Truck Law

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Independent Contractor Contracts (Still) Matter – In Fact, All Contracts Matter.

by gspencermynko

Contracts are (still) important! Recently, I was consulted by a shipper who contracted with a carrier to deliver several loads to the ports. Unfortunately, as so often happens in this industry,  problems arose. For whatever reason, the carrier was unable to deliver the containers to the ports for overseas delivery. They literally missed the boat.

Unfortunately, The relationship between the shipper and the carrier deteriorated to the point of name-calling, the use of inflammatory language, accusations of fraud, conversion, theft, bad faith, and general criminality. “Call the cops?” Forget about it: the cops said this is a “civil” matter, which is basically cop-speak for “fuck off”.

Unfortunately, the shipper’s cargo is being stored in an undisclosed location by the carrier, who is now demanding an exorbitant (if not extortionate) fee for return of the cargo. So the shipper is not in possession of their cargo, and even worse, their customer, a secured creditor, does not have the cargo they bargained for.

But most unfortunately, there was no contract between the shipper and the carrier: not only was there no shipper – carrier contract, there is not even a bill of lading that exists regarding this fairly valuable cargo. So this unethical carrier can take advantage of their possession of cargo, and may exert an illegal lien to sell the goods. And to add insult to injury, because there was no contract in place, the shipper is unlikely to be awarded attorneys fees in the event of litigation, which is what they are looking at now. And by the time litigation is done, the amount of money they spend in lawyers fees will easily approach the value of the cargo.

Had the shipper had in place a clearly and strongly worded contract in place, they probably could have avoided all of this (eg.: lien rights), and, in the event of litigation, get their legal fees paid. Don’t let this happen to you. I don’t care if you’re a shipper, broker, carrier, independent contractor, freight forwarder, etc., etc. If you are in the transportation business, regardless of your role, and you are conducting business without a contract in place, you are a goddamn fool and you deserve to get your ass handed to you in a dispute.

Long Live The Independent Contractor Operating Agreement

So with that pleasant musing, let’s revisit the independent contractor operating agreement, and why it is still so important. Before I address independent contractor agreements, I want to address AB5 and the “ABC test”. It’s my opinion that Federal law preempts AB5 and the state of California has violated the laws of the United States in their attempt to destroy the independent contractor business model in trucking. While the cases are making their way through the courts and many issues are still in dispute, I am optimistic that, in the context of Trucking, AB5 will fall. Hence, the ICOA still is important.

ICOAs Define the legal status of both parties.

While an ICOA cannot guarantee that a worker will be considered an independent contractor under the law, an ICOA does provide powerful evidence that the independent contractor entered into a contract accepting and understanding their status as an independent contractor, and that the work they perform complies with the legal requirements of independent contractorship.

The ICOA also makes clear of the duties and responsibilities, and expectations and rights, of both the contractor and the principal.

ICOAs put the parties on the same page.

A clear ICOA helps avoid misunderstandings and makes clear the terms of a contract. So again, should a dispute unfortunately arise, the first document you’ll go to will be the contract between the parties.

Critical clauses that must be included in an ICOA:

The contract needs to state that this is a “independent contractor operating agreement” and needs to make it clear the date when the contract goes into effect.

Both the principal and the independent contractor need to put down their legal names, including the legal names of their companies. Again, if the contractor is an LLC or Incorporated, the contract needs to make it clear that the principal is contracting with a business entity, and not a sole proprietor. As a sidenote, I still believe that working with independent contractors who are incorporated or operate as an LLC moves the needle closer to proving independent contractor status.

The contract needs to define the agreement and the parties: again, the independent contractor is knowingly entering into the agreement as an independent contractor. This always helps should someone try to backtrack and claim that they thought they were an employee.

The duration of the contract clearly needs to be stated in the agreement, as well as the provisions for termination. It is important that an independent contractor operating agreement include details on how either party can terminate the agreement at any time.

The scope of the independent contractors duties need to be clearly described and stated in the independent contractor operating agreement. Again, details are important, because it makes clear what the contractor is in control of, and what the principle is in control of.   Remember, the concept of “control” is always critical in any independent contractor/misclassification analysis.

The independent contractor agreement should make it clear that the independent contractor provides the “instrumentalities of the trade“. In other words, the independent contractor provides the materials and labor, and is responsible for their cost. And in Trucking, of course, that means actually bringing a truck, and associated costs such as insurance, maintenance, and fuel, along with professional driving skills, to the table. No ICOA should be without these critical details.

How the IC is compensated, and how the amount is calculated and when it is due is critical. This must be expressly stated in the agreement.

The contract needs to make it clear that the independent contractor does not have the rights of an employee, nor does the company have the right of control over the contractors schedule, manner and means of work, and the moment to moment decisions that a contractor is responsible for.

Furthermore, the terms and conditions of the contract need to be kept confidential, and any confidential or proprietary information may not be disclosed or misappropriated by the contractor. This is critical, if a contractor decides they want to form their own business, and try and steal your customers.

An Indemnification clause is a critical part of any independent contractor operating agreement. indeed, this is perhaps one of the most critical parts of an independent contractor operating room.

Of course, all of the miscellaneous stuff, such as attorney fees provisions, choice of law clauses, venue and forum selection clause is, are all critically important in any independent contractor operating agreement.

California Budgets Over $17M To Enforce Misclassification Law

Now is NOT the time to let your guard down: the California state legislature has reached an agreement that will see $17.5 million allocated toward enforcement of AB-5 in the 2020-2021 budget year. That’s right kids: the Department of Industrial Relations will receive $17.5 million to fund over 100 positions to ensure compliance with misclassification law. Yikes! The funds will primarily be used to conduct audits, carry out prosecutions, and charge penalties on employers.

One Last Time: Contracts Are Critical

For all parties in the chain of the transportation of goods, there should be a contract in place. There should be a contract between the shipper and the carrier or broker, there should be a contract between the broker and the motor carrier, there should be a contract between the motor carrier and the independent contractor who may be driving under the motor carrier’s authority. Furthermore, if the shipper and carrier are working together directly, there should be a contract between the shipper and the motor carrier. If freight forwarders are involved, whoever is dealing with them should have a written contract in place with them. When brokers tender loads to other brokers, there should be a contract in place. Similarly, if the freight has to be warehoused for a while, whoever is entrusting the cargo to a warehouser, should have a contract with the warehousing company.

These documents are critical because they determine the rights, duties, and obligations of all of the parties. One of the first questions out of my mouth, when someone calls me up about a dispute, is “was there a written contract in place?” Too often, I hear “no”, which automatically triggers my mind to say, “ah, fuck”, because I know they are in a tough spot.

Don’t let yourself get into this situation: having proper contracts in place with the entities you do business with can go along way toward protecting your interests and the well-being of your company.

Avoid Denied Freight Claims

by gspencermynko

Few things cause as much frustration and anger for my clients than denied freight claims. And rightfully so: You paid your premium, and when things go awry, you expect your cargo insurance carrier to cover your loss. But, as too many of you know first hand, you’re NOT in good hands and the insurance company wants to take your money, and, like Ebenezer Scrooge, holds on to every penny like a mother protecting a child from predators. So, now that we’ve established that insurance companies suck, let’s discuss what YOU can do to protect yourself against a denied claim.

