AB5: Pending Compliance for Uber and Lyft could impact operations in the State

On Monday, August 10th, a Superior Court Judge in California ruled that drivers of Uber and Lyft must be classified as employees, essentially giving the companies ten days to make the necessary changes and abide with AB5. This was obviously a key blow to the company’s efforts to push back on the notorious AB5 Bill that become state law, a little over seven months ago, that attacks the independent contractor model. The companies have been arguing that they are technology companies rather than transportation companies and because of that, their drivers are not core to their platforms. The battle is far from over and will ultimately head to lengthy appeals process.

Because of the Superior Court Judge’s decision, Uber and Lyft have threatened to shut down their operations in the state of California completely. The main concern from the companies is the cost of doing business with their drivers and the impact to their business model that allows them to offer quick low-cost rides by maximizing the number of drivers on their platforms.

There was an unscientific survey done a few months ago that citied that 70% of the 734 respondents identifying themselves as drivers said they did not want to be classified as employees and enjoy the work of the “gig” business and working on their hours.

In the upcoming election in November there is a ballot measure Proposition 22 that will let the California people decide (at least for now) on the applicability of AB5 and if companies like Uber and Lyft should be required to classify their employees as employees rather than independent contractors. This could be a potential bailout for Uber and Lyft or another nail in their coffin, at least in California.

TIA Government Affairs will continue to monitor the AB5 issue and potential implications to our members who utilize independent sales agents in the state of California.

If you have any questions, please contact TIA Advocacy (advocacy@tianet.org).

A Time of Crisis: PPP Loans

Scott Marks | TIA Government Affairs Manager

 

The Paycheck Protection Program (PPP) has become the center of the U.S. business world in the past month, thrust into the limelight by the CARES Act – the sweeping bi-partisan, Phase III legislation used to jump-start the economy following a record-breaking slump as a result of the novel coronavirus (COVID-19) outbreak.

Contrary to popular belief here in Washington D.C., most individuals do not like interacting with the Federal government. This sentiment quickly changed from not liking to interact to needing to interact. The country finds itself waging a war against COVID-19 on two fronts – the health of the people and the health of the economy, each of which requires different strategies and approaches required to heal and rejuvenate.

The current tool of choice for legislators in D.C. is the PPP, a forgivable loan program available to small businesses with fewer than 500 employees It stipulates the loan will be forgiven if 75% of the amount is used to keep employees on the payroll. The PPP is a big deal for companies and an absolute lifeline to owners reeling from this economic disaster. Many companies have had to furlough and layoff dozens – if not hundreds – of individuals who they count as not only employees but often a second family.

The PPP funding has been deleted and will remain so until Congress takes action to replenish the funds. The Senate passed a relief package that provides an additional $310 billion for the PPP loans on April 21, and the House is expected the pass this package on April 23, thus sending the package to the President’s desk for an expected signature.

TIA represents third-party logistics companies that in most cases do not own assets or vehicles, nor do they touch freight as it moves across the globe. They do, however, facilitate the global movement of freight. Our 1,800 member companies use extensive technological and knowledge-based assets to successfully move freight from Company A (a manufacturer,) using Company B (a trucker, airfreight, train, or ocean liner) to Company B (a storefront who needs freight from Company A). TIA’s member companies do this effectively, efficiently, and ethically.

As one can imagine, most of our members were hit hard by the slump and slowdown in freight which needs moving across the country, that being said some of our members thrived and rose to the occasion especially in the arena of “essential services,” a phrase which can mean something different in all 50 states and federally. Third-party logistic companies who were tasked with moving medical supplies, grocery store food, and government equipment might have a boost in numbers and activity. Contrary to essential needs, our members who run the logistics for non-essential manufacturers (such as furniture or any number of leisure items) are being decimated right now. These members are seeking assistance from the Small Business Administration (SBA), the government agency implementing the PPP.

