News / Trucker anger at Washington’s independent contractor rule change

11/01/2024

The American Trucking Associations (ATA), the largest haulage lobbying group in the US, is on the barricades over a looming change in the classification mechanism for independent contractors, alongside other interest groups, including shippers.

Some transport companies that use independent contractors are not fazed, though, saying they don’t expect any changes to their trucker relationships.

The rule rescinds the 2021 Independent Contractor Rule, which established that independent contractors are not employees under the US Fair Labor Standards Act. This rendered them not subject to minimum wage, overtime and record-keeping requirements.

Whereas that rule identified two criteria as the key determinants for classification as an independent contractor or an employee, the new system uses a combination of six factors to determine status:

a worker’s opportunity for profit or loss;
the financial stake and nature of resources a worker has invested;
the degree of permanence of the work relationship;
the degree of control an employer has over the work;
whether the work is essential to the employer’s business;
a worker’s skill and initiative.

It says classification should be based on consideration of all these factors, without a preponderance of some elements over others, while previously the rule elevated two determining “core factors” – the nature and degree of control over the work and the worker’s opportunity for profit or loss.

The rule change is hardly an apocalyptic plunge into uncharted territory. Essentially, it rescinds a rule implemented by the previous Republican administration that overturned a regime.

Nevertheless the move has elicited fierce rhetoric from the ATA, which views it as “an assault on core American values”.

ATA president and CEO Chris Spear said: “I can think of nothing more un-American than for the government to extinguish the freedom of individuals to choose work arrangements that suit their needs and fulfill their ambitions.

“More than 350,000 truckers choose to work as independent contractors because of the economic opportunity it creates and the flexibility it provides, enabling them to run their own business and choose their own hours and routes. That freedom of choice has been an enormous source of empowerment for women, minorities, and immigrants pursuing the American dream.

“The trucking industry has used independent contractors since the inception of interstate trucking, and court decisions over the last 90 years have continually reaffirmed the legitimate role they play in the economy. It’s unfortunate that the administration has chosen to replace a clear and straightforward standard with a tangled mess that weakens our supply chain and undermines the livelihoods of hundreds of thousands of truckers across the country.”

The National Retail Federation (NRF) also expressed strong opposition. Its government relations SVP, David French, said: “The administration is repealing commonsense rules that clearly articulate the difference between employees and independent contractors. The NRF vehemently opposes a change in this important area of law, which is both unwarranted and unnecessary. This decision will only foster confusion, endless litigation and reduced innovation.”

And the US Chamber of Commerce warned it may challenge the new rule in court.

Other stakeholders are less alarmed. Uber commented that “this rule does not materially change the law under which we operate and won’t impact the classification of the over one million Americans who turn to Uber to make money flexibly”.

The regulators argue, in their release of the rule, that it is better aligned with the Fair Labor Standards Acts, as well as the department’s decades-long approach and with federal appellate case law, than the 2021 rule.

“This rule will help protect workers, especially those facing the greatest risk of exploitation, by making sure they are classified properly and that they receive the wages they’ve earned,” said acting labor secretary Julie Su.

The new rule is set to come into effect on 11 March. But in the event of a change of the guard in the White House at the end of this year, what are the odds of yet another rule returning to two overriding factors to determine employment status?