The Department of Labor recently announced a new rule for determining who is an employee and who is an independent contractor, and the trucking industry is voicing its opposition.
The new rule, which is set to take effect March 11, undoes a previous one enacted during the Trump administration and restores previous standards for
The Department of Labor said, "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 2021 Independent Contractor Rule had five criteria for making the determination, but relied on two: the nature and degree of the worker’s control over the work and the worker’s opportunity for profit or loss.
Changes to these rules were driven primarily by the explosive growth of the so-called "gig" economy, including working for Uber, Lyft, DoorDash, and other similar delivery services. Additionally, California passed legislation that required companies to classify all independent contractors -- including trucking owner-operators -- as employees.
The trucking industry's reaction was swift and pointed.
Here's what the major associations said in response to the Labor Department's new rule:
Todd Spencer, President Owner-Operator Independent Drivers Association:
"Truckers are tired of the endless parade of classification rules that do not listen to their concerns. This constantly changing landscape has created uncertainty that makes it more difficult for them to operate their businesses. We are still reviewing all the details in the final rule, and it is too soon to know what the exact effect of this final rule would be.
“As we said when the Biden administration first issued this proposal, we have concerns that some details contained in the rule may disregard specifics of the trucking industry and could lead to the reclassification of independent contractors as employees. With that said, we support the Department’s stated intent to follow decades-long practices for classification under the Fair Labor Standards Act, as well as its rejection of the ABC Test as signed into law in California with AB5.
“As we have stated before, any classification rule must allow for owner-operator relationships to be examined on a case-by-case basis. This approach has historically allowed owner-operators to work as independent contractors and generally protected workers from misclassification. As we continue to review the final rule and engage with the Department and Congress about this rulemaking, we will fight to protect the rights of small-business truckers, owner-operators, and all of America’s hard-working truckers.”
Chris Spear, President and CEO, American Trucking Associations:
“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.”
Jim Ward, president of the Truckload Carriers Association:
“The truckload segment of the industry was founded based upon the independent contractor business model which continues to be used prominently today. The truckload industry has and will continue to support the IC model which has proven itself to be critical to the standard mode of freight delivery this nation uses to support its economy. Jeopardizing the freedoms of those businesspeople that have chosen to become entrepreneurs stands against the American dream that this country was founded upon and endangers a business model that continues to thrive for a nation that needs them. TCA will continue to work with all stakeholders in an effort to defeat this anti-industry rule.
"As we navigate through the intricacies of this ruling, our team is diligently monitoring and studying its implications for our operations. In recognition of the potential impact on the trucking industry, we have proactively engaged in collaborative efforts with the American Trucking Association.”