Educational presentation by Prasad Sharma, ATA SVP and General Counsel, to the Florida Trucking Association Annual Conference 2015 (July 2015)

1. PRASAD SHARMA
SVP AND GENERAL COUNSEL
AMERICAN TRUCKING ASSOCIATIONS

2. • “UBER MAY BECOME AN ISSUE IN THE US PRESIDENTIAL RACE
AS HILLARY CLINTON VOWS TO CRACK DOWN ON WORKER
'MISCLASSIFICATION‘” – BUSINESS INSIDER HEADLINE 7/13/15
• “A GROWING WAY TO CUT PAY: COMPANIES TREATING
WORKERS AS CONTRACTORS” – CHICAGO TRIBUNE 6/24/15
• “BOSSES RECLASSIFY WORKERS TO CUT COSTS” – WALL
STREET JOURNAL 6/30/15
• “IN INDUSTRY WHERE FEW WORKERS ARE ‘EMPLOYEES,’
TEAMSTERS MOUNT MULTI-FRONT ATTACK” – THE NATION
7/25/13

3. • LABOR’S EFFORTS
• NATIONAL EMPLOYMENT LAW PROJECT REPORT (2010) – OUR “ANALYSIS
CONCLUDES THAT THE TYPICAL PORT TRUCK DRIVER IS MISCLASSIFIED
AS AN INDEPENDENT CONTRACTOR.”
• “LIKE MILLIONS OF WORKERS, DRIVERS ARE TREATED LIKE REGULAR
EMPLOYEES BUT ILLEGALLY COMPENSATED AS INDEPENDENT
CONTRACTORS. THE TEAMSTERS ARE COMMITTED TO WORKING WITH
DRIVERS AND THEIR ALLIES TO STOP WAGE THEFT IN THE PORT
TRUCKING INDUSTRY. JUSTICE FOR PORT DRIVERS MEANS JUSTICE FOR
ALL AMERICAN WORKERS.” – JIMMY HOFFA, GENERAL PRESIDENT
• STATE EFFORTS
• USDOL SIGNED MOU WITH 19 STATES (INCLUDING FLORIDA EARLIER THIS
YEAR) TO COORDINATE INFORMATION SHARING AND ENFORCEMENT
EFFORTS TO COMBAT INSTANCES OF WORKER MISCLASSIFICATION

4. • Independent contractors are frequently highly motivated,
experienced, skilled drivers
• Provide needed equipment and capacity at considerable
cost savings
• Provide ability to meet fluctuation in demand for
transportation services
• Help address shortage in experienced drivers

5. • Allows individuals the opportunity to be entrepreneurs
and own their own business; springboard for small
business creation
• Increased work flexibility, independence, and control of
their own destiny
• High levels of job satisfaction
• For ICs in general, only 1 in 7 said independent status was due
to factors beyond their control
• 2012 Univ. of Arkansas survey of owner-operators found 67%
said it would be “very easy” and another 13% said it would be
“easy” to find an employee driver job
• Typically outearn similarly situated employee drivers

6. • For workers’ comp purposes, an employee does not
include:
AN OWNER-OPERATOR OF A MOTOR VEHICLE WHO TRANSPORTS PROPERTY
UNDER A WRITTEN CONTRACT WITH A MOTOR CARRIER WHICH EVIDENCES A
RELATIONSHIP BY WHICH THE OWNER-OPERATOR ASSUMES THE
RESPONSIBILITY OF AN EMPLOYER FOR THE PERFORMANCE OF THE
CONTRACT, IF THE OWNER-OPERATOR IS REQUIRED TO FURNISH MOTOR
VEHICLE EQUIPMENT AS IDENTIFIED IN THE WRITTEN CONTRACT AND THE
PRINCIPAL COSTS INCIDENTAL TO THE PERFORMANCE OF THE CONTRACT,
INCLUDING, BUT NOT LIMITED TO, FUEL AND REPAIRS, PROVIDED A MOTOR
CARRIER’S ADVANCE OF COSTS TO THE OWNER-OPERATOR WHEN A WRITTEN
CONTRACT EVIDENCES THE OWNER-OPERATOR’S OBLIGATION TO REIMBURSE
SUCH ADVANCE SHALL BE TREATED AS THE OWNER-OPERATOR FURNISHING
SUCH COST AND THE OWNER-OPERATOR IS NOT PAID BY THE HOUR OR ON
SOME OTHER TIME-MEASURED BASIS.
FLA. STAT. § 440.02

