ann Ferro, the agency's chief, emphasized that crash data are a legitimate indicator of a motor carrier's safety performance regardless of fault. She went on to say, however, that the agency recognizes the problem of crash accountability and will analyze the data if the carrier's safety fitness rating comes into question.
The Federal Motor Carrier Safety Administration (“FMCSA”) announced on June 22nd that it is eliminating the requirement for most for-hire motor common carriers of property and freight forwarders to maintain cargo insurance in prescribed minimum amounts. In addition these groups will no longer by required to file evidence of this insurance with FMCSA. These changes are to go into effect starting March 21, 2011.
Note that the new rule does not apply to household goods carriers and freight forwarders, however. The only shippers that FMCSA considered in need of the protection provided by the cargo insurance requirement are individuals who arrange to move their own household goods. FMCSA concluded that such individuals are less knowledgeable about carrier liability requirements and need the protection afforded by the existing regulations.
As previously reported on this blog, the U.S. Supreme Court's ruling in Kawasaki Kisen Kaisha Ltd. v. Regal-Beloit Corp. involved a rail carrier. However, the case also affects motor carriers since motor carriers are also subject to the Carmack Amendment. Unfortunately, the case is not clear as to its affect on motor carriers. As noted, the issue in the case was whether the Carmack Amendment or the Carriage of Goods by Sea Act ("COGSA") applies to cargo claims arising during the inland leg of an import ocean move. The court ruled that COGSA applies. This is generally thought to be favorable to motor carriers defending cargo loss and damage claims because COGSA includes a $500 per package limitation of liability and it is possible that the entire intermodal container will be considered a package for purposes of the limitation. However, the decision raises questions with respect to whether Carmack applies to export moves that will move by steamship under a through bill of lading, or to import moves from Canada and Mexico.
Today the United States Supreme Court ruled that the Carmack Amendment does not apply to the inland rail portion of international, multimodal import shipments moving under through bills of lading (i.e., those covering both the ocean and inland portions of transport in a single document) and that the forum selection clause contained in the bills is enforceable. The bills designated COGSA (the Carriage of Goods by Sea Act) as the law governing the carriers’ responsibility for cargo loss and damage claims during the entire shipment; contained a “Himalaya Clause,” which extends the bills’ defenses and liability limitations to subcontractors; and designated a Tokyo court as the venue for any dispute. The 6-3 decision was issued in the companion cases of
Union Pacific Railroad Company v. Regal-Beloit Corporation and
Kawasaki Kisen Kaisha v. Regal-Beloit Corporation.
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.
Class action certification was denied when a group of newspaper delivery drivers working for Publishers Circulation Fulfillment, Inc. could not convince the Southern District of New York to grant certification in their claim of misclassification as independent contractors. The drivers signed independent contractor agreements, but they claimed that they were truly employees because of Publishers' reserved right of control. In the court's denial, the judge pointed at a lack of showing of actual control and a need for individualized assessments rather than common proof.
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