FMCSA has extended its emergency declaration regarding COVID-19 through May 31. For the latest version and other guidance related to COVID-19 is available at www.fmcsa.dot.gov/COVID-19.
As expected, the U.S. Department of Labor’s Wage and Hour Division (WHD) has delayed until May 7 the effective date on a Trump administration final rule regarding independent contractor status under the Fair Labor Standards Act (FSLA) while Biden administration officials review the rule for issues of law, policy, and facts. The rule, which had been set to take effect March 8, is virtually certain to be either scrapped or fundamentally revamped. (For details on the final rule, see Regulatory Update, January 2021.)
In keeping with a regulatory freeze and review ordered on January 20, WHD on February 5 proposed to delay the rule until May 7 pending review and invited comments on that question. WHD received 1,512 comments in response with numerous comments on both sides of the issue, along with comments making procedural objections to the short time frame to comment or to the lead time for delaying the effective date of a final rule. For the Federal Register notice delaying the effective date, visit https://www.federalregister.gov/d/2021-04608. For the regulation and comments on the proposed delay of the effective date, visit https://beta.regulations.gov/docket/WHD-2020-0007.
WHD has withdrawn a July 2019 opinion letter (FSLA2019-10) declaring that a truck driver did not have to be compensated for time spent in a truck’s sleeper berth provided that the driver had been relieved of all duties and permitted to sleep without interruption from the employer. WHD also withdrawn a May 2019 opinion letter (FSLA2019-6) addressing whether a service provider for a “virtual marketplace company” is an employee of the company under FSLA or an independent contractor.
In a February 19 notice on the agency’s website, WHD said that opinion letter FSLA2019-10 “was inconsistent with longstanding WHD interpretations regarding the compensability of time spent in a truck's sleeper berth.” WHD said that “several courts have declined to follow the opinion letter, determining, among other things, that it is inconsistent with the Department's regulations; unpersuasive; and not entitled to deference, in part because the letter did not adequately explain WHD's change in position.” The agency said those courts have instead continued to follow the department's longstanding prior position. To the extent that FLSA2019-10 withdrew prior opinion letters on the issue, those letters are reinstated, WHD said.
WHD said in a separate February 19 notice that FSLA2019-6 addresses the same issue under consideration in the final Trump administration rule concerning independent contractor status. Given that the Biden administration has delayed the effective date of that rule while it considers further comments, the opinion letter is withdrawn, WHD said.
The withdrawal of FSLA2019-6 follows a January 26 withdrawal of an opinion letter (FSLA2021-9) related to independent contractor status that was specific to trucking. FSLA2021-9, which WHD had issued on the final full day of the Trump administration, had concluded that a motor carrier’s requirement that tractor-trailer drivers abide by safety-related mandates does not constitute control for the purposes of determining independent contractor status. As it did with FSLA2019-6, WHD a week later ruled that FSLA2021-9 was premature because the final rule on independent contractor status had not taken effect.
For WHD opinion letters and notices on those that are withdrawn, visit https://www.dol.gov/agencies/whd/opinion-letters/search?FLSA.
The White House in February announced several changes in the Paycheck Protection Program (PPP) to improve access to the recently reauthorized program by very small businesses. The steps included designating February 24 through 5 p.m. Eastern on March 9 as a period during which only sole proprietors and businesses with fewer than 20 employees could apply for PPP loans. This exclusive period is intended to ensure that very small businesses have ample time to apply for and receive support before PPP expires on March 31.
SBA also is allowing sole proprietors, independent contractors, and self-employed individuals to receive more financial support by revising the PPP’s funding formula for these categories of applicants. SBA also loosened some prior restrictions to allow access to PPP loans by small business owners who (1) have non-fraud felony convictions; (2) have struggled to make student loan payments; and (3) are not citizens but are lawful U.S. residents.
For more information, visit https://www.sba.gov/funding-programs/loans/coronavirus-relief-options/paycheck-protection-program.
FMCSA postpones effective date on rule changing rulemaking procedures that was slated to take effect March 1. The effective date is now March 21, allowing time for the Biden administration to review the rule and consider any questions of fact, law, or policy that it might raise. For the Federal Register notice delaying the effective date, visit https://www.federalregister.gov/d/2021-04110. For the Federal Register notice on the rule itself https://www.federalregister.gov/d/2020-27854.
FMCSA has granted an exemption to Wilson Logistics to allow drivers who have hold a commercial learner’s permit (CLP) and who have passed the commercial driver’s license (CDL) skills test but who have yet to receive the CDL document to drive even if the accompanying CDL holder is not seated in the passenger seat. FMCSA has previously granted similar exemptions to C.R. England and New Prime, Inc. For the Federal Register notice, visit https://www.federalregister.gov/d/2021-03685.
Rep. Bobby Scott (D-Virginia) and 195 original co-sponsors on February 4 introduced comprehensive pro-labor legislation (H.R. 842) that includes language mandating a federal ABC test for worker classification similar to that in California’s AB 5. The legislation – called the Protecting the Right to Organize Act, or PRO Act – passed the House in the 116th Congress but was never considered by the Republican-controlled Senate.