Our members had a mixed experience when applying for the PPP, whose rollout has been deemed as flawed from the start. It should be noted, however, that this was a monumental undertaking for the federal government – taking $350 billion in funds authorized when President Trump signed the legislation March 27, to starting to move money into business accounts of companies in all 50 states and territories some 170 hours later. Once again, a monstrous undertaking for an organization that in FY2019 handled just over $20 billion in the same types of loans.

I applaud the effort behind the CARES Act, spearheaded by leadership in both chambers of Congress. This legislation was a great bipartisan response by Congress, answering the call to action. TIA Members all over the country thank them for their proportioned response in a time of crisis.

The next phase in the process of economic recovery was the implementation of the CARES Act, led by the executive branch headed by President Trump (but more narrowly by Secretary of the Treasury Steven Mnuchin and even more narrowly by SBA administrator Jovita Carranza). The feedback received from members regarding their experience working with banks and the PPP applications came in swiftly.

One of our members was unable to apply until April 10th due to his status as a 1099 contract worker and not an employee of a company. This member vented about how frustrated he was with the process, the formula for him is not sustainable as the amount is cripplingly low. He is from a rural part of Texas and struggled to get a bank to hear him out and accept and application, he was given misinformation from one of three banks (all which he had previous accounts with). Thankfully, TIA’s Government Affairs team was able to connect him with his member of Congress, whose constituent services team provided much-needed assistance.

Another member stated to me that she is stuck in limbo: the application has been approved at the bank level, but the fund has run out of money, and she’s now stuck between the application phase and the funding phase of the process. A third member noted, “This has been the most confusing process to get documentation to the correct lender” and “very disappointing.” One stated, “once everything was in place it went rather smoothly.”

Where We Stand Now: Republicans offered last week to quickly fund PPP alone and keep discussions moving on hospital and localities, but this was repeatedly blocked by Senate Democrats who insisted money for those hospitals and localities be included. At the time of this writing, the Senate has passed legislation which provides the PPP with an additional $310 billion in funding ($60 billion of which goes directly to rural and small lenders, $ 60 billion in Economic Injury Disaster Loans (EIDL) grants and loans, $75 billion for hospitals, and $25 billion for COVID-19 testing. I do believe the PPP will be funded this week, as the political pressure is mounting since the funds were fully depleted in less than two weeks.

As the process moves forward, the challenges of passing additional legislation increases. You will likely see an effort to fund every major industry, another personal check to taxpayers, multiple rounds of PPP funding, and more.

The United States and the entire global economy are reeling from this disaster. Jobless claims are up and mental health is down, but we all must do what we can to get through this. For our members, that task is simple in definition but complicated in action: we must keep freight moving – 24 hours a day, 7 days a week for the next couple months to stock shelves, support our medical community and get equipment to the most needed groups as quickly as possible.

TIA Daily COVID-19 Update – March 20th (Afternoon Edition)

We understand that Pennsylvania has re-opened the turnpike rest areas. This is American business leading the way through this crisis!

As reported earlier today, the U.S. Department of Homeland Security (DHS) defined 3PLs as an essential business service.

U.S. Customs stated on a call yesterday that all U.S. ports of entry, including the northern and southern borders, are open for cargo and running on pre-crisis hours. U.S. Customs and Border Protection is trying to limit border crossings for non-essential reasons, but Customs told their officers to be liberal in their interpretation. Customs gave the example of Canadians with U.S. mailboxes should be able to enter the U.S. to get their mail.

In order to keep the 3PL industry considered essential as tighter restrictions are promulgated out. We have begun a grassroots campaign for Members of TIA to write their Members of Congress about the importance of the 3PL industry during this tumultuous time. Take action now!

The Metals Service Center Institute is urging other National Association of Manufacturing members to contact the White House and Congress to be deemed essential businesses. As many of these companies are your customers, you may want to support their effort. Here is a copy of their letter.

On Tuesday, Treasury Secretary Mnuchin announced that the IRS and the Treasury would defer federal income tax payments up to $1 million for individuals and other unincorporated entities and up to $10 million for corporations from April 15 until July 15. Treasury is urging states to follow their lead. While the time for payments has been extended by 90-days, tax returns must be timely filed by midnight on April 15.