Common Reasons For Denial And How To Deal With Them

Poor Or Incomplete Documentation

Often times, a freight claim will be declined or denied due to inadequate or incomplete documentation. This is why invoices, bills of lading, rate confirmation sheets, freight manifests, etc. are so important. Don’t allow yourself to fall into the trap of poor documentation resulting in a denied claim. Do everything you can to make sure your documentation is pristine as a matter of practice.

Lack of Mitigation

Most insurance policies will state that the trucking company is responsible to mitigate their damages. Often, in the insurance policy, there will be some statement about the insurance carrier liability being limited to the “actual measure of damage” and further stating that it is the responsibility of the claimant to “mitigate the claim”. Examples of mitigation include selling the damaged goods at a discount, having the damaged goods repaired, or returning the damaged goods to the supplier/shipper. Again, I have to stress the importance of maintaining pristine documentation to support your mitigation efforts.

However, you have no duty to mitigate if mitigation is commercially unreasonable: if the last cargo is worth nothing, or the cost of mitigation exceeds the value of the cargo, then no mitigation is required.

Proof of delivery with no documentation of damage.

This problem arises when the consignee signs off on the delivery receipt stating that the freight was received in good condition with no documentation or record that there was a loss or damage to the freight or damage to the outer packaging. This will provide the insurance company with an excuse to state there was “no evidence that the freight was damaged while in your possession”.

As such, it is important that freight be inspected thoroughly upon delivery, including looking for any concealed or non-apparent damage. Admittedly, if the consignee signs off on the delivery as received in good condition, You can shift the blame to the receiver, but this will result in hard feelings and finger-pointing between your trucking company, the broker, the shipper, and the consignee. Meanwhile, the insurance company sits back and laughs while you and the other parties throw grenades at each other.

Shipper Negligence

In this situation, the Shipper simply did not properly package or prepare the cargo for shipment. As a carrier, this provides for a defense against a cargo claim. But if the insurance company denied the claim based on shipper negligence, don’t expect the shipper to roll over. Indeed, as I have seen this before, the shipper will still do what they can to point the finger at the carrier and place responsibility at the motor carrier’s feet. And certainly, you can expect the shipper to invoke the Carmack amendment to hold the carrier strictly liable for the damage.
Therefore, as a carrier, it is important to take a defensive posture and be meticulous in your documentation that you did what you were supposed to do. Look for dents, holes, tears, water damage, etc. on packed goods.

Furthermore, remember how the Carmack amendment works:

Under the Carmack Amendment to hold a motor carrier liable for cargo damage, the shipper must prove that:

a) The goods were in good condition when given to the shipper
b) The goods were damaged when delivered (or weren’t delivered)
c) The amount of damages

There are five exceptions outlined in the Carmack Amendment that a motor carrier can claim to deny liability for cargo damage:

1) an Act of God – weather, a tornado, flooding, acute driver illness
2) The public enemy
3) Act or Default of Shipper
4) Public Authority (the government)
5) The inherent vice or nature of the goods transported

Any of these will do, but #3 is what we are concerned with here. Don’t get stuck holding the bag because a shipper was negligent.

Act of God

This obviously speaks for itself. Pursuant to a shipping contract or a bill of lading, an “Act of God” will absolve a carrier from liability. I think a claim should still be filed in these cases, but obviously anyone making the claim is going to have a steep hill to climb in order to convince the insurance company to accept the claim. It’s important to note that if the carrier could’ve taken reasonable protective action against one of these events and didn’t, they may still be found liable.

Public Enemy

Not talkin’ about the rap group here, but rather enemy military forces. If damage is caused by enemy military forces, the carrier can’t be held liable. This includes acts during wartime. It does not include hijackers, criminals, or rioters. Hmm, I wonder why that might be relevant today? “Lemme hear you say Fight the power (lemme hear you say) Fight the power…” Uhhh…never mind.

Freight Bill Not Paid

This should be good news for motor carriers: In the face of a claim, the motor carrier is still owed money, and therefore the shipper must pay the freight charges. Shippers must pay your freight charges without delay for a damaged shipment: this is essential. If a shipper (or broker) refuses to pay the freight charges, it could hold up the resolution of a freight claim.

Missing Pieces

If there’s a problem with the piece count, and all that was mentioned in the bill of lading was a pallet count, it’s possible that a claim for a short pallet could be denied. Now again, this is more a shipper issue than a carrier issue, but it behooves anyone handling freight to carefully document what was received and document that it was loaded and maintained in the original condition from the shipper.

Finally, A Mention About Contracts

Finally, I have to mention the importance of having proper contracts in place. For all parties in the chain of the transportation of goods, there should be a contract in place. There should be a contract between the shipper and the carrier or broker, there should be a contract between the broker and the motor carrier, there should be a contract between the motor carrier and the independent contractor who may be driving under the motor carrier’s authority. Furthermore, if the shipper and carrier are working together directly, there should be a contract between the shipper and the motor carrier. If freight forwarders are involved, whoever is dealing with them should have a written contract in place with them. Similarly, if the freight has to be warehoused for a while, whoever is entrusting the cargo to a warehouser, should have a contract with the warehousing company.

These documents are critical because they determine the rights, duties, and obligations of all of the parties. One of the first questions out of my mouth, when someone calls me up about a problem with a freight claim, is “was there a written contract in place?” Too often, I hear “no”.

Don’t let yourself get into the situation: having proper contracts in place with the entities you do business with can go along way toward protecting your interests and the well-being of your company.

Contact for more information on how to deal with cargo claims and what contracts you can rely on to protect your business interests.

New Hours-Of-Service Rules

by gspencermynko

What You Need To Know About The New HOS Rules

The federal government has released its final rule to the hours of service rules that will increase driver flexibility and add some new responsibilities for trucking companies. The new rules were announced May 14, 2020. The rules have not been published and will become effective 120 days after publication, thereby allowing stakeholders to submit comments.  Specifically, the changes affect the 30 minute break rule, short haul exceptions, split sleeper provisions (the ability to split the 10 hour required off duty time into two periods), and adverse driving conditions. These new rules clearly allow greater flexibility as a result of their looser standards. The new proposal is expected to be published by the USDOT FMCSA come late September and includes NO new restrictions.

Here Are The Highlights:


This applies to interstate commerce, which pretty much covers anyone operating pursuant to USDOT Authority, including truck and bus drivers. Specifically, the new rules amend 49 CFR sections 385 and 395. Recall “interstate commerce” does not require that a truck actually leave the state, as long as the goods are travelling within the stream of interstate commerce. California will have up to three years to adopt equivalent rules, but any state law would likely run into serious preemption problems if California drafted laws conflicting with Federal law.

