Scopelitis

On April 25, 2012, the Equal Employment Opportunity Commission (“EEOC”) issued important new guidance impacting the way employers use criminal arrest and conviction records of prospective employees to make hiring decisions.  Motor carriers (including last-mile carriers, household goods carriers, and couriers) dealing directly with homeowners, residents, and retail consumers are quite often required by their retailer customers to perform criminal background checks.  Although the EEOC’s guidance applies to “employers” as opposed to contractors of owner/operators, caution and attention are warranted.  Employers seeking to avoid liability for claims of discrimination under the disparate impact and disparate treatment prohibitions contained in Title VII are advised to evaluate their application and hiring policies to ensure compliance with the EEOC’s new guidance.

Under the EEOC’s new guidance, an employer’s (e.g. motor carrier) blanket policy or practice of excluding applicants with criminal records from employment may violate Title VII to the extent the policy strays far from Federal Motor Carrier Safety Regulations and the commercial motor vehicle driver disqualifications listed at 49 U.S.C. § 31310.  Instead, the EEOC now requires narrowly-tailored individualized assessments, or “targeted screens,” of applicants that consider the nature of the crime, the time elapsed since the arrest or conviction, and the specific responsibilities of the job for which the applicant is applying. 

With the new guidance in place, employers should expect the EEOC to step up its investigative and enforcement efforts, particularly to the extent blanket criminal background policies raise the “pattern or practice” flags most noticeable to the EEOC.  Motor carriers that “employ” drivers and helpers to conduct in-home deliveries should therefore evaluate their application and hiring policies related to the use of criminal arrest and conviction records to ensure narrow tailoring and individualized assessments in light of the new EEOC guidance.  Even contractor-model motor carriers should use reasonable efforts to avoid overly-broad screening of owner/operators.  For additional information on the new EEOC guidance, or to discuss implementing a policy that minimizes your company’s exposure on a claim of discrimination in its hiring practices, contact Greg Feary, Jim Hanson, David Robinson, or Jack Finklea in the Firm’s Indianapolis office at (317) 637-1777.
 

Beginning in 2014, Kansas will no longer have a motor carrier property tax.  The tax has applied to for-hire motor carriers operating in Kansas (regardless whether the motor carrier is actually based in the state) since 1956 as an ad valorem tax on the value of their rolling stock.  The new law, which was signed by the Kansas governor on April 6, does impose an additional registration fee on intrastate and interstate carriers operating in Kansas.  Unlike the repealed tax, however, the registration fee will apply equally to both for-hire and private carriers.

As we recently noted, a South Carolina federal Court invalidated a National Labor Relations Board regulation requiring the posting by all employers of a notice of employee rights to engage in union and other protected activities.  We also noted that the ruling contradicted a decision last month by a DC federal court upholding the notice posting requirement.  This afternoon, the DC Circuit Court of Appeals issued a temporary injunction preventing the NLRB from its planned April 30 implementation of the notice posting requirement.  As such, employers will not be compelled by the NLRB to post a notice of employee rights unless and until the appellate process is complete and the injunction is dissolved.  We will keep you updated as events unfold.

Late Friday, a South Carolina federal Court struck down the National Labor Relations Board's recently-promulgated employee rights notice-posting regulation.  The regulation, set to go into effect April 30, 2012, requires employers, including motor carriers and other transportation companies, to post a notice informing employees of their rights to engage in union and other protected, concerted activity.  The Court recognized that the NLRB had only the authority granted to it by Congress and that the NLRB exceeded that authority.  The Court's ruling contradicts last month's finding by a D.C. federal Court that Congress in fact granted broad power to the NLRB, which included power to require the proposed notice-posting.  The NLRB has not yet commented on the ruling, nor has it formally suspended the April 30 effective date of the regulation.  We will continue to monitor the matter as the proposed implementation date approaches.   

Based on analysis provided to congressional leaders, the Government Accountability Office ("GAO") found that while Federal Motor Carrier Safety Administration’s ("FMCSA") resources are limited, it could take steps to identify more "chameleon" carriers that attempt restart business after sanctions for safety violations.

