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Federal Regulations Eliminate Independent Contractor Defense in Interstate Trucking

Much of the following summary of the elimination of the independent contractor defense in interstate trucking is borrowed from my esteemed colleague, Michael Kress, the Renaiassance Man of Sparta, Tennessee.

The Federal Motor Carrier Safety Regulations, 49 C.F.R. § 390.5, absolutely eliminates the distinction between “independent contractors” and “employees” so that any attempt by a carrier to label a driver as one or the other is an exercise in futility. Drivers, including independent contractors, are now legislatively deemed “statutory employees” of motor carriers and, as such, motor carriers can no longer escape liability through the use of linguistic gymnastics. The carrier’s fate is now inextricably intertwined with that of its driver. In Shell v. Navajo Freight Lines, 693 P.2d 382 (Colo. Ct. App. 1984), the Colorado Court of Appeals noted that “[t]he regulations, which have the force and effect of law, eliminate the defense of independent contractor by making the owner/operator of the equipment the "statutory employee" of the carrier.”

The Texas Court of Appeals, in Morris v. JTM Materials, Inc., 78 S.W.3d 28, 37-38 (Tex. Ct. App. 2003), noted that,

an interstate motor carrier’s liability for equipment and drivers … is not governed by the traditional common-law doctrines of the master-servant relationship and respondeat superior. Instead, an interstate carrier is vicariously liable as a matter of law . . . for the negligence of its statutory employee drivers.

In 49 C.F.R. § 390.5, the FMCSRs define the term“employee” as,

any individual, other than an employer, who is employed by an employer and who in the course of his or her employment directly affects commercial motor vehicle safety. Such term includes a driver of a commercial motor vehicle (including an independent contractor while in the course of operating a commercial motor vehicle), a mechanic, and a freight handler.

See Consumers County Mut. Ins. Co. v. P.W. & Sons Trucking, Inc., 307 F.3d 362 (5th Cir. 2002).

Question 17 of the official interpretations to 49 C.F.R. § 390.5 contains the following question and guidance:

Question 17: May a motor carrier that employs owner-operators who have their own operating authority issued by the ICC or the Surface Transportation Board transfer the responsibility for compliance with the FMCSRs to the owner-operators?

Guidance: No. The term “employee,” as defined in § 390.5, specifically includes an independent contractor employed by a motor carrier. The existence of operating authority has no bearing upon the issue. The motor carrier is, therefore, responsible for compliance with the FMCSRs by its driver employees, including those who are owner-operators. 62 Fed. Reg. 16,407 (April 4, 1997). 49 CFR Chapter III: Regulatory Guidance for the Federal Motor Carrier Safety Regulations, Interpretation to § 390.5, question 17 (1997)(emphasis added). See also 49 C.F.R. § 390.5 (2002).

In 1991 the United States Court of Appeals for the Sixth Circuit in Johnson v. S.O.S. Transport, Inc. held that,

Importantly, . . . the operator's status, whether it be as an independent contractor or employee of a carrier, is irrelevant. 49 U.S.C.App. § 2503(2) defines an “employee” as including “an operator of a commercial motor vehicle (including an independent contractor while in the course of operating a commercial motor vehicle)” This same section also defines an “employer” as “any person engaged in a business affecting interstate commerce who owns or leases a commercial motor vehicle in connection with that business”49 U.S.C.App. § 2503(3). Johnson v. S.O.S. Transport, 926 F.2d 516 (6th Cir. 1991)(emphasis added). See Gilstorff v. Top Line Exp., Inc., 106 F.3d 400 (6th Cir. 1997).

Johnson v. S.O.S. Transport, 926 F.2d 516, n.17 (6th Cir. 1991), the U.S. Sixth Circuit Court of Appeals echoed similar concerns of the ICC during the regulatory enactment process when it stated

“[w]e note that the ‘control and responsibility’ regulations were initially prompted by concerns that certified carriers were evading federal safety requirements by using equipment leased from owner-operators who were exempt from the limitations placed upon certified carriers.”

The Johnson Court further recognized that a “statutory employee” relationship clearly eliminates the independent contractor concept and creates an irrebuttable presumption of vicarious liability as a matter of law for the motor carrier as a consequence of any tortious acts committed by its driver when it stated that,

The statute and regulatory pattern clearly eliminates the independent contractor concept from such lease arrangements and casts upon [the carrier-lessee] full responsibility for the negligence of [the driver] of the leased equipment. Any language to the contrary in the lease agreement would be violative of the spirit and letter of the federal regulations and therefore unenforceable.

Additionally, in Laux v. Juillerat, (citation omitted) the court ruled, as a conclusion of law, that federal regulations require a carrier-lessee to assume legal control of the leased vehicle and driver. Thus, the carrier-lessee should be held vicariously liable for the negligence of the driver and the resulting damages.

Accordingly, this Court finds that the ICC regulations enacted pursuant to the Interstate Common Carrier Act create an irrebuttable presumption of an employment relationship between a driver of a leased vehicle furnished by a contractor-lessor and a carrier-lessee. This employment relationship is known as statutory employment. Any negligence on the part of the driver of the leased vehicle is imputed to the carrier-lessee as a matter of law. The common law doctrines of master-servant, respondeat superior and independent contractor are preëmpted by these regulations.

More recently, in 2002, the Morris Court opined that “… an interstate carrier is vicariously liable as a matter of law under the FMCSR for the negligence of its statutory employee drivers. (citations omitted).”

As a “statutory employee,” any fault attributed to the driver of an owner-operator driver hauling for an interstate motor carrier must be imputed to the carrier, which cannot purge itself of liability by applying the label of “independent contractor” to the driver. The “crushing weight of authority” from courts throughout the United States has overwhelmingly so held, and have found motor carriers liable for the negligence of their “statutory employee” driver.

One court noted that “[t]herefore the trial courts were correct in charging the juries that these defendants could not escape liability by delegating their duties to independent contractors.” Cincinnati v. Haack, 708 N.E.2d 214 (Ohio Ct. App. 1997).

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