Shifting Rules for Independent Truckers
The regulations dictating the classification of independent truckers are as unpredictable as the Great Plains’ weather; they can change rapidly. This uncertainty is causing concern within the industry.
On March 11, rules from the Department of Labor (DOL) regarding the classification of independent contractors will revert to guidelines that existed before 2021. These changes will affect contractors in various professions, but they hold significant implications for owner-operator truck drivers and the fleets that utilize them.
The Biden administration’s updated classification emphasizes a “totality of the circumstance” analysis, focusing on six economic factors for determining if a worker is an independent contractor (IC) or an employee. Consequently, no single factor is given undue weight. In contrast, the Trump-era rules focused on two primary factors: the level of control over the work and opportunities for profit or loss.
The DOL’s final rule indicated that most employees and labor unions were supportive of revoking the prior regulations, while independent contractors and business entities opposed the changes, criticizing the proposed economic reality test as ambiguous and biased against independent contracting.
Duane Williams, President of the Montana Trucking Association, noted that the subjective nature of the new rules could hinder entrepreneurship among independent contractors. He expressed concerns about safety and unintended consequences stemming from the new regulations.
Jim Burg, owner of James Burg Trucking in Michigan, reflected on his journey as an independent operator, which facilitated his business growth. He pointed out that about 20 drivers in his fleet are ICs, with some venturing out to start their own companies, a progression he considers beneficial for the industry. However, he criticized the vagueness of the new rules, fearing they might lead to increased litigation.
While Burg is cautious about onboarding new ICs due to the ambiguous guidelines, other companies, like Lafayette Logistics in Indiana, seem ready to adapt without major changes. They maintain a clear distinction between their contractors and the company structure, but recognize potential challenges for the broader workforce if the independent contractor market shrinks.
Varied Impacts Across the Industry
The effects of the rule changes are not uniform across the trucking sector. For instance, Smith Transfer in Indiana does not employ any independent contractors, so the regulations do not affect them. In Hawaii, where independent contracting is less prevalent, the trucking industry has not embraced the owner-operator model significantly.
Josh Norum, president of Sourdough Express in Alaska, noted that the vagueness of the six-point test raises questions regarding revenue sources for independent drivers, particularly because their business can be seasonal. He expressed similar concerns as Burg about potential litigation arising from the subjectivity of the new rules, which could impact several trucking companies in Alaska.