Currently, the process is lengthy and involves screening applicant data against poorly performing carriers dating back to 2003, and reviewing each application.  The process can take from a couple of weeks to a couple of months. However, the increased enforcement only affects buses and movers, a mere 2% of the approximately 66,000 carriers that apply for certificates every year.

While GAO acknowledged the FMCSA does not have the staff to conduct investigations on applicants, it does believes the FMCSA could use its current data screening methods more effectively. GAO derived and tested a method that can identify applicants that have chameleon attributes. It wrote an algorithm that searched the data for matching registration information, and for previously registered carriers that had a motive to evade detection, such as a history of safety violations. GAO said it identified 1,136 new applicant carriers in 2010, an increase from 759 in 2005.  These carriers were three times more likely than other new carriers to be involved in a severe crash, GAO found.

GAO recommended the FMCSA develop a system to screen applicant data against carriers that have chameleon attributes, and apply it to all applicants. It also recommended that the agency strengthen its new entrant safety assurance program by training auditors to identify chameleon carriers.

FMCSA said it will implement the recommendations, although it is not clear when.

The Federal Motor Carrier Safety Administration ("FMCSA") announced planned improvements to the implemented in December 2010 as part of the agency’s Compliance, Safety, Accountability initiative. A preview is currently available to motor carriers and law enforcement. During this data preview period, FMCSA requests comments on the possible impact of the changes.  To comment, go to www.regulations.gov; the docket number is FMCSA 2012-0074. The changes will be available to the public in July 2012.

FMCSA says the SMS improvements are based on ongoing analysis and feedback from enforcement personnel, the motor carrier industry and other stakeholders, and are designed to more effectively identify and prioritize high-risk and other unsafe motor carriers for enforcement interventions designed to reduce commercial motor vehicle crashes and hazardous materials incidents.

 FMCSA will provide motor carriers with the ability to preview how the improvements impact their individual safety data in SMS. These improvements include:
• Changes to the SMS methodology that identify higher-risk carriers while addressing industry biases;
• Better applications of SMS results for agency interventions by more accurately identifying safety-sensitive carriers – such as carriers transporting people and carriers hauling hazardous materials – so that such firms can be selected for CSA interventions at more stringent levels; and
• More specific fact-based displays of SMS results on the SMS Website.

On March 29th, a federal court in the S.D. Indiana issued an opinion denying class and conditional certification of plaintiffs’ claims in the Scott v. NOW Courier case.  Plaintiffs are five former couriers who brought the action at issue in June of 2010, alleging they were misclassified as independent contractors, along with violations of the Fair Labor Standards Act ("FLSA") and Indiana employment law protections. Plaintiffs sought recovery of minimum wage and overtime under the FLSA and various benefits under Indiana law.

In its analysis, the court stated it found "disingenuous" plainitffs' assertions that NOW controlled the maner and means of deliveries by its drivers.  Furthermore, the evidence revealed that the indvidual drivers had considerable autonomy and independence in choosing the kinds of routes they wish to be assigned and schedules they wanted to work. As to the state claims, the court  stated it was not persuaded that certification was appropriate or necessary based on the same problems addressed in its FLSA analysis.  While the court did provide sub-groups of drivers may be appropriate, it stated no sub-groups were suggested nor were independent facts available upon which the court might determine such subsets exist.

As we discussed in prior entries at this site, the NLRB recently promulgated regulations requiring all employers to post workplace notices informing employees of their rights under the National Labor Relations Act.  The National Association of Manufacturers ("NAM") challenged the NLRB's ability to require the posters in court; more specifically, the lawsuit stated that (1) the NLRB did not have the power to label a failure to display the poster as an "unfair labor practice"; and (2) the NLRB did not have the right to find that the statute of limitations on an unfair labor practices action could be tolled if an employer did not display the required poster.  While the District of Columbia District Court found the NLRB could require employers to display the posters as of April 30, 2012, the court agreed with NAM that the NLRB does not possess the power to define an action as an unfair labor practice, nor to toll the statute of limitations on an unfair labor practice.

