The National Labor Relations Board issued a final rule addressing the standard for determining joint-employer status under the National Labor Relations Act. The rule reverses a 2020 rule that had set a higher threshold for joint-employer status by requiring that a putative joint employer possess and exercise substantial direct and immediate control over essential terms and conditions of employment. By contrast, the new NLRB rule considers the alleged joint employer’s authority to control essential terms and conditions of employment whether the control is exercised or not and whether the control is direct or indirect.
Under the rule, an entity may be considered a joint employer of a group of employees if each entity has an employment relationship with the employees and share or codetermine one or more of the employees’ essential terms and conditions of employment, including:
In response to one concern raised in the proceeding, NLRB clarified that a contract that simply acknowledges a law or regulation concerning working conditions – such as truck driver hours-of-service limits, for example – would not constitute control.
NLRB rejected requests for specific carveouts that would not trigger joint-employer status, saying the approach in the proposed rule was the prudent one. “Because the language used in contract provisions that ostensibly address the same subject matter may vary widely, we believe that case-by-case adjudication applying the joint-employer standard is a better approach,” the agency said. “To do otherwise might risk problems of both over- and under-inclusion and overlook important context that might be relevant to the Board’s analysis.”
Initially, the joint-employer rule was effective December 26, but the agency subsequently delayed the effective date until February 26 to allow for time to adjudicate legal challenges. For the Federal Register notice, visit https://www.federalregister.gov/d/2023-23573.
FMCSA in late October extended the comment period until November 29 on an advance notice of proposed rulemaking (ANPRM) seeking comment on the need for rulemaking to revise safety fitness determination regulations (SFD) regulations. The agency is also seeking available science or technical information to analyze regulatory alternatives for determining SFDs.
The ANPRM resurrects an effort begun by the Obama administration in 2016 that ultimately was withdrawn by the Trump administration in 2017. The ANPRM addresses the issues surrounding SFDs more broadly than did the 2016 NPRM, posing 12 specific questions – many of which have multiple parts – on which the agency seeks public comment. For the Federal Register notice of the ANPRM, visit https://www.federalregister.gov/d/2023-18494. To view related documents and comments already submitted, visit https://www.regulations.gov/docket/FMCSA-2022-0003.
More than 11 years after directed to do so by Congress, FMCSA in November published a final rule concerning financial responsibility requirements for brokers of property and freight forwarders. The rule is effective January 16, 2024, but the implementation dates for the rule’s provisions are one to two years beyond that date. The rule addresses five areas:
FMCSA is requesting comments by December 15 on an application by Clym Environmental Services LLC for an exemption from the hours-of-service (HOS) regulations to allow its drivers up to 14 hours of drive time within the work shift or, in the alternative, up to 12 hours. Clym indicates that complying with the 11-hour driving time limit places a strain on the company's drivers and its overall operating costs. For the Federal Register notice, visit https://www.federalregister.gov/d/2023-25111.
FMCSA is requesting comments by December 18 on a request from Reiman Corp. for an exemption from certain HOS regulations for drivers transporting latex-embedded cement for use at highway construction sites. The company requests that it be allowed to operate under the same HOS exception provided for “specially trained drivers of commercial motor vehicles that are specially constructed to service oil wells.” For the Federal Register notice, visit https://www.federalregister.gov/d/2023-25304.
FMCSA is requesting comments by December 18 on an application for exemption from Safe Fleet Bus and Rail (Safe Fleet) to allow motor carriers to operate commercial motor vehicles (CMV) equipped with Safe Fleet's “MirrorLESS” camera monitor system (CMS) installed as an alternative to the two rear-vision mirrors required by the Federal Motor Carrier Safety Regulations (FMCSRs). For the Federal Register notice, visit https://www.federalregister.gov/d/2023-25303.
Legislation (H.R. 6359, S. 3273) has been introduced in the House and Senate that would eliminate the longstanding provision that exempts truck drivers from the overtime provision of the Fair Labor Standards Act of 1938. If enacted, the measure would require that truckers receive overtime compensation when they work more than 40 hours a week. The Senate bill’s primary sponsor is Sen. Alex Padilla (D-California), and prominent co-sponsors include Sen. Bernie Sanders (I-Vermont) and Elizabeth Warren (D-Massachusetts). The House bill is sponsored by Rep. Jefferson Van Drew (R-New Jersey) and co-sponsored by Rep. Mark Takano (D-California). For more on the bills, visit https://www.congress.gov/bill/118th-congress/house-bill/6359 and https://www.congress.gov/bill/118th-congress/senate-bill/3273.