Not all the news during the COVID-19 crisis is bad. We heard from Kristy Knichel, President & CEO of Knichel Logistics, that since they’ve gone fully remote, the company is now providing employees with a $20/day stipend to buy their coffee or lunch from local small businesses.

Bob Biesterfeld, President & CEO of C. H. Robinson, reported that in addition to gifts they made to Give2Asia during the initial outbreak in Wuhan Province, they are contributing $250,000 to support those impacted by COVID-19.

Specifically, C.H. Robinson has donated to St. Christopher’s Truckers Relief Fund to provide financial assistance to truck drivers during these increased times of need; the World Food Programme, Feeding America, and Second Harvest Heartland to support hunger relief efforts; and they are supporting local non-profits.

TIA encourages all members to share with us the ways you and your business are positively impacting local communities as America’s Entrepreneurs lead us out of this crisis. Please send your stories, testimonials, or efforts to communications@tianet.org, and we’ll be sure to share them!

Here’s Benny Goodman’s Let’s Dance to Start Our First Official Weekend of Social Distancing.

TIA Issues Update on “Essential” & “Life-Sustaining” Business Designations in Response to COVID-19

TIA has been working tirelessly over the last few days to review, analyze and disseminate the latest information and guidance in response to the rapidly evolving developments related to the coronavirus disease (COVID-19) global pandemic.

We have been in constant contact with the White House, Congress, and federal and state agencies to ensure that as tighter restrictions are being promulgated, the 3PL industry members are considered “essential” businesses.

We continue to make the case that in order to keep the freight – including food, medical supplies, and other emergency products – needed to combat the outbreak, our members MUST be declared “essential” businesses.

To date, the Governors of California and Pennsylvania have declared a “shelter in place order” for businesses, which includes closing all businesses that are not deemed “essential” in California or “life-sustaining” in Pennsylvania.

On Wednesday, March 19, 2020, California Governor Gavin Newsome (D) announced a statewide “stay at home” order to prevent the further spread of COVID-19. California is exempting critical infrastructure workers from this order based on guidance released by the Department of Homeland Security’s Cybersecurity & Infrastructure Security Agency (CISA). Specific to the transportation sector, CISA’s guidance includes the following two provisions that would include our member companies:

  • “Employees supporting or enabling road transportation, including dispatchers, maintenance and repair technicians, warehouse workers, truck stop and rest area workers, and workers that maintain and inspect infrastructure.”
  • “Employees of firms providing services that enable logistics operations, including cooling, storing, packaging and distributing products for wholesale or retail sale or use.”

On Thursday, March 20, 2020, Pennsylvania Governor Tom Wolf (D) ordered all “non-life-sustaining” businesses in the state to close their physical locations as of 8:00 PM ET today to slow the spread of COVID-19. The order is silent on teleworking. The Pennsylvania life-sustaining businesses that are permitted to continue operations includes a section on Transportation & Warehousing including:

Support Activities for Transportation

  • Support Activities for Air, Rail, Water & Road Transportation
  • Freight Transportation Arrangement
  • Other Support Activities for Transportation

Obviously, the freight transportation arrangement provision would cover our member companies.

If you encounter any issues with your state, please contact us immediately at advocacy@tianet.org.

TIA has also created an interactive map tracking the latest COVID-19 related transportation developments as they become available.

TIA will continue to do whatever we can to ensure that members can continue to operate their businesses during this tumultuous time. TIA urges everyone to be safe, and if you need anything or have any questions or concerns, please don’t hesitate to contact us at advocacy@tianet.org.

 

Let Your Members of Congress Know of the Important Role 3PLs Are Playing During the COVID-19 Pandemic

We Need Your Help.

As tighter restrictions are certainly on the horizon with the coronavirus disease (COVD-19) continuing to spread throughout the nation. TIA wants to ensure that our members and the 3PL industry continues to be considered “essential” and able to continue the facilitation of freight in interstate commerce.