The 30-Minute Break Rule

Some of the biggest changes have to do with the 30 minute break room. The current rule States that a break is needed before driving a commercial motor vehicle after the eighth consecutive hour of the workday. Also, The driver must be off duty or in a sleeper berth.
The new rule states that a break is needed before driving a commercial motor vehicle after already driving for eight hours. Furthermore, the driver may be on duty (not driving), off duty, or in the sleeper berth. Obviously, this new rule implements two huge changes: the time counted before a 30 minute break is required only applies to actual driving. Furthermore, the driver may still be on duty during the break. So conceivably, detention, waiting for unloading or offloading, doing paperwork, etc. would qualify as a 30 minute break. This obviously creates much greater flexibility in complying with the 30 minute break rule. The driver would no longer need to stop work activities such as loading/unloading, doing vehicle inspection, paperwork, etc to have a compliant 30 minute break. Again, this only applies to drivers who drive a commercial motor vehicle for over eight hours.

The Short Haul Exception

Major changes here as well.The current rule states that all work must be done within 12 consecutive hours, and the driver must remain within a 100 mile radius. The new rule states that all work must be done within 14 consecutive hours and the driver must remain within a 150 mile radius. So not only does the new rule expand the hours of service restrictions by two hours, it essentially doubles the amount of geographic area a driver may cover while on duty.

So the revised short haul exception will add two hours to the workday, and allow a driver greater flexibility to complete his or her full 11 hours of driving per day. As far as I can tell, however the “8/10” hours off between shifts rule remain the same and the “60/70” hour limit per week will remain the same as well. Drivers will need to continue to start and end at the normal work reporting location.

Notably, short haul drivers are exempt from ELDs but are still required to keep time records instead of logs. The records must document their start, end, and total hours and need to be kept for six months. 30 minute breaks do not need to be documented and there is no requirement to keep supporting documents. That said, I would still recommend using ELD is with short haul drivers to simply make record-keeping more accurate and simpler.

Also keep in mind that the short-haul exception for Non-CDL drivers driving CMVs (less than 26001 lbs.) requires they stay within the 150 mile radius and return to base each day. There is no on-duty limit but the driving must be done within 14 hours 5 out of 7 days, and within 16 hours no more than 2 out of 7 days.

The Sleeper Berth Rule

The current rule requires that a driver must spend at least eight consecutive hours in the sleeper berth, plus another two hour break to accumulate 10 hours. also, the shorter break counts against the 14 hour on duty limit, and the two hour break may be riding in a vehicle, but only after eight hours in the sleeper.
The new rule provides much greater flexibility: The driver must spend at least seven consecutive hours in the sleeper berth, plus another break of two hours to get 10 hours. However, neither break counts against the 14 hour limit, and a driver may have a three hour break riding in the vehicle after seven hours in the sleeper.

Note that the qualifying rest breaks must add up to 10 hours, with each break being at least two hours, and one of the two breaks is at least seven consecutive hours in the sleeper berth. Furthermore, there can be no more than 11 hours of driving time, and no driving after the 14 hour limit. Compliance is calculated from the end of the first qualifying break.

The new sleeper berth rule allows greater flexibility to rest and split the 10 hour break, and there’s no loss of productive time due to the 2+ hour rest break which does not count against the driver’s driving time. So remember, a driver is still not allowed to do more than 11 hours of driving, and no driving after the 14 hour limit. However, there is less time required in the sleeper for teams.

The Adverse Conditions Exception

The adverse conditions exception has been changed. The current rule states that adverse conditions may extend the driving limit, but not the on-duty limit, by two hours. The new rule states that adverse conditions may extend both driving and on duty limits by two hours. Therefore, while before truck drivers had to drive 13 hours in a 14 hour period, they will be able to drive 13 hours in a 16 hour period.
Here is the definition of adverse driving conditions: snow, ice, sleet, fog, or other adverse weather conditions or unusual road or traffic conditions that were not known, or could not reasonably be known, to a driver immediately prior to beginning the duty day or immediately before beginning driving after a qualifying rest break or sleeper berth period, or to a motor carrier immediately prior to dispatching the driver.

This will allow more drivers to take advantage of the full two hour extension, and drivers will be able to wade out unexpected weather or traffic conditions because of the increased flexibility and time limits. However, Edward still apply to unforeseeable events and do not examine the driver from their 30 minute break.

A Final Word

When this goes into effect, it goes without saying that drivers, dispatchers and other key employees will require training and education on the new rules. Obviously, your employee handbook and policies and procedures manual will need to be updated as well.

At we will keep tabs on the progress of the new HOS rules. Contact us for more information.

IRP and IFTA – What You Need To Know!

by gspencermynko

Recently I attended a JJ Keller conference on IFTA and IRP. The lecture focused on the differences between IRP and IFTA and what you need to know to comply with the regulations. Hopefully this will clear up some confusion with great information straight from the source. All information in quotes is directly from JJ Keller.

Here Are The Highlights:


“The most fundamental difference between IRP and IFTA is:

* IRP refers to license plates or vehicle registration;
* IFTA refers to fuel tax reports that member carriers must file
with their base jurisdictions.

What trucking companies must remember is that compliance with IFTA and IRP regulations is very document intense: “…both IFTA and IRP involve an extensive amount of recordkeeping. We’re talking years – not weeks or months – of preserving fuel receipts and mileage data to satisfy the requirements of both programs.”

Does my vehicle need IFTA and IRP?

JJ Keller advised us:

“Vehicles that qualify for IRP and IFTA share the same characteristics. The
vehicle needs to meet one of the following criteria:

* Has two axles and a gross vehicle weight or registered gross vehicle weight exceeding 26,000 pounds;

* Has three or more axles regardless of the weight of the power unit; or

* Is used in combination with a trailer and the weight of such
combination exceeds 26,000″

Also, IFTA does not apply to vehicles that weigh less than 26000 lbs. Under IRP, vehicles that have two axles and are at or under 26,000 pounds can be registered with IRP apportioned plates at your option. Vehicles weighing 26,000 lbs. or less and operating strictly interstate may be exempt from IRP or temporary commercial trip permit under reciprocal agreements. Contact the DMV for more details.

Is it cheaper to apportion or buy trip permits?

“Trip permits for IRP and IFTA help carriers avoid extensive recordkeeping and remove the possibility of a jurisdictional audit of IFTA and IRP records….A simple rule of thumb for carriers is that with five or more trips across state lines, apportioning plates and registering with IFTA will typically be the best option. Carriers that cross state lines less than five times in a year are probably better off using trip permits.”

IRP Fees

“Carriers pay IRP fees based on the percentage of distance operated in each jurisdiction.”

Fuel Taxes

“Carriers are determining how much fuel tax they owe by:

1. Recording total miles traveled in each jurisdiction and total gallons of fuel purchased in each jurisdiction to determine the fleet miles-per-gallon (MPG);

2. Compiling mileage in each jurisdiction for the entire quarter;

3. Calculating total gallons used in each jurisdiction during the quarter (miles divided by the MPG);

4. Subtracting from the total gallons burned in each jurisdiction in Step 3 to determine “net” taxable gallons (if fuel was purchased in a jurisdiction); then

5. Multiplying the net taxable gallons total by the tax rate in each jurisdiction to learn the amount owed or the amount to be credited on the IFTA return.”

Also: Record all miles! “Drivers must know that all miles for IFTA-qualified vehicles and IRP-apportioned vehicles must be recorded. This includes miles accumulated due to personal use, vehicle repairs, and yard moves.”