Last week, the Occupational Safety and Health Administration (“OSHA”) placed the Office of the Whistleblower Protection Program under the direct supervision of the agency’s head, Assistant Secretary of Labor Dr. David Michaels.  The move strongly emphasizes the heightened priority OSHA and the U.S. Department of Labor placed on employee whistleblower protections last year.

Among the whistleblower laws enforced by OSHA that are critical to motor carriers is the Surface Transportation Assistance Act, or STAA.  The STAA protects drivers and other employees from adverse employment action taken in response to complaints related to commercial motor vehicle safety.  Motor carrier liability under the STAA is significant and may include back pay, reinstatement, compensatory and punitive damages, and attorney’s fees.  OSHA’s efforts to strengthen whistleblower protections, as indicated by yesterday’s announcement, signals a continuation of the increased government scrutiny motor carriers have faced in recent years.

The Oregon Employment Department intends to initiate formal proceedings to repeal an administrative rule prohibiting the application of the Oregon For-Hire Carrier Unemployment Tax Exemption to owner-operators that obtain their equipment through motor carrier- and motor carrier affiliate-sponsored equipment acquisition programs, sometimes referred to in the industry as “leaseback” arrangements.  A taskforce comprised of industry players, with the advice and guidance of counsel and represented in large part by the Oregon and American Trucking Associations, advanced a vigorous and proactive effort to secure the repeal of the rule.  The repeal of the rule is crucial to protect the long standing utilization of leaseback arrangements by Oregon motor carriers and owner-operators.  The Employment Department resisted the efforts of the task force, but the Governor’s office ultimately intervened.  The formal repeal of the administrative rule is expected to occur at the end of the next legislative session.

 The Oregon For-Hire Carrier Unemployment Tax Exemption provides that the term “employment” excludes “transportation performed by motor vehicle for a for-hire carrier by any person that leases their equipment to a for-hire carrier and that personally operates, furnishes and maintains the equipment and provides services thereto.”  ORS 657.047(2) (emphasis supplied).  The soon-to-be repealed administrative rule defined the term “their equipment” to include only equipment “independently furnished by the service-provider, neither leased nor purchased from the for-hire carrier or from any entity affiliated with the for-hire carrier.”  OAR 471-031-0200 (certified as effective on Dec. 13, 2010).

A putative class action brought by former drivers against Performance Food Group, Inc. ("PFG") was dismissed with prejudice by a California federal judge.  The court held that the meal and rest break claims were preempted by the Federal Aviation Administration Authorization Act ("FAAA"), enacted in 1994 to preempt state trucking regulation and bars state laws related to the prices, routes or services of federally regulated motor carriers.  The dismissed class action is the second in several months, after a California federal court granted Penske Logistics LLC's motion for partial summary judgment, holding that the FAAAA trumped meal and rest break claims from a class of appliance delivery drivers and installers. In the PFG order, the court stated that the reasoning in Dilts v. Penske was persuasive.

 

California has recently entered a Memorandum of Understanding ("MOU") with the Department of Labor ("DOL").  California now joins the ranks of eleven other states taking part in this initiative. The eleven states are Colorado, Connecticut, Hawaii, Illinois, Maryland, Massachusetts, Minnesota, Missouri, Montana, Utah, and Washington. The purpose of the California-DOL MOU is to target worker misclassification and permit information sharing between the state and federal agencies at issue with regard to this issue. California's cooperation with the DOL comes on the heels of SB 459, the recent California misclassification bill that went into effect January 1.  Under the amended California Labor Code, businesses now be assessed civil penalties when found in violation for having misclassified workers.

