Recognizing the impact it could have on small-business truckers, OOIDA asked the U.S. Department of Labor to extend the comment period on a proposed “economic reality” test.
In September, the DOL announced its attempt to tackle the controversial topic of worker classification by proposing a test to determine whether a worker is an employee or an independent contractor under the Fair Labor Standards Act. The proposal, which is open to public comment until Oct. 26, would apply to a variety of industries. Comments can be made here or by going to the Regulations.gov website and entering regulatory information number 1235-AA34.
OOIDA wants the comment period on the notice of proposed rulemaking extended 30 days.
“The notice of proposed rulemaking seeks input from interested parties on a wide range of issues related to worker classification,” OOIDA wrote. “Given the diversity of working arrangements in the trucking industry, there are many issues that must be considered before we can determine the proposal’s impact on our membership. If not done carefully, changes to the classification test could upend a business model that has enabled millions of truckers to have a successful and secure career.”
According to the Department of Labor, the proposal would:
- Adopt an “economic reality” test to determine a worker’s status as an FLSA employee or an independent contractor. The test considers whether a worker is in business for himself or herself or is economically dependent on a putative employer for work.
- Identify and explain two “core factors,” specifically the nature and degree of the worker’s control over the work, and the worker’s opportunity for profit or loss based on initiative and/or investment.
- These factors help determine if a worker is economically dependent on someone else’s business or is in business for himself or herself.
- Identify three other factors that may serve as additional guideposts in the analysis: the amount of skill required for the work; the degree of permanence of the working relationship between the worker and the potential employer; and whether the work is part of an integrated unit of production.
As of Oct. 20, the proposal had already received 161 comments. However, OOIDA said the additional time is necessary to get feedback from all of the affected industries. Worker classification has been a hot topic for a variety of careers, including Uber drivers, freelance writers and truckers.
“This is a significant proposal as worker classification has recently received a great deal of attention at both the federal and state level,” OOIDA wrote. “The department’s notice of proposed rulemaking will have a large impact on these discussions and possible future changes to classification at the federal and state level.”
Much of the recent worker classification conversation has surrounded California’s Assembly Bill 5, which prompted a lawsuit from the California Trucking Association.
While the Department of Labor’s proposal isn’t expected to affect AB5, it likely helped motivate the desire to provide federal clarification.
Signed into law in 2019, AB5 codifies a 2018 California Supreme Court decision that established the ABC test to determine a worker’s status.
Under the ABC test, all workers are considered employees unless the hiring business demonstrates that three factors are established:
A. That the worker is free from the control and direction of the hirer in connection with the performance of the work, both under the contract for the performance of the work and in fact.
B. That the worker performs work that is outside the usual course of the hiring entity’s business.
C. That the worker is customarily engaged in an independently established trade, occupation, or business of the same nature as that involved in the work performed.
Opponents say the B prong of the test makes it impossible to hire independent contractors.
Shortly after the law went into effect in January, the California Trucking Association received a preliminary injunction that blocked California from enforcing it against motor carriers.
On Sept. 1, the U.S. Court of Appeals for the Ninth Circuit heard oral arguments in the case to decide whether the injunction should remain in effect.
The California Trucking Association claims the law is preempted by the Federal Aviation Administration Authorization Act of 1994, which prevents states from enforcing a law or regulation related to a price, route or service of motor carriers.
The state of California and the International Brotherhood of Teamsters contend that AB5 is a law of general applicability that doesn’t reference motor carriers and can’t be preempted by the F4A. LL