Independent Contractor Rule Changes Facing Delays–John Stefani Weighs In

The regulatory freeze that occurred in late January following the inauguration of President Biden has subsequently delayed the actions intended by the U.S. Department of Labor to modify the interpretation of an independent contractor working for a carrier.

This is a typical occurrence with the entrance of a new president as regulatory landscapes will undergo large changes every time a new administration takes office.

“When there is a change in administrations, it is standard to have a regulatory freeze so new agency staff have some time to review the issues at hand, and the review can delay or pause the regulatory process,” said American Trucking Associations vice president of safety policy, Daniel Horvath.

In February, the Department of Labor announced a two-month delay on the final rule that would revise its interpretation of an independent contractor’s status in regards to the Fair Labor Standards Act. The rule was initially planned to go into effect on March 9th, and the DOL said its purpose would be to “promote certainty for stakeholders, reduce litigation, and encourage innovation in the economy.”

For now, the DOL said it would be delaying the effective date for this revision until May 7th and accepted further public comment regarding this change through the month of February. It had also announced that it would be withdrawing its previous opinion letter stating that motor carriers could offer safety equipment and training to their independent contractors without causing any conflict in relation to their statuses and independent contractors.

The letter was retracted because it had been “based on a rule that had not gone into effect” and was “issued prematurely,” according to the Department of Labor’s Wage and Hour Division. If that rule does end up going through as originally intended, it would give a new federal standard to motor carriers, allowing them to decide whether a trucker is an independent contractor or an employee–which the DOL said would likely be more beneficial than California Assembly Bill 5 law’s ABC test that is currently used to make this determination.

As of right now, it is difficult to know whether or not the modification will continue on as planned, undergo further changes, or be dismissed altogether under the new administration, according to deputy general counsel for American Trucking Associations, Richard Pianka.

“I think there’s an expectation that the independent contractor rule will go away, one way or the other,” he said. “We certainly know there are a number of groups that were not happy about the [independent contractor] rule who are likely to be influential and will be urging this administration to undo it.”

Executive vice president of advocacy for ATA,  Bill Sullivan, noted that ATA strongly supports this becoming a final rule. “This rule would provide a welcome step in the right direction, providing fleets and independent contractors with needed clarity,” he said.

Additionally, most public comments collected in regards to the rule changes were in favor of the new modifications, expressing their belief that it would boost work arrangement flexibility, clarity for workers, and business benefits.

However, some groups that have been looking critically into the consequences of allowing drivers to maintain their independent contractor statuses have concerns regarding the responsibilities and pressures that would fall onto the shoulders of these drivers as opposed to the companies for which they would be driving for–especially when the companies are typically the party with the resources to pay for damages and insurance costs in the event of an accident.

“If this rule goes into effect–shifting the legal burden from the large company to the independent driver–it’s all the more reason we need to see an increase in minimum insurance requirements,” said Levinson and Stefani’s John Stefani. “When something goes wrong and people are injured–or worse–the responsible party should have the means to compensate the victims.”

Additionally, when truckers are working as independent contractors, they may often feel the expectation to transport shipments as fast as they can, meaning that a driver may overlook his or her own health and safety to get the job done.

“The concept of an independent contractor–driver–is a bit trickier in the trucking industry because the reality is that these large companies are exerting a lot of pressure on the drivers to get the loads transported as quickly as possible,” Stefani explained. “And, as we’ve seen in many of our truck crash cases, those drivers react to that pressure by cutting corners, oftentimes staying on the road while fatigued or despite hazardous weather conditions.”