by G. Spencer Mynko, Esq.
I find it far more satisfying when I help clients avoid trouble as opposed to getting them out of trouble. The laws governing transportation are very complex and transportation companies require competent advice when it comes to compliance and implementation of legal business practices. The bottom line is that every trucking company needs to know when they are doing things right, when they are doing things wrong, and what they need to do to correct and improve their business practices. Furthermore, as problems arise, those problems need to be addressed and dealt with expeditiously. This article explores several extremely important areas where trucking companies should consult with transportation attorneys.
I regularly advise companies on the importance of properly running their companies. Too often, trucking companies do not follow proper corporate formalities when in comes to running their corporations and LLCs. If a company follows proper corporate protocol, the owners, shareholders, and officers should be able avoid personal liability for the company’s debts and liabilities. However, courts will sometimes hold a corporation’s owners and shareholders personally liable for business debts. This is called “piercing the corporate veil”. Corporations enjoy a “veil” of limited liability, but this can be lifted if a court decides the owner/shareholders are not entitled to corporate protection. This is why it is so important to make sure your corporate practices are State of the Art and determine whether your Trucking Company can withstand attack and protect its owners from from being liable for its debts. Contact Transportation Attorneys to make sure your company is being run properly.
Utilizing Independent Contractors
Protecting IC status requires more than a good Contract. While you may have a state-of-the-art independent contractor lease agreement, the real issue is whether you are properly classifying your independent contractors. Transportation providers know the importance of having best-in-class contracts to document their independent contractor relationships. Companies often think that such contracts are a silver bullet to ward off potential driver reclassification claims, but that is not the case. The next step in the independent contractor model due diligence process is ensuring that your operations actually reflect the practices outlined in the contract. That means training everyone involved in your independent contractor program to handle real-world issues and situations in a manner that is consistent with the contract and the nature of the independent contractor relationship. Supplementing your agreement with practical training on how to manage contractor relationships goes a long way toward reducing the likelihood you are later faced with reclassification claims.
Trucking in the U.S. was deregulated, in economic terms, in the 1980s and 1990s. When it comes to safety, however, trucking is more regulated now than it has ever been. Truck safety rules are reshaping how trucking companies operate and serve shippers, and carriers, drivers and shippers alike will face more regulation soon. From 2009 through 2014, former Federal Motor Carrier Safety Administrator Anne S. Ferro rewrote her agency’s regulatory playbook, focusing the FMCSA on three key initiatives: implementing the Compliance, Safety, Accountability, or CSA, program; changing driver hours-of-service rules; and replacing paper driver log books with electronic logging devices. The CSA and revised HOS rules are still with us, and ELDs are soon to become a reality.
The December 18, 2017 compliance deadline for the FMCSA’s electronic logging device (ELD) mandate looms large in the transportation industry, particularly now that the 7th Circuit Court of Appeals has upheld the rule. With only a few exceptions, the mandate requires all drivers of commercial motor vehicles who are currently required to complete daily records of duty status to begin tracking their duty status with a compliant ELD by the end of next year. For their part, carriers must ensure the devices are installed and operational in their owned and leased equipment and must retain all hours-of-service-related data, including supporting documentation, for at least six months.
Other “hot” regulatory topics include: Prohibition of Coercion, Safety Fitness Determination, and FAST Act and Regulatory Reform.
Transportation contracts are a reality of life for carriers, shippers, freight brokers, intermediaries, third-party logistics companies, freight forwarders and anyone else I can’t think of. I often see contracts at the center of a dispute which make me think to myself: “Why did you sign this?” Which reminds me: it’s better to ask me to review a contract before you sign it. Remember: your leverage, well-being, and future performance are all best served by having a lawyer involved before you enter into a contract.
Trucking Companies really must consult with a lawyer before entering into any contract. If this is not the case, have all of your current contracts reviewed. Too much is at stake to run your company without fully understanding your contractual obligations.
Whenever a client comes to me with an actual dispute, whether it be a cargo claim, employment dispute, work injury, major accident, or any other matter, the initial steps a trucking company takes are critical to favorable resolution of the dispute. And while I always hope that trucking companies can resolve disputes informally and avoid litigation, lawsuits are an unfortunate reality for trucking companies.
Transportation litigation presents unique legal and social scenarios beyond the more simplistic “car wreck” case. When legal counsel is presented with a trucking case, it is imperative that such counsel immediately adjust any “common” litigation strategy to take into account specialized regulations and social risks. All assumptions must be set aside; regardless of the scope of counsel’s experience, a trucking case simply cannot be properly handled in a cookie-cutter fashion. From the outset of the case, a detailed litigation strategy must be considered that takes into account federal and state laws and motor carrier regulations that apply bumper to bumper, tractor to trailer, and owner to driver, and all in the context of potential social bias against large transportation vehicles.