We appreciate the hard work that all of you are doing, and we need to make sure that you are able to continue to facilitate the movement of food, medical supplies, and other emergency essential products needed to combat this pandemic and keep the economy and commerce from falling apart.

Please take a moment to let your Members of Congress know of the important role you are playing during this pandemic, by clicking here to Take Action now.

On the landing page, click the “Take Action” button and simply enter your information and your Members of Congress will automatically pre-populate. We have prepared a pre-loaded form letter, that you can edit as you see fit or send as is.

Thank you for your leadership during these difficult times. TIA will continue to do what we can to make sure your business is protected.

COVID-19 Update from TIA President & CEO

A couple of updates this afternoon…

First, the Mayor of Austin called late Friday afternoon to let me know that the TIA Capital Ideas Conference & Exhibition would not be allowed to be held April 1 -4. During this call, I thanked the Mayor for the best (worst) news I’d ever received.

The city’s order triggered the force majeure provisions in our contracts and insurance. TIA’s Meetings Department is currently working with our key exhibitors and the JW Marriott Austin to work through alternatives. We will let you know how we plan to proceed in my update tomorrow.

The second item is that TIA Staff will follow the federal government’s direction and allow liberal telework. All our direct phone numbers are forwarded to our cell phones, so we can be reached directly during normal business hours of 8:00 AM – 5:00 PM EST. All staff is also equipped with laptops or Surfaces, and TIA maintains a robust VPN, so maintaining connectivity will not be an issue. We will continue to serve you as you serve your customers.

Finally, to me, this is what it must have felt like in Brittan in September of 1939 knowing that they were going to war with Germany. And, since I am a 1940’s music junky, I’ll close these updates with a tune from that era.

TIA Issues COVID-19 Guidance for Shippers, Receivers & Truck Drivers

As you are aware, on March 11, 2020, the World Health Organization (WHO) officially declared the coronavirus disease (COVID-19) a global pandemic. This is the first time the WHO has declared a viral disease a pandemic since the H1N1 “Swine Flu” in 2009.

The implications and ramifications to businesses throughout the United States as a result of COVID-19 have begun to take shape. In preparation for the coming months, TIA has created a reference guide for our members to share with their customers to limit and prevent the likelihood of being exposed to this virus.

The virus is thought to spread mainly from person-to-person, generally between individuals in close contact and proximity to each other (a radius of approximately six feet); it is also believed to spread through respiratory droplets produced when an infected person coughs or sneezes.

Shippers, receivers, and truck drivers that are in personal contact (as they facilitate the movement of freight) need to be aware of – and take – necessary steps in order to minimize and prevent the spread of COVID-19.

This includes, but is not limited to, avoiding personal contact to the extent possible, regularly washing hands with soap and warm water for at least 20 seconds, and sanitizing your facility on a regular basis.

As an industry, we are in this together and, as such, we all need to look out for one another. If you are a shipper or receiver, consider providing truck drivers with a bottle of hand sanitizer or alcohol wipes to keep them healthy (and keep our nation’s freight moving).

The Centers for Disease & Prevention (CDC) also recommends the following steps be taken:

Clean Your Hands Often

  • Wash your hands often with soap and water for at least 20 seconds especially after you have been in a public place, or after blowing your nose, coughing, or sneezing.
  • If soap and water are not readily available, use a hand sanitizer that contains at least 60% alcohol. Cover all surfaces of your hands and rub them together until they feel dry.
  • Avoid touching your eyes, nose, and mouth with unwashed hands.

Avoid Close Contact

  • Avoid close contact with people who are sick
  • Put distance between yourself and other people if COVID-19 is spreading in your community. This is especially important for people who are at higher risk of getting very sick.
  • Stay Home if You’re Sick
  • Stay home if you are sick, except to get medical care. Learn what to do if you are sick.

Cover Coughs & Sneezes

  • Cover your mouth and nose with a tissue when you cough or sneeze or use the inside of your elbow.
  • Throw used tissues in the trash.
  • Immediately wash your hands with soap and water for at least 20 seconds.
  • If soap and water are not readily available, clean your hands with a hand sanitizer that contains at least 60% alcohol.

