The Changing Rules for Independent Truckers: An Industry on Edge

The Changing Rules for Independent Truckers: An Industry on Edge

New Department of Labor rules on the classification of independent contractors are causing anxiety in the trucking industry.

The classification of independent truckers has always been a complex issue, but recent rule changes by the Department of Labor (DOL) have added an extra layer of uncertainty. Under the Trump administration, the emphasis was on two core factors: the nature and degree of control over the work, and the work’s opportunity for profit or risk of loss. However, the Biden administration has reverted to a “totality of the circumstance” analysis, considering six economic factors when determining independent contractor (IC) versus employee classification. This change has sparked concern and debate within the industry, with some fearing the potential consequences for owner-operator truck drivers and fleets that rely on them.

The Impact on Entrepreneurship

The subjectivity of the new rules has raised concerns about stifling entrepreneurship among independent contractors (ICs). Duane Williams, President of the Montana Trucking Association, argues that the rules have unintended consequences, such as compromising safety. He believes that the lack of clarity in the new rules could discourage ICs from starting their own businesses, limiting opportunities for growth and innovation in the industry.

The Value of Independent Operator Experience

For Jim Burg, owner of James Burg Trucking Company, being an independent operator was instrumental in building his business. Starting as an IC with one truck, Burg gained valuable experience and knowledge of the industry before establishing his own company. He views being an owner-operator as a stepping stone for others who aspire to start their own trucking businesses. Burg worries that the new rules’ lack of clarity could lead to litigation and hinder the progression of ICs in the industry.

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Chilling Effect on Hiring Independent Contractors

The pending rule change has already had a chilling effect on the ability of companies like James Burg Trucking Company to bring on new ICs. The vague guidelines and potential for litigation have made business owners hesitant to proceed. The uncertainty surrounding the new rules has caused companies to delay making any changes until they have a clearer understanding of how the rules will be interpreted and enforced. This hesitation could have implications for the workforce, as a chilling effect on the IC market would limit opportunities for independent drivers.

Varying Impact Across the Industry

Not all motor carriers are equally impacted by the changing rules. Some companies, like Smith Transfer, do not have any ICs in their driver corps, so the rule changes have no direct impact on them. In other regions, such as Hawaii, the unique trucking culture and lack of a true over-the-road component mean that the use of independent contractors is not a significant issue. Similarly, in Utah, the independent contractor model is not widely utilized, so the rule changes have not been a major topic of discussion.

Concerns in Alaska

In Alaska, several large trucking companies rely on independent contractors. Josh Norum, President of Sourdough Express, a freight and moving company, uses about 30 drivers on a contract basis. He highlights the vagueness and subjectivity of the six-point test used to determine independent contractor status. Norum is particularly concerned about the interpretation of where the drivers’ revenue comes from and the potential for litigation. He believes that the new rules impact about five trucking companies in Alaska.

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Conclusion:

The changing rules for independent truckers have created a sense of unease within the industry. While some argue that the new emphasis on economic factors provides a more comprehensive analysis, others worry about the lack of clarity and the potential for litigation. The impact of these rule changes varies across different regions and companies within the industry. As the new rules come into effect, it remains to be seen how they will be interpreted and enforced, and what implications they will have for the future of independent truckers.