How long do I have to retain my records for IFTA
and IRP?

“The level of recordkeeping required for IFTA and IRP is extraordinary, and diligence is required to maintain the necessary documents.”

“For IRP compliance, carriers must keep their mileage records, including monthly and quarterly summaries, for up to 6½ years.”

“IFTA requires that records be maintained from the current year of quarterly tax returns plus the three preceding mileage years – or four years from the return due date or filing date, whichever is later, plus any time included as a result of waivers or jeopardy assessments.”

Records You Must Keep

“For mileage requirements, the following information needs to be gathered for
both IFTA and IRP:

* Original GPS or other location data for the vehicle to which the records pertain;
* Date and time of GPS readings;
* Location of each GPS or system reading;
* Beginning and ending distance readings from the odometer, hubodometer, or similar device;
* Calculated distance between each GPS or other system reading;
* Route of the vehicle’s travel;
* Total distance traveled by the vehicle;
* Distance traveled in each jurisdiction; and
* Vehicle Identification Number (VIN).”

Your ELD should capture all of this information.

“IFTA also requires carriers to provide proof of fuel purchases in the form of receipts from the site of purchase. Fuel receipts must include the following information:

* Date of purchase,
* Seller’s name and address,
* Number of gallons purchased,
* Total amount of sale,
* Purchaser’s name and address,
* Fuel type, and
* Vehicle number.

If you use fuel cards, make sure their receipts contain all of that information.

What About O-Os Leased On To Motor Carriers?

“IRP allows the responsibility to reside with either party – the owner-operator or the motor carrier. The written lease agreement must specify which party will be the registrant.”

“With IFTA, the length of the lease is the deciding factor in responsibility. When the lease is long-term (30 days or more), either the owner-operator or the motor carrier can take responsibility. If liability and responsibility for IFTA are not specified in the lease agreement, the vehicle operator will be liable. In short-term leases (29 days or less), the owner-operator takes on IFTA responsibility.”

Getting Audited?

JJ Keller states Audit Triggers include:

* Late returns,
* Missing information/data,
* An amended return,
* Fluctuations in miles and fuel mpg,
* Higher refunds than anticipated, and
* High MPG reported.

Also, “Since states and provinces are mandated to audit 3 percent of their registrants annually, there is a chance that carriers could be randomly selected for an audit at some point.”

Electronic Proof of IRP and IFTA registrations

“As of January 1, 2019, IRP cab cards and IFTA licenses are allowed in electronic format. Drivers were asked to carry PDF versions of the electronic cards and licenses as well as paper versions for up to a year during the transition in case of connectivity problems with law enforcement.”

The complete JJ Keller White Paper on IFTA/IRP can be found here:

Please go here for the complete document: IFTA & IRP Whitepaper

A Final Word On IFTA and IRP Compliance

I was so impressed with the information I received from the JJ Keller webinar, I knew I wanted to share it with my readers. Please know that I am not receiving any compensation from JJ Keller to share their information.

What I also know is that JJ Keller can keep these records for you, ensure compliance with IFTA and IRP rules, and help you sail through an audit. Look – I’m smart enough to know that I’m too stupid to do my own taxes – that’s why I hire an accountant. Similarly, the penalties in IRP and IFTA audits can be staggering – so I urge you to do the smart thing and contact JJ Keller to help you with your IRP and IFTA matters – let the pros handle it.

Finally, if you do get hit with an assessment after an IFTA or IRP Audit Contact to appeal an IFTA or IRP fine.


by gspencermynko

EDD Will Accept PUA Application Starting April 28, 2020.

“This is a newly available emergency unemployment assistance program under the federal CARES Act.  PUA provides assistance for unemployed or partially unemployed individuals who are not eligible for regular unemployment insurance and who are unable or unavailable to work due to COVID-19 related circumstances.

The Employment Development Department (EDD) will be accepting on-line applications for this program beginning on Tuesday, April 28.  Check back on this page for the latest updates.”

For More Information Go To These Web Pages:

Pandemic Unemployment Assistance (PUA) Program

Good Luck from



The Prospect Of Owner-Operators Filing For Unemployment Benefits Is Creating Fear Of Misclassification Audits and Allegations. But should you be worried or are these fears the product of paranoia?

by gspencermynko

Rumor Has It Trucking Companies Will Be At Increased Risk For Misclassification Allegations If Their Owner-Operators Apply For Unemployment Benefits.

First A Quick Review:

In my last article, I discussed how the CARES Act provides expanded unemployment assistance to individuals not traditionally eligible for unemployment insurance benefits: specifically independent contractors, including “Owner-Operators”. Under this new program, ICs could receive over $600 a week from the federal Pandemic Unemployment Assistance (PUA) program. In addition to the $600 a week offered through the end of July, self-employed individuals and independent contractors would also receive from the federal government 50% of what their state offers as unemployment pay. In an unprecedented change, independent contractors and those self-employed will be able to draw unemployment pay should they lose work because of the COVID-19 Corona-virus outbreak. Whether you are completely out of work or have experienced a substantial decline in your business, you are still eligible for PUA Program benefits. While these are Federal programs, they will be administered by State Unemployment agencies, which in California, means the Employment Development Department (EDD).
As I also discussed in my last article, nearly 50% of independent truck drivers have experienced a substantial decrease of work as a result of the COVID-19 pandemic. As a result, many of these owner operators are filing unemployment claims with the California EDD. That is to be expected, considering all of the politicians who are trumpeting about expanded Unemployment benefits for independent contractors. At least that is the theory: The reality is the EDD is woefully unprepared to administer this program and start handing out benefits under the PUA program to ICs. Indeed, the EDD has yet to update their Application for unemployment benefits to include self-employed individuals. (I will circle back and discuss this problem in a minute and what EDD is saying). As a result, independent contractors/owner operators are filing for unemployment benefits as traditional employees (and not ICs). Of course, that ain’t going to fly because ICs generally do not pay unemployment insurance premiums, but it can “red-flag” the employer for further scrutiny.

The New Old Problem

Which leads us to the “new problem” of independent contractors applying for unemployment benefits with EDD. But, this “new problem” is really an “old problem”: Will an application for unemployment benefits by an IC result in an EDD audit for misclassification of an employee as an independent contractor?

The answer to that is a resounding “maybe”. Lord knows I’ve had many a trucking company executive lament the fallout of an IC applying for Unemployment. Considering that unemployment benefit applications to EDD have been skyrocketing, and they are completely overwhelmed with the flood of applications, the risk of an audit is certainly no worse than it has been all along; and for that matter, it may actually be less since they are stretched a bit thin over at EDD these days. Admittedly, that is speculation on my part. So let’s focus on what Trucking Co.’s need to do in light of ICs applying for unemployment benefits (whether as regular employees or as self-employed workers).

