At issue were federal regulations that require lease or hauling contracts to state that the carrier has “exclusive possession, control and use” of the equipment during the lease. The rules also require leased vehicles to display the carrier’s placard or name.
In Universal Am-Can vs. Workers Compensation Appeal Board, a lower court applied the “right to control” test to the carrier/contractor relationship and found that compliance with the federal rules gave the carrier the right to control its owner-operators, thus they are employees.
“By doing that, the lower court pretty much said that almost any time you have a situation in which you lease equipment from an owner-operator, and put him on as your owner-operator driver, under normal lease arrangements you were going to have sufficient control to make that driver an employee,” said Louis DeJoie, an attorney with McNees, Wallace & Nurik.
The state Supreme Court reversed that decision, siding with the Pennsylvania Motor Trucking Assn. and the American Trucking Assns. It cited another leasing provision, which specifically states that the control provision is not intended “to affect whether the lessor or driver provided by the lessor is an independent contractor or an employee.” The court also said that other regulatory requirements don’t indicate employee status, since the motor carrier isn’t free to negotiate aspects of leased equipment operation that are covered by regulation.
While the case dealt only with Pennsylvania law, DeJoie said there’s likely enough weight to the Supreme Court analysis that it will be considered in other jurisdictions.
ATA’s Litigation Center was even more optimistic. The decision, it said, “not only eliminates the troubling negative precedent on owner-operator status, it creates excellent favorable precedent on the issue.”