The three largest issues facing interstate trucking are identified in the monthly update above. They are (1) The deconstructionist pro-labor agenda of the current administration and Department of Labor; (2) The FMCSA’s recent attempts to reboot SMS methodology and ultimately replace safety fitness determinations that have been in effect for decades; and (3) Evidence of the Agency’s response to addressing supply chain fraud with more accurate and timely data while leaving enforcement to the Office of Inspector General.
While appeals of AB5 are pending and some favorable case law is being made elsewhere, other decisions by certain states and Department of Labor are not helpful. The NLRB decision on joint employer status will affect collective bargaining and imposes a loosely constructed control test which could affect dedicated contract carriage, overly demanding shipper and broker contracts, and further undermine the independent contractor model and return our industry to closed shop requirements where organized labor could demand union participation in return for dock access.
As noted above, repeal of the hours of service exemption from overtime is clearly on the reconstructionist agenda and could have severe adverse consequences, particularly for long haul operations where away from home time could be incorporated into minimum wage calculations.
Vetting carriers and brokers for both safety and fraudulent operations
Both of these two problems relate to a common issue, that is the inability of the Agency to procure sufficient and accurate data to vet and certify that carriers, brokers, and forwarders are properly licensed, authorized, and insured to operate safely and to comply with the Agency’s registration requirements and meet the recordkeeping requirements imposed by federal regulations.
In this regard, the Agency has a serious data problem. Using SMS in the background, it only issues actual safety ratings to less than 4,000 carriers a year although Congress requires actual ratings to be assigned to all carriers. After over 15 years of development the Agency has launched two companion requests for comments – a third level of appeal for DataQs and an Advanced Notice of Proposed Rulemaking which promotes a kinder, gentler form of SMS without addressing its systemic flaws or cost issues.
Our coalition for advocacy filed comments in the DataQ appeal docket at https://www.regulations.gov/comment/FMCSA-2023-0190-0047. Therein, we objected on due process grounds a third level of appeal which was not based upon a decision by a third party neutral and did not allow for issues of fact as well as law to be considered.
Comments to its ANPRM are due on November 29th and we will file comments showing why SMS, based on its past history, should be declared as damaged goods and a “total constructive loss.” If conducted together with a timely desktop audit for safety compliance, we can present a more cost effective procedure which will meet the Agency’s goal of providing a reliable safety fitness standard while addressing the fraud issue.
In this context, the Agency is taking steps to identify identity theft by fraud, the hijacking of carrier data by misuse of PINs, and more appropriate vetting for the 100,000 new applicants per year seeing carrier or broker authority without any vetting of the carrier’s application or other required data.
In the Agency’s multipage discussion on changing its bond replenishment requirements, it shows its concern for data integrity with the following, “FMCSA is dedicated to ensuring the integrity of the trucking sector and refers incidents of criminal conduct to appropriate authorities. Criminal enforcement is handled by the Office of Inspector General and the Department of Justice.”
The OIG enforcement initiative the Agency endorses has congressional support and has been championed by participating stakeholders and other large trade groups. An initial meeting with OIG is scheduled before the end of the month to explore the creation of a task force together with DOJ to prosecute major scamsters to the full extent of the law including RICO.
The Agency apparently appreciates that criminal fraudsters are gaming the system, engaging in identity theft, double brokerage, and bait and switch fraud which is made worse by the creation of new carriers and brokers that submit fraudulent applications, have no principal place of business, and are never vetted by the Agency.
In addition to an application which must be submitted under penalty of perjury, carriers must submit for public use evidence of insurance and a list of resident agents in each state who can be served with legal due process. In this regard, it is highly recommended that registered carriers, brokers, and freight forwarders take steps to ensure that both they and their customers have reliable attorneys acting as their agents.
The FMCSA has been auditing process agent companies over the past year. Process agent companies that are unable to comply will no longer be valid to file or maintain the BOC-3 for motor carriers. As a result, companies with their BOC-3 filed by one of these invalid process agents have been receiving Show Cause Orders from the FMCSA which requires them to retain a new process agent within 30 days or their operating authority will be revoked. Many of the FMCSA's current blanket companies who are still going through the audit process have invalid resident agents listed that have retired or that only have a mail drop and not a person at the address to accept legal process.
It is important that all companies that could receive a Show Cause Order take action now to avoid a possible revocation notice. It is also important to make sure that your current process agent company has valid agents who can accept legal documents on your behalf and that your list of actual agents reflects knowledgeable attorneys in each state which can help you navigate state law issues involving summons, complaints, interpleader actions and contract issues as local counsel if you are taken to court or need to file suit.
Service of Process Agents, Inc. has been recertified to file BOC-3s by the FMCSA and is the only blanket company with transportation attorneys serving as resident agents for each state. Visit us at www.serviceofprocessagents.com for more information and to register.