The Solution For The New Old Problem

Desperate ICs are going to apply for these benefits and trucking companies can’t really do much about that. You may be able to advise your ICs to hold-off on filing for benefits until EDD updates their application for PUA benefits. But I advise against placing your fate into the hands of people who are getting conflicting information (eg.: Some people are advising ICs to go ahead and apply for unemployment as a regular employee, while others say hold off). Notably, EDD has explicitly encouraged independent contractors in both its public statements and website to file a claim for unemployment if they believe they are misclassified:

“If you are unsure if you are an independent contractor or an employee who could be eligible for benefits, then you are still encouraged to apply for Unemployment Insurance as instructed in our FAQs under the Unemployment Insurance Benefits section.”

Therefore, the better strategy is to be well prepared if EDD decides to knock on your door and start asking pesky questions.

Answer The Door

First of all, if they knock, you have to answer the door: You are going to have to respond. Ignoring contact from EDD usually ends badly – especially for you – not so much EDD. Most often, EDD will send You a “Pre-audit questionnaire”: This will likely be your initial notice that an audit is coming. While I have had some clients receive pre-audit questionnaires that never turned into actual audits, that tends to be unusual.

Clean Your House Before Your “Guests” Arrive

However, Trucking companies do not want to wait for a notice from EDD before getting prepared for a worker classification audit. Indeed, you should act today as if EDD is going to knock on your tomorrow. By and large, EDD audits center around the proper classification of independent contractors. In an audit situation, the employer has the burden of proving that their independent contractors are properly classified. (In California, the burden of proof is always on the employer to make the case that independent contractors are properly classified. And yes, you are presumed guilty until proven innocent). Therefore, you always want to be prepared to defend yourself and be ready with solid and substantial evidence that your independent contractors are properly classified. That is nothing new – but the tsunami of unemployment applications by ICs makes it clear that now is the time to get prepared.

Help Me, Mr. Wizard!

When I am hired by a Trucking company to prove their Owner-Ops are properly classified as ICs, my job is to marshal the evidence and apply that evidence to the rule of law to support the finding that the ICs are properly classified. So where do we start? Actually at the end! The first thing I do is let everybody know that the O-Os are properly classified as ICs! Unfortunately, it generally doesn’t end there and I have more persuasion to do. The next thing to do is state what the rule of law is.

Remember our old friend, Borello?

Despite the passage of AB-5 and codification of the “ABC” Test, a friendly federal judge specifically told EDD they cannot apply and use AB-5 and the “ABC” Test against trucking companies. Here is what we need to know:

“Whether certain laws and regulations in the California Labor Code apply to truck drivers, generally, depends on their status as employees or independent contractors. S.G. Borello & Sons, Inc. v. Dep’t of Indus. Relations, 48 Cal. 3d 341, 350 (1989). For nearly three decades, California courts have used a test, based on the Borello decision, to determine whether workers are correctly classified as employees or independent contractors. The Borello standard considers the “right to control work,” as well as many other factors, including (a) whether the worker is engaged in a distinct occupation or business, (b) the amount of supervision required, (c) the skill required, (d) whether the worker supplies the tools required, (e) the length of time for which services are to be performed, (f) the method of payment, (g) whether the work is part of the regular business of the principal, and (h) whether the parties believe they are creating an employer-employee relationship”

The ruling makes it clear that AB-5’s ABC test is preempted by the FAAAA, and restores the multi-factor Borello test as the standard to determine whether a truck driver is an independent contractor or employee. The Court ruled that the FAAAA preempted Prong B of AB-5’s ABC test because it effectively prohibits motor carriers from utilizing independent owner-operator truck drivers. Hooray again.

Now We Apply The Law To Your Facts

NOW is the time to collect all of the necessary information and documentation for every IC that currently drives for you and has driven for you in the last 3 years (EDD can go back 3 years in a misclassification audit). This starts with your Independent Contractor Operating Agreement. Then we gather numerous documents (some obvious – some not so much), and others that need to be created, that will tip the scales in your favor. Then I make the case that the facts satisfy the Borello standard. Notably, EDD has a Audit Guideline that essentially follows the Borello standard that auditors use and that I rely on to help my clients.

Back To The Conclusion

Then, I return to my conclusion that the IC’s are indeed properly classified. But let me be clear: THESE DOCUMENTS NEED TO BE COLLECTED AND FILED FOR EVERY IC YOU HAVE EVER WORKED WITH GOING BACK 3 YEARS. Not all trucking companies are created equally which is why it is critical to sit down with an experienced Transportation Attorney ASAP and get your game plan together. That way, if EDD knocks on your door, you can answer with a smile on your face.

An Apology To ICs

My previous article touted the new CARES program and PUA program to help Owner-Ops get desperately needed benefits. In theory, that sounded great: The reality has been nothing but frustrating. EDD is simply unable to currently help Owner-Ops out: Go to EDD’s website on the PUA program which provides their excuses for not being able to implement it here.

“You see, in this world there’s two kinds of people, my friend: Those with loaded guns and those who dig. You dig.”

What does that have to do with this article? Not a damn thing. But I watched “The Good, The Bad, and The Ugly” over the weekend and that is my favorite Clint Eastwood quote in the movie. And nowadays, I can think of worse ways to kill 3 hours.

Federal Relief Package Offers Unemployment For Owner-Operators

by gspencermynko

Out-of-work owner-operators are eligible for benefits!

“Unemployment For Independent Contractors”. Yep, these are strange times indeed. So, you ask, how can my Owner-Operator friends collect Federal unemployment benefits.

Allow Me To Introduce You To The Federal CARES Act – Unemployment Benefits for Independent Contractors.

The CARES program provides unemployment assistance provides expanded unemployment assistance to individuals not eligible for unemployment insurance benefits: specifically independent contractors, including the ubiquitous “Owner-Operator”. In an unprecedented change, independent contractors and those self-employed will be able to draw unemployment pay should they lose work as social distancing and shelter-at-home requirements related to the COVID-19 coronavirus outbreak erode the U.S. economy. Under the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act, both leased and independent Owner Operators will be entitled to “pandemic unemployment assistance” if they are able and willing to work or telework (I think this would encompass freight brokers as well) for pay, but can’t because of reasons related to the COVID-19 pandemic. You heard me right: owner-operators will be able to file for unemployment pay from the federal government.

Unemployment assistance will be available to self-employed individuals under Section 2102 of the CARES Act if the Applicants provide self-certification that they are (1) partially or fully unemployed, OR (2) unable and unavailable to work because of one of the following circumstances:

  • is diagnosed with COVID-19 or experienced symptoms or is seeking a diagnosis,
  • has a member of his or her household that has been diagnosed with the illness,
  • is providing care to a family member with COVID-19,
  • has primary caregiving responsibility to a child that is unable to attend school due to COVID-19,
  • cannot reach his or her place of work because of a quarantine or advice of a health care provider to self-quarantine,
  • has become a breadwinner after the head of household has died from COVID-19,
    has had to quit his or her work as a result of Coronavirus, or
  • has a work location that is closed as a direct result of a COVID-19 public health emergency.

This pay could be necessary for many owner-operators: Nearly 50% of Owner-Operators have experienced a substantial decrease in their work load. The exception is for those hauling food, particularly reefer loads. ICs could receive over $600 a week from the federal Pandemic Unemployment Assistance (PUA) program. In addition to the $600 a week offered through the end of July, self-employed individuals and independent contractors would also receive from the federal government 50% of what their state offers as unemployment pay. Of course, employee drivers who are eligible for state unemployment pay are not eligible for PUA program benefits.

