CCJ Daily Dispatch, Sept. 29: Labor Department looks to officially define ‘independent contractor’

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Updated Sep 30, 2020

Trucking news and briefs for Tuesday, Sept. 29, 2020:

Labor Dept. aims to clarify federal ‘independent contractor’ definition
The Department of Labor’s Wage and Hour Division is proposing to better define independent contractor in the context of the Fair Labor Standards Act. That law has long governed employer wage and hour rules, such as minimum wage and overtime, and has defined employer/employee relationships for the purposes of applying those rules.

A new notice of proposed rulemaking would add a part to Title 29 of the Code of Federal Regulations. It would adopt interpretations to which courts and the DOL have long adhered when it comes to determining independent contractor status. It also would sharpen a multifactor economic-realities test into “five distinct factors,” and would shift greater weight in the determination to “actual practices” in independent contractor agreements as opposed to “what may be contractually or theoretically possible”.

For the purposes of litigating issues under the FLSA, there’s never been a clear definition of independent contractor, DOL said in its notice. That’s left it up to DOL and the courts in wage and hour-related cases to interpret the degrees to which any employer “suffers or permits” work by an employee/contractor.

DOL and federal courts have long analyzed the employer/employee relationship by looking to the degree of the worker’s “economic dependence” on the employer. The current multifactor test is designed to get to the root of whether a worker is “an independent contractor under the FLSA.” Yet DOL has concluded “the test’s underpinning and the process for its application lack focus and have not always been sufficiently explained by courts” or the DOL itself. That’s resulted in uncertainty for employers, employees and independent contractors.

The NPRM proposes a variation on the current approach. The proposal is aimed at decreasing litigation and encouraging innovation among employers, employees and contractors. The five economic-reality factors it envisions, consolidating some of the current ones and changing the weight of others, are:

  1. Nature and degree of the worker’s control over the work. Substantial control weighs toward independent contractors, with less control pointing in the opposite direction.
  2. Opportunity for profit or loss. Does the employee/contractor have “an opportunity to earn profits or incur losses” in his operation? Both being present weighs toward independent contractor. The NPRM would include in this factor aspects of the worker’s investment in the work, such as in the purchase of equipment.
  3. Skill required.  This would be in place of the “skill and initiative” analysis used in some circuits, DOL said, which it believes “creates unnecessary and confusing overlaps with the control and opportunity for profit or loss factors.” More skill required, generally, leans toward an independent contractor.
  4. Permanence of the working relationship. Stronger/longer ties are evident of a more employee-like relationship. This factor does not require analysis of the exclusivity of the relationship, which is covered in Factor 1 on control.
  5. Integrated unit. This seeks to require analysis of the extent to which a worker is integrated directly into the business of the employer. This is to be distinguished from how some courts have interpreted the “integral part” factor, DOL said, mistakenly interpreting it as simply how “important” a worker is to the business.

The proposal would place the greatest emphasis on factors 1 and 2, with the other factors carrying less weight. “As a result of their greater weight, if both core factors point towards the same classification, their combined weight is substantially likely to outweigh the combined weight of other factors that may point towards the opposite classification,” DOL said.

The comment period on the proposal is open through Oct. 26 via the Federal Register‘s comment portal, where you can also read the proposal in full, at this link.

Forward Air now offering LTL services in Missouri, Virginia
Forward Air Corporation (No. 33 on the CCJ Top 250) announced Monday it is now offering less-than-truckload service in Columbia, Missouri, and Roanoke, Virginia.

Forward LTL will initially operate from the company’s existing Final Mile facilities in Columbia and Roanoke and will evaluate the future need for separate locations based on growth. The expansion is part of Forward’s effort to grow and evolve its LTL network to broader market coverage, beyond its airport-to-airport footprint.

“By leveraging our existing Final Mile network, we are able to expand our LTL footprint at a greatly reduced investment,” said Tom Schmitt, chairman, president and CEO. “This type of organic growth allows Forward to bring expedited LTL into markets outside of our traditional coverage model – and we are excited to bring our world class expedited LTL offering to Columbia and Roanoke.”

Small number of Volvos recalled for potential axle issue
Volvo Trucks is recalling a small number of model year 2021 VNL, VHD and VNR models for a potential axle issue, according to National Highway Traffic Safety Administration documents.

The recall affects approximately 12 trucks manufactured between March 27 and July 13 this year, Volvo says. In the affected trucks, the kingpin nut may not have been installed or properly tightened during axle assembly.

Volvo will notify owners, and dealers will inspect the vehicle to make sure that the king pin nut is installed and that it properly tightened. Owners may contact Volvo Trucks customer service at 1-800-458-1522 with recall number RVXX 2003. NHTSA’s recall number is 20V-535.