OOIDA: Worker classification rule should be tweaked, not rescinded

While admitting that the rule could use some improvements, the Owner-Operator Independent Drivers Association opposes the Department of Labor’s plan to withdraw the previous administration’s worker classification final rule.

In March, the DOL announced its plans to rescind the previous administration’s “Independent Contractor Status Under the Fair Labor Standards Act” rule, which had originally been set to take effect on March 8. The worker classification rule attempted to tackle worker classification by proposing an “economic reality” test to determine whether a worker is an employee or an independent contractor under the Fair Labor Standards Act.

The “economic reality” test proposal was elevated to a final rule on Jan. 7, which was just shy of two weeks before President Joe Biden took office. The new administration first delayed the final rule until May and then announced plans to withdraw it. The public was given 30 days to comment on the proposal to withdraw the rule.

OOIDA submitted its comments on Monday, April 12.

“We believe that classification issues in the trucking industry are best addressed through adjustments to the existing system,” OOIDA wrote in comments signed by President Todd Spencer. “We therefore urge the department to address issues contained in the existing final rule, but we oppose its full withdrawal.”

The Association said the new rule would provide some level of certainty within the trucking industry. Worker classification has been a hot topic in recent years with much of the controversy surrounding California’s adoption of the restrictive ABC Test.

“We support the final rule’s clarification that no single factor should be dispositive when determining a worker’s classification status,” OOIDA wrote. “Working arrangements in the trucking industry are extremely diverse, and having any single disqualifying factor or criteria would likely upend the owner-operator model. At the same time, we support the final rule’s decision to afford the ‘control’ and ‘opportunity for profit or loss’ factors greater weight in a classification determination.”

Incorrect example

One tweak to the final rule that OOIDA suggests is removing an inaccurate example. In the final rule, the Labor Department referenced a motor carrier that required an owner-operator to use speed-limiting devices and clarified that these requirements would not constitute control for the purposes of classification. The Labor Department’s rationale was that speed limiters were a part of safety regulations, so requiring drivers to use them wouldn’t be considered control.

“The department has erred significantly in adding this example,” OOIDA wrote. “Speed limiters have the potential to jeopardize road safety, and they in no way comply with any specific legal mandate. Furthermore, speed limiters directly take control of a truck out of a driver’s hands and a have a direct negative impact on an owner-operator’s productivity and ability to make business decisions since they can prevent truckers from operating at established speed limits.”

But OOIDA would rather see improvements to the rule made rather than it being rescinded. The Association also recognizes that worker classification rules can be a difficult needle to thread.

Specifically, OOIDA said the Labor Department’s misclassification concerns should be focused on lease-purchase or lease-to-own agreements.

“These are schemes where motor carriers lease a truck to a driver with the promise of fair compensation, future ownership of the truck and independence from traditional employer-employee requirements,” OOIDA wrote.

“Lease-purchase schemes can only be described as indentured servitude. Drivers are paid pennies on the dollar, will likely never own the truck, and have zero independence.”

OOIDA said the Labor Department should address these kind of worker classification issues rather than try to use “overly broad” approaches, such as the ABC Test. LL