Under the PUA program, self-employed and independent contractors are eligible if they quit their jobs because the virus outbreak, such as if they contract the COVID-19 or if they need to care for a relative who does. This further covers ICs who generally cannot go on “paid leave” from a job.

The Unemployment Assistance covers ICs who are “unemployed” and also “partially unemployed”.

Whether you are completely out of work or have experienced a substantial decline in your business, you are still eligible for PUA Program benefits. There are important exceptions: people receiving benefits under the Families First Coronavirus Response Act or state laws providing similar benefits to ICs.

For what period of time am I eligible for these benefits?

This financial assistance is available retroactively to January 27, 2020 through December 31, 2020 provided the individual’s unemployment, partial unemployment, or inability to work caused by COVID-19 continues, up to a maximum of 39 weeks including any weeks when the independent contractor received any other paid benefits under federal or state law.

The Families First Coronavirus Response Act (“FFCRA”)

The Families First Coronavirus Response Act, which covers independent contractors, also provides for paid sick and paid family leave to self-employed individuals. This program has been expanded and extended to pay sick time and family and medical leave to “eligible self-employed individuals” who “regularly [carry] on a trade or business . . . , and would be entitled to receive paid leave . . . if the individual were an employee of an employer (other than himself or herself).”

Independent contractors are eligible for up to 10 days of paid sick leave if they are unable to work because they are subject to a government quarantine or order of isolation due to COVID-19, have been advised by their doctor to self-Quarantine, or are experiencing symptoms of COVID-19 and are seeking medical attention. Such eligible independent contractors are entitled to up to $511 per day up to a maximum of $5110, or 100% of their average daily self-employment income for the taxable year, which ever is less. Further assistance is available if the independent contractor has to care for another individual in isolation or to care for a child whose school has been closed or whose care provider is unavailable due to COVID-19 up to a maximum of $2000 for 10 days paid sick leave or 67% of the average daily self-employment income for the taxable year.

Paid family leave is also available to ICs unable to work because they have to care for a family member who is under government order or under advice by their doctor to isolate, or to care for a child who school has been closed or whose Child care provider is unavailable because of COVID-19. This benefit entitles the recipient to the lesser of $200 per day or 67% of their average daily self-employment income for a maximum of 50 days.

Notably, the FFCRA goes into effect today, April 1, 2020. No foolin’.

So, you ask, how do I get this money?

Look, the government isn’t going to send unemployment fairies out to your homes with bags of money. So, let’s figure out what you need to do; but first a statement from Senator Dianne Feinstein:

“The $2 trillion coronavirus stimulus signed into law last week includes new unemployment benefits for self-employed, part-time and gig workers who in the past haven’t been eligible for such benefits. These workers were made eligible because the economic damage caused by the coronavirus isn’t discriminating between different types of workers and so neither should federal benefits.
“In California, more than 2 million workers are self-employed and 3.4 million work a part-time job. The state is also home to millions of so-called ‘gig workers,’ independent contractors who work through online platforms such as Uber and Lyft. These non-traditional workers comprise as much as one- quarter of all workers in the state.
“I encourage all Californians who have lost their jobs because of the pandemic to apply for unemployment benefits if needed. Even if you weren’t eligible in the past, you may be now.”

Well, ain’t that special.

How do I file for unemployment insurance?

Californians can apply for unemployment benefits through the California Employment Development Department. The best way to begin the process is by going online and clicking HERE. Claims can be filed online Sunday 5 a.m. to 8:30 p.m., Monday 4 a.m. to 10 p.m., Tuesday through Friday 2 a.m. to 10 p.m. and Saturday 2 am to 8 p.m.

But you say, what if I’m not eligible for traditional Unemployment Insurance?

Fear not, Noble O-O! The CARES Act temporarily expands unemployment insurance to cover individuals who are not traditionally covered, including the self-employed, gig-workers, independent contractors, and workers with irregular work histories. It also expands the list of allowable criteria for claiming unemployment compensation to include many reasons related to the COVID-19 public health emergency. Contact the unemployment office in the state where you worked to determine your eligibility.

Got it?

Good – now go n’ get you some.

This is a Medical and Legal Article about COVID-19 – the disease caused by the Novel Corona Virus of 2019.

by gspencermynko

As some of you may know, in addition to being a transportation lawyer, I am also a Medical Doctor, working for an urgent care and occupational medical group. As you can imagine, I routinely see patients with upper respiratory and pulmonary symptoms: People complaining of cough, fever, chest pain, shortness of breath; some who have chronic illnesses such as diabetes, lung disease, kidney disease, compromised immunity; and those who are elderly. In other words, people who may have COVID-19. I will share some basic information from the CDC regarding the Corona virus, what you should do to protect yourself, and when to go to your doctor, an emergency room or urgent care. While this is out of the ordinary for my articles, this is an extraordinary time and I want to share my experience as someone who is on the front line dealing with this.

Secondly, I will discuss the recent FMCSA order suspending certain safety rules in response to the COVID-19 outbreak.

What are the Signs and Symptoms of COVID-19?

COVID-19 ranges from mild disease with non-specific signs and symptoms of acute respiratory illness (like a common cold or mild case of the flu), to severe pneumonia with respiratory failure and shock (people who end up in an ICU on a ventilator). Frighteningly, there are people infected with COVID-19 who have NO symptoms and feel perfectly normal – scary because these individuals may pass off the illness to unsuspecting people. Needless to say, it makes diagnosing the illness a challenge and testing for COVID-19 is extremely limited.

Who is at risk for COVID-19?

Patients at greatest risk of infection are persons who have had prolonged, unprotected close contact with a patient with symptomatic, confirmed COVID-19 and those who live in or have recently been to areas with sustained transmission.

If I am concerned about COVID-19, I ask patients these questions:

-Any travel to mainland China (or other high risk areas) in the past 14 days?
-Any contact with a person diagnosed with, suspected to have, in evaluation for COVID-19?
-Any fevers, dry coughs, or shortness of breath?

At the clinics I work at, patients with suspected or confirmed COVID-19 are asked to wear a surgical mask as soon as they are identified and are evaluated in a private room with the door closed.

Who is at risk for severe disease from COVID-19?

Basically, older adults and people of any age who have serious underlying medical conditions.

According to the Centers for Disease Control, those at high-risk for severe illness from COVID-19 include:

People aged 65 years and older
People who live in a nursing home or long-term care facility
Other high-risk conditions:
People with chronic lung disease or moderate to severe asthma
People who have heart disease with complications
People who are immunocompromised including cancer treatment
People of any age with severe obesity (body mass index (BMI)≥40) or certain                      underlying medical conditions, particularly if not well controlled, such as                    those with diabetes, renal (kidney) failure, or liver disease might also be at                   risk
People who are pregnant should be monitored since they are known to be at risk            with severe viral illness.

Many conditions can cause a person to be immunocompromised, including cancer treatment, bone marrow or organ transplantation, immune deficiencies, poorly controlled HIV or AIDS, and prolonged use of corticosteroids (like Prednisone) and other immune weakening medications. Ask yourself if you fall into any of these criteria.