7. • IRS, for employment tax purposes, uses the right to
control test, which focuses on right to control manner and
means of performance, not simply the end result
• To guide its analysis, IRS uses a multiple factor test (used
to be 20; now technically 11 but essentially covers the
prior 20) grouped into 3 categories:
• Behavioral control (e.g., training, reporting/monitoring, etc)
• Financial control (e.g., method of pay, who pays for what)
• Type of relationship (e.g., right to terminate, term)

8. • USDOL, for FLSA and SSA purposes, uses the economic
realities test. The factors to consider:
1. Degree of control
2. Relative investments of the parties
3. Degree to which worker’s managerial skills affect opportunity
for profit or loss
4. Skill and initiative required of the worker
5. Permanency of the relationship
6. Extent to which work performed is an integral part of the
“employer’s” business
• DOL issued guidance on July 15, 2015

9. • This test presumes a worker is an employee unless the
worker:
A. Is free from control or direction over the performance of the
services;
B. Performs the services outside the usual course of business of
the putative employer or outside the places of business of the
putative employer; and
C. Is customarily engaged in an independently established trade
or business.

10. • Simply having a written agreement that say it establishes
an IC relationship and issuing 1099s no longer assures
IC status
• But do have a written agreement and do issue 1099s
• Ensuring joint satisfaction of customer expectations is useful
• Federal leasing regs – “exclusive possession and
control”
• Uniforms and grooming/appearance rules viewed as
evidence of control
• Monitoring/supervision/coaching viewed as evidence of
control

11. • Working for only one carrier/restrictions on use of the
truck
• Equipment leasing arrangements (extra scrutiny in CO, CT, IL,
LA, MD, MN, NJ, OK, OR, SC, VA, WV, WI)
• Renewal and termination provisions of IC agreement
• Employee-like language in handbooks/manuals

12. • TREAT THE IC AS A BUSINESS
• Allow some points of negotiation
• Facilitate opportunities for owner-operator to make business
decisions and to realize profit or loss (this means avoiding
financial assistance that keeps operator from suffering
loss/failing)
• ENSURE THE OPPORTUNITY TO HAUL FOR OTHER
CARRIERS (both in IC agreement and equipment
agreement)
• MC identification should be easily removable
• AVOID APPEARANCE OF FORCED DISPATCH
• Rejecting one load ≠ termination

13. • AGREEMENTS SHOULD BE ARMS LENGTH AND ON
COMMERCIALLY REASONABLE TERMS
• Avoid the appearance of financial assistance and be careful of
using MC’s creditworthiness to impart a sweetheart deal to
owner-operator
• INCENTIVIZE BEHAVIOR AND ADOPTION OF
EQUIPMENT
• BE MINDFUL OF TERMINOLOGY USED
THROUGHOUT THE COMPANY INTERNALLY
• CONSIDER ESTABLISHING A CONTRACT RENEWAL
PROCESS AND ALLOW FOR MUTUAL TERMINATION
RIGHTS

14. • PROVIDES MORE PREDICTABLE CAPACITY AND
OFTENTIMES ENGENDERS MORE LOYALTY
• HAVE MORE CONTROL
• CONTROL = MORE TRAINING, EASIER DEPLOYMENT
OF TECHNOLOGY
• COMPANY PROVIDES VEHICLES, SO MORE
UNIFORMITY

15. • DRIVER SHORTAGE
• THE POTENTIAL FOR UNIONIZATION AND THE NLRB
• AMBUSH ELECTION RULE
• COMPLIANCE WITH MYRIAD LAWS
• PAYMENT OF EMPLOYMENT TAX, UNEMPLOYMENT,
WORKERS’ COMP
• WHILE EXEMPT FROM OVERTIME UNDER FEDERAL LAW,
MAYBE NOT UNDER STATE LAW
• HEALTH CARE, PAID SICK LEAVE, MEAL AND REST BREAK
LAWS

16. Source: ATA
95
96
97
98
99
100
101
102
103
104
105 2014
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
2015
Feb
Mar
Apr
May
I.C.s
Employee Tractors
TRUCKLOAD INDUSTRY
STRUGGLES WITH INDEPENDENT
CONTRACTORS
INDEX: JANUARY 2014 = 100
+3%
-4.7%
Percent change
(May ‘15 vs Jan ‘14)