This fireside chat recap is from FreightWaves’ Domestic Supply Chain Summit on Wednesday.
FIRESIDE CHAT TOPIC: Wrestling with the proposed DOL rule on independent contractors.
DETAILS: The Biden administration has proposed a rule seeking to define when a worker is an employee versus an independent contractor. The Department of Labor’s Wage and Hour Division would look to the rule for guidance when it handles a dispute, but companies that regularly use workers who are now considered independent contractors are likely to look to the new rule’s guidance in setting their own policies. James Mahoney is an Arizona-based logistics attorney who has done a significant amount of work on issues involving the question of legitimate independent contractors versus employees. He discusses the issue with FreightWaves Editor at Large John Kingston.
KEY QUOTES FROM JAMES MAHONEY:
On the legal question of whether an independent contractor has “control”: “Every independent contractor wants to make money and be their own entrepreneur. Most trucking executives today started out as independent contractors.”
“Under the Trump rule, there were two factors. One was whether the entrepreneur had the opportunity for profit and loss. The second is the degree of control. Under the Biden rule, all the parts of the Economic Realities test have the same weight. Under the new rule, there must be an investment by the worker. For the most part, independent contractors in trucking either own their own unit or are under lease with an entity. And that’s not necessarily defined in the new rule.”
“What does an IC bring other than a power unit? Does he bring his expertise, his knowledge of routes? All that leads up to investments.”
“This is headed toward litigation over the terms, and I think those terms and the six factors [of the Economic Realities test] need to be fleshed out by administrative law judges or various administrators or the departments of labor in each and every state.”
“There will be class actions brought under this. There will be vigorous attempts by various state agencies. They will be administering the rules so you need to understand that some drivers who are independent contractors will make a complaint, at which point you must defend the independence of that driver.”
