Workers Compensation Issues on the Rise

TIA has received feedback from multiple Members recently about the State of New York cracking down on workers’ compensation rights for owner-operators, which is part of a larger effort by multiple states to crack down on employee misclassification. Since New York has been the topic of interest for our Members recently and a focal point of the State to crack down on misclassification, this article will focus on that State’s workers classification laws and how they apply to 3PLs.

Specifically, the State of New York requires New York-based employers to provide workers compensation, with the following allowable exceptions:

  • If the business is owned by one individual and there are no employees, leased employees, borrowed employees, part-time employees, unpaid volunteers, or subcontractors.
  • If the business is a partnership or corporation and has no employees (based on the above specifications).
  • If the business is owned by one or two people, and those people own all stock and offices, and there are no additional employees.

Obviously, the above exemptions would include owner-operators based in the State of New York. With this being the case, you would need to look to the Commercial Goods Transportation Industry Fair Play Act which took effect on April 14, 2014. The statute specifically states:

“Under the Fair Play Act, a driver who possesses a state-issued driver’s license, and who transports goods in the state of New York while operating a commercial motor vehicle (as defined by law), is presumed to be the employee of a commercial goods transportation contractor (as defined by law) who compensates the driver.”

This definition places 3PLs and motor carriers who utilize owner-operators between a rock and a hard place in terms of compliance, but there are a few things you can do to protect yourself before action by the State is attempted.

TIA has prepared a guidance document for our Members to utilize and a “Certificate of Election” to have your motor carriers sign. TIA recommends that its members request certificates of workers compensation insurance from every carrier with whom they do business and put those certificates in the carrier’s file. Without a written certificate of exemption, however, these individuals retain the right to claim coverage. In the trucking industry, the result is that many owner-operators may not have workers compensation coverage but will file a claim if they are injured. The state will look to the contracting entity to cover the cost.

TIA’s position in such situations is that brokers are independent contractors who undertake to arrange transportation but do not take responsibility as carriers. Because brokers do not act as carriers, they do not and cannot subcontract their duties to motor carriers. Nevertheless, some states continue to try and argue that motor carriers are subcontractors to brokers. Further, that the brokers are liable for workers’ compensation claims not covered by the motor carrier because the brokers are prime contractors who are, in effect, employing the motor carrier as a subcontractor.

TIA additionally recommends that you all review your written contracts and evaluate actual day-to-day relationships with owner-operators for compliance with the applicable State laws. We highly recommend being proactive with this process, because after a claim has been filed in a State, the situation gets more complicated.

If you have any questions, please contact TIA Advocacy ([email protected]).

Down the Road, the 117th Congress and Transportation

Scott Marks | Government Affairs Manager | TIA

The 2nd session of the 116th Congress has been a whirlwind, packed with a marathon markup of a $2 trillion infrastructure package, COVID-19 response packages, and a lot of pettifogging by both sides of the aisle. Coming up in a couple of weeks will be Infrastructure Week. This is a dedicated week focused on the shared transportation priorities between the Executive and Legislative Branches of the Federal Government to fix America’s crumbling roads, bridges, and other infrastructure needs.

This Infrastructure Week feels a lot like the past ones as once again, the United States Congress has yet to send to the President’s desk a new sweeping, comprehensive surface transportation reauthorization. Instead, it will most likely pass a continuing resolution which means carrying over the spending levels from the previous authorizing legislation. Our United States freight system is about four million miles of highways and roads; 140,000 miles of rail lines; 25,000 miles of inland and coastal waterways; 2.8 million miles of pipelines; and more than 5,000 public airports. We must pass into law a piece of legislation that is just as powerful as the system it looks to overhaul.

Next Congress needs to feel the urgency to pass a sweeping, up-to-date, surface transportation bill that takes into consideration all aspects of the supply chain, shippers, brokers, and carriers. The bill needs to be expansive, while at the same time, empowering states to fix their non-federal highways. Studies are conclusive and substantive on the issue of dollars lost because of the crumbling infrastructure, and as the Department of Transportation’s newly released National Freight Strategic Plan states, the issue will continue to worsen: 

“Freight shipments are expected to increase by 22.4 percent over the next 20 years. Investments in infrastructure capacity and operational improvements will be required to meet rising demand for freight. Yet, freight system performance can be hindered by regulatory, financial, and institutional barriers that raise the economic costs of freight movements.”

Our message to Congress: you must empower states with grants, fund federal programs to expedite construction while at the same, making regulatory changes, we know that pumping money into a problem does fix the underlying issue. Lay out a roadmap for brokers and 3PL’s to certify what a safe carrier is (this is especially crucial as trucks move 72% of Americas Freight), throw out the current audit safety rating system, overall the process to include data from states (that is fair to motor carriers and determines fault for crashes), and continue to allow the transportation industry to be fair, open and competitive without bogging it down with burdensome transparency regulations.

There is a lot to be done for the rest of the Congress and in the 117th Congress, TIA Government Affairs looks forward to working closely with our members, Members of Congress and their staff, the Department of Transportation, and other key players in the Executive Branch and private sector key stakeholders.

If you have any questions, concerns, or want to learn more about TIA’s Advocacy efforts, please contact TIA Government Affairs at [email protected].

DOL Notice Of Increase Minimum Wage For Those Individuals Involved In Contracts With The Government

Scott Marks | Government Affairs Manager | TIA

February 12, 2014: President Barack Obama signs and issues Executive Order 13658. This order raises the wages of those individuals who are used to facilitate contracts with Government entities. This minimum wage was to be $10.10 at the time of the Executive order.

On September 19, 2019, the Department of Labor published an additional Notice in the Federal Register to announce that, the notice stated beginning January 1, 2020, the Executive Order 13658 minimum wage rate is increased to $10.80 per hour (84 FR 49345). This Executive Order minimum wage rate generally must be paid to workers performing work on or in connection with covered contracts.

In order to stay competitive, keeping up with inflation and deter constant turnover among employees, moving forward on, Jan 1, 2021 “workers performing work on or in connection with federal contracts covered by the aforementioned Executive Order 13658, Establishing a Minimum Wage for Contractors (the Executive Order or the Order), beginning January 1, 2021. Beginning on that date, the Executive Order minimum wage rate that generally must be paid to workers performing work on or in connection with covered contracts will increase to $10.95 per hour.”

For the TIA Members who handle government freight, if they have sales associates that they use to enter contracts with the Government, they would have to pay them the updated rate of $10.95. Please find the Department of Labor (DOL) poster that outlines the new regulations here or view the newly released rule here.

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