Section 101(b) of the PRO Act includes a definition of an employee stating that an individual performing any service shall be considered an employee and not an independent contractor unless:
A. the individual is free from control and direction in connection with the performance of the service, both under the contract for the performance of service and in fact;
B. the service is performed outside the usual course of the business of the employer; and
C. the individual is customarily engaged in an independently established trade, occupation, profession, or business of the same nature as that involved in the service performed.”
In addition to imposing a federal ABC test, the PRO Act would explicitly declare misclassification of workers a violation of the National Labor Relations Act (NLRA). As such, the legislation would overturn the National Labor Relations Board’s August 29, 2019 decision in Velox Express, which held that misclassification is not a violation of the NLRA.
The PRO Act also would establish a host of other pro-labor measures, including prohibiting employers from permanently replacing striking workers, prohibiting offensive lockouts, removing limitations on secondary picketing and strikes, and barring employers from holding mandatory meetings to persuade employees not to unionize.
Since introduction of H.R. 842, another 16 Democrats have co-sponsored the bill. Meanwhile, Sen. Patty Murray (D-Washington), the lead sponsor of the Senate version of the PRO Act in the last Congress, also announced plans on February 4 to reintroduce the bill, but the legislation apparently has not been formally introduced yet. For more on the House bill, visit https://www.congress.gov/bill/117th-congress/house-bill/842.
Legislation (H.R. 1341, S. 469) aimed at increasing participation of women in various aspects of the trucking industry was introduced in both the House and Senate in February. Rep. Mike Gallagher (R-Wisconsin) and Sen. Jerry Moran (R-Kansas), lead sponsors of the legislation, had introduced the bills in the 116th Congress, but they did not advance.
The bills would require FMCSA to establish and facilitate an advisory board to promote organizations and programs that provide education, training, mentorship, or outreach to women in the trucking industry and that recruit women into the trucking industry. The board would report to FMCSA within 18 months of the legislation’s enactment, and FMCSA would report to Congress outlining actions taken to adopt the strategies recommended by the board or explaining the reasons the agency did not adopt the strategies. For more information on the bills, visit https://www.congress.gov/bill/117th-congress/house-bill/1341 and https://www.congress.gov/bill/117th-congress/senate-bill/469.
Rep. W. Gregory Steube (R-Florida) introduced legislation (H.R. 358) that would require the Federal Motor Carrier Safety Administration (FMCSA) to exempt from certain provisions of the hours-of-service (HOS) rules drivers and carriers “transporting any agricultural, horticultural, or floricultural commodity.” The bill further defines the category as including “both fresh and processed products, as well as sod and other agricultural products sensitive to temperature and climate and at the risk of perishing in transit.”
Under the bill, in those situations (1) loading and unloading of commercial motor vehicles would be excluded from on-duty time requirements; (2) the 30-minute rest break would not be mandatory; and (3) carriers and drivers would not be limited by the maximum on-duty time if they are within 150 miles of their scheduled delivery point. For more information on the bill, visit https://www.congress.gov/bill/117th-congress/house-bill/358.
FMCSA’s proposed rule to adopt an alternative vision standard for physical qualification to replace the current vision exemption remains open for comment until March 15. Although the rule was proposed late in the Trump administration, FMCSA has yet to take any action halting or delaying the comment date. The Federal Register notice is available at https://www.federalregister.gov/d/2020-28848.
This month’s Regulatory and Legislative Update confirms earlier predictions that the owner operator/independent contractor model is in the crosshairs of proposed future administrative and congressional action. As predicted, the favorable “Economic Realities Test” of the former Department of Labor was stayed by the new Administration. Also as noted above, the new DOL is already issuing new opinions and taking actions which could adversely affect established practices. Finally, the prolific use of Executive Orders by the new Administration has been noted in both the New York Times and the Wall Street Journal, as has evidence of the new Administration’s support for increased unionization.
On the legislative side, the PRO Act sets up an across-industry employee classification test similar to California’s AB-5 which the owner operator/ independent contractor model as presently applied could not meet. Missing from the debate at both the legislative and DOL levels is the uniqueness and importance of the owner operator model to the trucking industry and to the blue-collar small businessmen for whom independent contractor status under the truth-in-leasing regulations is an opportunity and a choice.
Clearly, the independent contractor treatment of small businesspersons that lease equipment with drivers to carriers under the Federal Leasing Regulations (49 C.F.R. 376) has been an established rule of commerce for decades. This model is the backbone of the long-haul truckload segment, intermodal drayage and other trucking niches.
Yet the case is left to be made that the owner operator model is a unique and an important exception to any new or different rule of general application in determining independent contractor status. The model is based upon past precedent and grounded in Federal Regulations which provide opportunities and choices to blue collar entrepreneurs while ensuring protections against abuses offered through the truth-in-leasing regulations and Federal self-help statutes.
On February 24, 10 trade associations filed comments with the new Department of Labor to make the case for special treatment and a carve-out for the owner operator model consistent with past precedent. See https://www.regulations.gov/comment/WHD-2020-0007-3105. Readers of this monthly update are urged to read these comments and participate in efforts to save this important model.