How is COVID-19 treated?

Not all patients with COVID-19 will require medical supportive care. Treatment for hospitalized patients with COVID-19 is focused on supportive care of complications, including advanced organ support for respiratory failure, septic shock, and multi-organ failure. There are currently no antiviral drugs licensed by the U.S. Food and Drug Administration (FDA) to treat COVID-19.
Remember, the vast majority of patients require no specific medical treatment and will recover uneventfully. But don’t play Russian Roulette – take steps to protect yourself.

I work with patients to manage their underlying condition to the best of their ability, including ensuring that patients have sufficient medication and supplies. I encourage all patients, regardless of risk, to:
Take steps to protect yourself (see below)
See a doctor if you are sick with a fever, cough, or shortness of breath.
Follow CDC travel guidelines and the recommendations of your state and local health officials.

How COVID-19 Spreads.

The virus is thought to spread mainly from person-to-person.
Between people who are in close contact with one another (within about 6 feet).
Through respiratory droplets produced when an infected person coughs or sneezes.
These droplets can land in the mouths or noses of people who are nearby or possibly be inhaled into the lungs. It may be possible that a person can get COVID-19 by touching a surface or object that has the virus on it and then touching their own mouth, nose, or possibly their eyes, but this is not thought to be the main way the virus spreads. However, the virus that causes COVID-19 seems to be spreading easily and sustainably. It’s going to get worse before it gets better.

Protect Yourself And Others With These Simple Actions

Clean your hands often:

Wash your hands often with soap and water for at least 20 seconds especially after you have been in a public place, or after blowing your nose, coughing, or sneezing.
If soap and water are not readily available, use a hand sanitizer that contains at least 60% alcohol. Cover all surfaces of your hands and rub them together until they feel dry.
Avoid touching your eyes, nose, and mouth with unwashed hands

Avoid close contact

Avoid close contact with people who are sick
Put distance between yourself and other people if COVID-19 is spreading in your community.

Stay home if you’re sick

Stay home if you are sick, except to get medical care.

Cover coughs and sneezes

Cover your mouth and nose with a tissue when you cough or sneeze or use the inside of your elbow.
Throw used tissues in the trash.
Immediately wash your hands with soap and water for at least 20 seconds. If soap and water are not readily available, clean your hands with a hand sanitizer that contains at least 60% alcohol

Wear a facemask if you are sick

If you are sick: You should wear a facemask when you are around other people (e.g., sharing a room or vehicle) and before you enter a healthcare provider’s office. If you are not able to wear a facemask (for example, because it causes trouble breathing), then you should do your best to cover your coughs and sneezes, and people who are caring for you should wear a facemask if they enter your room.

If you are NOT sick: You do not need to wear a facemask unless you are caring for someone who is sick (and they are not able to wear a facemask). Facemasks may be in short supply and they should be saved for caregivers.

Clean and disinfect

Clean AND disinfect frequently touched surfaces daily. This includes tables, doorknobs, light switches, countertops, handles, desks, phones, keyboards, toilets, faucets, sinks and gas pumps! See for more information

The FMCSA issued an Emergency Declaration for motor carriers and drivers providing direct assistance in support of relief efforts related to the COVID-19 outbreaks.

The FMCSA ruled that due to the COVID-19 outbreak, an emergency exists that warrants an emergency exemption from Parts 390 through 399 of the Federal Motor Carrier Safety Regulations, excluding Drug and Alcohol Testing.
Specifically, the Emergency Declaration provides relief for motor carriers providing direct assistance in support of emergency relief efforts related to the COVID-19 outbreaks, including transportation to meet immediate needs for:

(1) medical supplies and equipment related to the testing, diagnosis and treatment of COVID-19;

(2) supplies and equipment necessary for community safety, sanitation, and prevention of community transmission of COVID-19 such as masks, gloves, hand sanitizer, soap and disinfectants;

(3) food for emergency restocking of stores;

(4) equipment, supplies and persons necessary to establish and manage temporary housing, quarantine, and isolation facilities related to COVID-19;

(5) persons designated by Federal, State or local authorities for medical, isolation, or quarantine purposes; and

(6) persons necessary to provide other medical or emergency services, the supply of which may be affected by the COVID-19 response.

The Emergency Declaration of 03/19/2020 is explained here: See the actual declaration here:

Arbitration Update! Federal Court Stops California From Banning Arbitration: Federal Judge Stops California From Enforcing AB 51

by gspencermynko

Federal Court Grants Preliminary Injunction on Enforcement of California Ban on Employment Arbitration Agreements.

California Assembly Bill (AB) 51, which bans mandatory arbitration agreements, was set to go into effect on January 1, 2020. However, the Chamber of Commerce of the United States filed a suit to stop AB 51 and succeeded in securing a Temporary Injunction against the State of California from enforcing the new law (this occurred in a very similar fashion as to how the CTA stopped the State from enforcing AB 5 against trucking companies).

The U.S. District Court for the Eastern District of California granted a request for a preliminary injunction to prohibit the State of California from enforcing Assembly Bill 51 (AB 51) as to arbitration agreements governed by the Federal Arbitration Act (FAA). Chamber of Commerce of the United States, et al. v. Becerra, et al., No. 2:19-cv-2456 (E.D. Cal. Jan. 31, 2020).

On January 31, 2020, the Court then granted the request for a preliminary injunction enjoining the State from enforcing AB 51. On February 7, 2020, the court issued its written order detailing its reasoning for granting the preliminary injunction. It ruled that the four factors required for a preliminary injunction were met:

The likelihood of the plaintiffs succeeding on the merits of the case;
The likelihood of irreparable harm to the plaintiffs absent a preliminary injunction;
The balance of the equities; and
Whether an injunction is in the public interest.

As such, the State of California is banned from enforcing AB 51, which essentially makes employment arbitration agreements unenforceable. Chalk up a victory for Employers.

However, enforcement of arbitration agreements in trucking under the Federal Arbitration Act (FAA) became more difficult under New Prime Inc. v. Oliveira, 139 S. Ct. 532 (2019).

FAA and Transportation Worker Exception.

Last year the United States Supreme Court ruled that a trucking company cannot compel arbitration in a wage dispute brought by an independent contractor truck driver. Generally, employers can insist upon arbitration agreements in contracts with independent contractors. However, The US Supreme Court has decided that an exception to the Federal Arbitration Act (FAA) applies to independent contractor truck drivers. Even though the plaintiff (an interstate truck driver) had signed an arbitration agreement agreeing he was an independent contractor, the Court held the FAA could not be used to compel arbitration. But the Court also stated that a transportation worker who signed an arbitration agreement could be compelled to arbitrate pursuant to a court’s inherent authority or state arbitration statutes

Who Actually Works In “Interstate Commerce”?

Following the decision in New Prime, courts have made inconsistent rulings as to who falls within the scope of the transportation worker exception, focusing on whether transportation workers are engaged in interstate commerce. These range from “obvious” examples: long-haul truck drivers whos transport goods across state lines are “engaged in interstate commerce”. But what about transportation workers who work within a single state, such as last-mile delivery drivers, couriers, food delivery drivers, drivers of ride-sharing services, and other gig-economy transportation service?