The Federal Motor Carrier Safety Administration ("FMCSA") released a Supplemental Notice of Proposed Rulemaking in order to address concerns regarding its electronic onboard recorder ("EOBR") rule.  By way of background, the initial Notice of Proposed Rulemaking ("NPRM") required frequent hours of service violators to use EOBRs starting July 2012. After making changes to the proposal in light of industry suggestions, the second proposal which  proposes to expand the initial NPRM to include practically all carriers, and is intended to address concerns about the technical standards in the NPRM. However, during the revisions set forth by the FMCSA, the 7th Circuit threw out the EOBR rule, as it did not address the issue of preventing harassment through the use of EOBRs as the FMCSA was statutorily requried to do. As a result, the FMCSA went back to the drawing board and now has decided to hold public listening sessions on the harassment issue and on the technical questions before proposing a revised rule. The FMCSA will release a schedule for the listening sessions in the near future.

The Department of Labor ("DOL") released it 2012 budget, setting forth a $12 billion discretionary budget authority  and aims increase enforcement of the Fair Labor Standards Act ("FLSA") and Family and Medical Leave Act ("FMLA").

The DOL's Wage and Hour Division ("WHD') is seeking $237.7 million and 1,839 full-time equivalent employees.  The DOL said it wants an increase of $6.4 million and 57 full-time equivalent employees to support greater enforcement of the FLSA's overtime provisions and the FMLA.

Additionally, the WHD seeks $3.8 million and 35 full-time workers for increased enforcement on the worker misclassification front. Overall, the 2013 budget proposal calls for some $14 million to fight misclassification, including $10 million for grants for states, according to the DOL.

The Occupation Safety and Health Administration's ("OSHA") proposed 2013 budget requests $565.5 million and 2,308 workers, representing a small increase — $680,470 and three employees — from the budget enacted in fiscal year 2012.

The Equal Employment Opportunity Commission ("EEOC") is seeking a $373.7 million budget for the 2013 fiscal year, up from $360 million in 2012.

 

Today, the General Assembly passed a bill to make Indiana the 23rd right-to-work state.  Governor Mitch Daniels has promised to immediately sign the bill into law.  The law will make Indiana the first state in the nation’s traditionally union-heavy manufacturing region—or “rust belt”—to pass such a law. 

Labor organizations, including trucking and transportation unions like the Teamsters, fiercely opposed the bill because it prohibits union security provisions in collective bargaining agreements entered into, modified, renewed, or extended after March 14, 2012 and carries criminal penalties.  Union security provisions require employees to (1) become or remain a union member, (2) pay union dues, fees, assessments, or other charges to the union, or (3) pay the equivalent of union dues, fees, assessments, or other charges to a charity or third party.  The new prohibitions stand to greatly affect the way unions attempt to organize workers, a company’s response to organizing efforts, and how contracts are negotiated.

On December 27, 2011, the Federal Motor Carrier Safety Administration published the final rule regarding the revised hours of service ("HOS") regulations.  FMCSA's new HOS final rule reduces by 12 hours the maximum number of hours a truck driver can work within a week. Under the old rule, truck drivers could work on average up to 82 hours within a seven-day period. The new HOS final rule limits a driver's work week to 70 hours.

In addition, truck drivers cannot drive after working eight hours without first taking a break of at least 30 minutes. Drivers can take the 30-minute break whenever they need rest during the eight-hour window.

The final rule retains the current 11-hour daily driving limit. FMCSA will continue to conduct data analysis and research to further examine any risks associated with the 11 hours of driving time.

The rule requires truck drivers who maximize their weekly work hours to take at least two nights' rest when their 24-hour body clock demands sleep the most - from 1:00 a.m. to 5:00 a.m. This rest requirement is part of the rule's "34-hour restart" provision that allows drivers to restart the clock on their work week by taking at least 34 consecutive hours off-duty. The final rule allows drivers to use the restart provision only once during a seven-day period.

Companies and drivers that commit egregious violations of the rule could face the maximum penalties for each offense. Trucking companies that allow drivers to exceed the 11-hour driving limit by 3 or more hours could be fined $11,000 per offense, and the drivers themselves could face civil penalties of up to $2,750 for each offense.

The effective date of the final rule is February 27, 2011.  Commercial truck drivers and companies must comply with the HOS final rule by July 1, 2013. The rule is available on FMCSA's Web site at http://www.fmcsa.dot.gov/HOSFinalRule.