Wear a Facemask if You’re Sick

  • If you are sick: You should wear a facemask when you are around other people (e.g., sharing a room or vehicle) and before you enter a healthcare provider’s office. If you are not able to wear a facemask (for example, because it causes trouble breathing), then you should do your best to cover your coughs and sneezes, and people who are caring for you should wear a facemask if they enter your room. Learn what to do if you are sick.
  • If you are NOT sick: You do not need to wear a facemask unless you are caring for someone who is sick (and they are not able to wear a facemask). Facemasks may be in short supply and they should be saved for caregivers.

Clean & Disinfect

  • Clean AND disinfect frequently touched surfaces daily. This includes tables, doorknobs, light switches, countertops, handles, desks, phones, keyboards, toilets, faucets, and sinks.
  • If surfaces are dirty, clean them: Use detergent or soap and water prior to disinfection.

COVID-19 Update from TIA President & CEO

Like you, we are all trying to figure out the COVID-19 situation on what seems to be an hour-by-hour basis. We also know you have concerns about the upcoming TIA Capital Ideas Conference & Exhibition. Our utmost concern is for the health and safety of our members and attendees.

We are working closely with the City of Austin, the Office of the Texas Governor, our insurance providers, and Marriott International. As such, we are looking at a number of options and will make a final determination on the afternoon of Monday, March 16. A formal announcement will then be made public on the morning of Tuesday, March 17.

We care about your health and safety. We care about your businesses. We know you care about the health of TIA. Together, we will get through this, and be stronger for it.

Congressional Hearing Weighs Freight Transportation Needs

As Congress continues putting together the next surface reauthorization, the House Subcommittee on Highways and Transit held a hearing last Thursday on the needs of the freight transportation industry. Representatives from railroads, state and metropolitan transportation departments, environmental advocacy groups, and academia testified on the investment needs and other challenges facing freight transportation.

One of the primary focuses of the hearing was how to finance freight infrastructure investments, particularly highway maintenance and expansion. American Association of State Highway and Transportation Officials (AASHTO) Executive Director Jim Tymon testified that current funding levels aren’t enough to meet states’ state-of-good-repair needs, let alone investing in constructing new infrastructure like freight corridors.

A lot of the industry has come out in favor of raising the gas tax to bring more money into the Highway Trust Fund. TIA supports a modest increase in the gas tax to help pay for critical infrastructure investments; however, we ultimately need to find a new way to raise revenue for the Trust Fund given that rising fuel economy and the increasing popularity of hybrid and electric vehicles has reduced how much revenue a tax on gasoline can raise.

There’s no shortage of ideas for alternatives to the gas tax: Association of American Railroads President & CEO Ian Jefferies, for example, offered a weight-distance fee as another way to shore up the Trust Fund. Others have talked about a vehicle miles traveled (VMT) tax, though it did not come up at Thursday’s hearing. Congressman Greg Pence (R-IN) said he appreciated that the freight industry has come together to support raising revenues, but the question remains exactly how Congress will choose to do that.

As for how to spend that money, Mr. Tymon said that state departments of transportation want to maintain the federal formula programs—which are easier to administer than competitive grant programs—so that states can have multi-year certainty about how much money they will get from the federal government to make larger infrastructure investments. He also suggested providing states with more flexibility within those programs so that the states can decide what best to spend the money on. (Currently, most of the federal-aid highway programs provide states the flexibility to move up to 50 percent of their allocations from one program to another.)

There was also discussion of the Infrastructure For Rebuilding America (INFRA) grant program, formerly known as FASTLANE, which provides competitive grant funding for infrastructure projects—mostly highways and bridges—with a freight transportation component. Several witnesses, including American Short Line and Regional Railroad Association President Chuck Baker and Chicago Metropolitan Agency for Planning Executive Director Erin Aleman, agreed that the process for selecting INFRA grant winners can be “opaque” and that USDOT should ensure project selection criteria are objective, well-communicated to applicants, and closely tied to the goals of the program.