Courts have applied vague, multi-factor tests which result in inconsistent and contradictory results:

These decisions have a broad, inclusive definition of the Transportation Worker Exception:

Waithaka v., Inc., LEXIS 140605 (D. Mass. Aug. 20, 2019) (last-mile delivery drivers were subject to the transportation worker exception, even though they did not cross state lines); See also Rittmann v., Inc., 383 F. Supp. 3d 1196 (W.D. Wash. 2019)

Ward v. Express Messenger Sys., LEXIS 175674 (D. Colo. Jan. 28, 2019) (package delivery drivers were subject to the transportation worker exception, even though they did not cross state lines);

Muller v. Roy Miller Freight Lines, LLC, 34 Cal. App. 5th 1056 (2019) (a trucker was subject to the transportation worker exception even though he did not personally transport goods across state lines).

These decisions have a narrow, exclusive definition of the Transportation Worker Exception, where employees are required to arbitrate disputes:

Austin v. DoorDash, Inc., No. 1:17-cv-12498, 2019 U.S. Dist. LEXIS 169728 (D. Mass. Sep. 30, 2019) (food delivery drivers were not subject to the transportation worker exception);

Davis v. Cintas Corp., No. 2:18-cv-1200, 2019 U.S. Dist. LEXIS 87261 (W.D. Pa. May 23, 2019) (route sales drivers were not subject to the transportation worker exception);

Borgonia v. G2 Secure Staff, LLC, No. 19-cv-914, 2019 U.S. Dist. LEXIS 70224 (N.D. Cal. Apr. 25, 2019) (airport employees providing passenger assistance and security services were not subject to transportation exemption).

Using California Law to Compel Arbitration of Transportation Worker Disputes

Obviously, there is great risk that arbitration agreements with transportation workers will not be enforced under the FAA. However, is enforcement under California Law possible? While the FAA provides limited shelter, despite the fight over AB 51, is there third way to compel arbitration?

Arbitration agreements may still be an option for contracts with carriers that are not a one-man/one-truck driving operation. During the oral argument, several justices probed whether an owner-operator who did not personally perform services or who operated multiple trucks would be subject to the exemption. The court did not address these issues in its opinion, arguably leaving them open for future litigation. That said, a trucking company may be able to protect itself if it contracts with another company instead of an individual.

Speak To An Experienced Transportation Attorney About Arbitration and Class Action Waivers.

Trucking and Transportation companies need to evaluate their current arbitration agreements to maximize their chance at enforceability. Can arbitration be governed by state law in the event the FAA is determined to be inapplicable; Or are there provisions for arbitration rules outside of Federal and State law? It is important to draft the arbitration provision carefully so that it will satisfy state law requirements.
Trucking companies need to work with lawyers who keep tabs on changing laws and make certain that their arbitration agreements are state of the art.

Furthermore, in light of recent developments, class-action waivers should be separate from arbitration clauses. Finally, the arbitration provision should make it clear that a trucking companies customers and clients are covered under the arbitration agreement.

Drug Testing Clearinghouse and AB5 Update

by gspencermynko

Drug and Alcohol Clearinghouse

What All Trucking Companies Need To Know.

“The Clearinghouse, is a web-based system that will provide FMCSA and employers of commercial motor vehicle (CMV) drivers” the ability to “identify drivers who are prohibited from operating CMVs due to DOT drug and alcohol program violations.” The Clearinghouse also documents that drivers have been green-lighted to again drive a CMV on public roads. “Information maintained in the Clearinghouse will enable employers to identify drivers who commit a drug or alcohol program violation while working for one employer, but fail to subsequently inform another employer. Records of drug and alcohol program violations will remain in the Clearinghouse for five years, or until the driver has completed the return-to-duty process, whichever is later.” See

What Employers Need To Do.

1) Employers will conduct pre-employment inquiries on prospective employees and if drug and alcohol violations are identified, those employees will be prohibited from performing safety-sensitive functions, until successful completion of the return-to-duty (RTD) process. Safety-sensitive functions are defined in
49 CFR § 382.107 as the time from when a driver begins to work or is required to be in readiness to work until the time he/she is relieved from work and all responsibility for performing work. Safety-sensitive functions include the time a driver is driving a CMV on public roads.

2) Employers will query the Clearinghouse annually for each driver they currently employ, and if drug and alcohol violations are identified, those employees will be prohibited from performing safety-sensitive functions until successful completion of the RTD process;

What The State and Federal Govenments Do.

3) State Driver’s License Agencies (SDLAs) will query the Clearinghouse before issuing, renewing, transferring, or upgrading a CLP or CDL;

4) When requested by the National Transportation Safety Board (NTSB) as part of a crash investigation, FMCSA will provide NTSB information contained in the Clearinghouse concerning drivers who are involved in the crash under investigation.

Employers may designate assistants to query, and/or report, within the Clearinghouse. Assistants will receive an invitation from their employer to register for a Clearinghouse account once an account and permissions have been established for them. The Assistants will not be able to register for a Clearinghouse account unless they receive an invitation. Once an assistant receives an invitation, he or she may login to the Clearinghouse using on behalf of their employer.

When and What Must A Trucking Company Report To The Clearinghouse?

An alcohol confirmation test with a concentration of 0.04 or higher

Refusal to test (alcohol) as specified in 49 CFR 40.261

Refusal to test (drug) not requiring a determination by the MRO as specified in 49 CFR 40.191

Actual knowledge, as defined in 49 CFR 382.107, that a driver has used alcohol on duty, used alcohol within four hours of coming on duty, used alcohol prior to postaccident testing, or has used a controlled substance

Negative RTD test results (drug and alcohol testing, as applicable)

Completion of follow-up testing

Employers, including a driver who employs himself or herself, are required to report the following information to the Clearinghouse:

1. Reason for the test;
2. Driver’s name, date of birth, and CDL/CLP number and state of issuance;
3. Employer name, address, and USDOT number;
4. Date of the test;
5. Date of verified result;
6. Test category
7. Date the result was reported; and
8. Test result.

Notably, there are ways and reasons by which a CMV Driver may challenge the information in the Clearinghouse. As a Transportation Lawyer and Certified DOT Medical Examiner, I am in a unique position to comment and advise on the legal AND medical aspects of drug and alcohol testing of CDL Holders.

Recent Developments In The CTA’s Battle Against AB 5

The CTA issued an AB5 “Litigation Update” after the State and Teamsters’ failed to convince Judge Benitez to essentially overturn his injunction on the enforcement of AB5 and dismiss the CTA’s lawsuit.

I will simply quote from the CTA’s news release:

“…[T]he Court denied the Teamsters’ request for a stay of the preliminary injunction, which means the State is still prohibited from enforcing AB 5 as it relates to motor carriers.”

In denying the State’s motion to dismiss the CTA’s lawsuit, “the Court found that [the] CTA has standing and may pursue the FAAAA preemption claim.”

So basically the CTA’s lawsuit based on FAAAA preemption of AB 5 is still very much alive and well.