James F. Mahoney, Attorney

March 2014

The Best Part of Idaho ...

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The best part of Idaho is not their famous potatoes. It's their Supreme Court's ruling on independent contractors.

The Idaho DOL assessed tax and penalties against Western Home Transport, a motor carrier, claiming owner-operators had been misclassified as contractors when they should have been classified as employees. The DOL concluded that the remuneration paid to its owner-operators was a wage.

On appeal the Supreme Court of Idaho in Western Home Transport, Inc., v. Idaho Department of Labor, (2014 Opinion No.19), recited correctly the regulatory constraints that the FMCSA places on motor carriers to "control" drivers. The Court then talked about existing Idaho law, which is not unlike everywhere else, that an employer must be free from control; and the worker must be engaged in an "independently established trade, occupation, profession or business."

These issues are often raised in representing motor carriers with state agencies, the IRS, insurance carriers, etc. They just don't understand the motor carrier industry.

The Court referred to the contract, working arrangements, practical considerations of the specific owner-operators in question saying the owner-operators' use (dependence) on the motor carrier's DOT number was inconsequential and nothing more than a fundamental part of all owner -operators' relationships with motor carriers. So true.

Importantly, since many of us seem to be under the false impression that an owner-operator should have his/her own DOT authority, the Court reminded us that the OO must use the carrier's DOT authority even if he has his own. See, 49 USC 14102; 49 CFR 376, et seq., and 390.11.

Despite some lawyers' recent advice to the contrary to you, it is impractical, unnecessary and against the Truth-In-Leasing regulations to haul goods for a carrier under a different MC number. Of course, except if the carrier switches to wearing its broker hat, issuing a new BOL or if the carrier suddenly becomes a shipper, and maybe another instance that eludes me.