While the nearly three-hour hearing mostly kept things at a high level, there was some interesting disagreement when it came to reducing freight emissions. The surface reauthorization reported by the Senate Environment & Public Works Committee back in July was the first to include a climate title, and House Transportation & Infrastructure Committee Chairman Peter DeFazio (D-OR) has said he wants to go bigger on climate in the House bill.

Jason Mathers, Director of Vehicles & Freight Strategy for the Environmental Defense Fund, testified about various pilot programs across the country for increasing the use of zero-emission heavy-duty vehicles in the freight network, from transporting cargo in and out of ports to delivery packages to homes and businesses. He suggested creating a federal revolving loan fund for purchasing and installing ZEV infrastructure to enable greater use of ZEVs in freight transportation.

Congressman Doug LaMalfa (R-CA) took issue with the idea of incentivizing the purchase of ZEVs; he said a better approach would be to eliminate the 12 percent federal excise tax on new trucks, which would make it easier for truck operators (particularly smaller, independent owner-operators) to turn over their fleets; as newer trucks are cleaner and more efficient than the older models they’d be replacing, Rep. LaMalfa said, this would more quickly reduce emissions in the trucking industry than a new incentive. (Rep. LaMalfa has a bill, H.R. 2381, which would eliminate that tax.)

The witnesses seemed reluctant to agree with that approach: Mr. Tymon brought up the fact that the excise tax on new trucks goes into the Highway Trust Fund, and so eliminating that tax would reduce revenues at a time when the focus should be on raising additional revenue. Rep LaMalfa replied that this tax is only a small slice of Trust Fund revenue and would be easily replaced with something else.

Watch the hearing and read the witnesses’ testimony here. If you have any questions, please contact TIA Advocacy at advocacy@tianet.org or 703.299.5700.

USMCA Deal Reached between White House and Congressional Leaders

There has been a lot of activity in the last 24-hours on the United States – Mexico – Canada Agreement trade deal or the USMCA. TIA is happy to report that a deal appears to be imminent, with all three nations agreeing to sign the agreement as early as today. TIA has been pushing Members of Congress to move this landmark trade deal forward for quite some time. It is imperative to the 3PL industry that we as a nation continue the free movement of goods with our friendly neighbors to the North and South.

“The update to NAFTA in USMCA will modernize trade between our most important international partners. It is essential that we have a secure, strong, prosperous, and growing North American continent. USMCA will keep us on that path,” stated TIA President and CEO Robert Voltmann.

TIA Chairman of the Board of Directors Brian Evans, CTB who is also a Member of the Arkansas State House representing the 43rd district, drafted a letter of support to Congressional leaders and authored a resolution supporting the passage of the USMCA. Chairman Evans stated in the letter which was co-authored by 26 other State officials:

Trade with Mexico and Canada is vital to the U.S. economy. It has been more than two decades, though, since trade with those countries was comprehensively addressed by the North American Free Trade Agreement (NAFTA). It is well past time to modernize our agreement with these important partners.

We need a 21st Century trade agreement for the 21st Century economy. The time is now to put USMCA to work for us here at home. This bold new agreement provides the framework for economic growth and increased jobs. It will also establish a much more balanced environment for American workers.

News broke yesterday that an agreement was on the horizon, and Speaker of the U.S. House of Representatives Nancy Pelosi was reviewing recent changes to the agreement that U.S. Trade Representative Robert Lighthizer and his Mexican counterpart Jesus Seade had discussed recently. Those changes were proposals on labor inspection rules and tougher steel provisions. The demand from the U.S. regarding steel and aluminum rules came from the United Steelworkers union, who threatened to continue to stall the negotiations last week.

Passing this important trade deal has been one of President Trump’s top priorities. There are still a few procedural hurdles before the agreement can come to the floor for a vote, including committee hearings and review of the implementing bill in the House Ways and Means and Senate Finance committees. Those steps could be waived to save time, and people familiar with the talks said lawmakers are likely to skip some of them.

If you have any questions, please contact TIA Advocacy (advocacy@tianet.org, 703.299.5700).

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