In what could be a seismic change for the US trucking sector, the Biden administration announced this week that it was moving forward with a new rule that requires businesses to reclassify many independent contractors as employees.
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That of course includes contract carriers and independent owner-operators, a mainstay of the trucking business.
Such a change could have a big impact on the trucking sector’s cost structure, and potentially increase dramatically the share of unionized drivers.
The new rules are set to go into effect March 11 – just around the corner.
“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,” American Trucking Associations President Chris Spear said in a statement. “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 new rules requires companies to consider six criteria for determining whether a worker should be treated as an employee or a contractor, without predetermining whether one outweighs the other.
The six criteria are:
• Whether the jobs performed by such workers are an integral part of the employer’s business.
• The degree of control by the employer
• Whether the work requires special skills
• The degree of permanence of the relationship between worker and employer
• The vestment a worker makes, such as truck payments
Of course, for truck drivers specifically, they would be considered “an integral part” of a carrier’s business. Some may say other aspects of the driver job also meet some of the factors, such as the degree of control by the carrier (high).
However, the new rule does seem to recognize having a CDL as a “specialized skill.’
TA CEO Spear added in the statement that “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.”
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Other groups also have opposed the new rule, arguing that it could threaten the flexibility of many workers, in and out of trucking, who want to work as contractors. For example, the US Chamber of Commerce issued a statement saying it may challenge the new rule in a lawsuit.
While contract truck drivers would likely have to be reclassified, it is not clear for say ride sharing services such as Uber. After California passed a similar law a couple of years ago, voters approved changes that exempted ride share drivers.
Spear also said that “ATA will work with members of Congress and other stakeholders to defeat this ill-advised rule” – though it is not clear under what grounds or procedures.
Nevertheless, expect legal action in response to the new rules – and likely a delay in the March 11 enforcement date.
That said, it could be the beginning of the end for contract truck drivers in the US.
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