If the suit doesnt fit ...

This 10-step recovery program may save you from costly disputes with owner-operatorsFor the past year or so, fleets that use independent contractors have had a new legal headache to worry about. The Owner-Operators Independent Drivers Association of America (OOIDA) has brought suit against half a dozen large carriers, alleging several violations of federal leasing rules. OOIDA has sought to have these

This 10-step recovery program may save you from costly disputes with owner-operators

For the past year or so, fleets that use independent contractors have had a new legal headache to worry about. The Owner-Operators Independent Drivers Association of America (OOIDA) has brought suit against half a dozen large carriers, alleging several violations of federal leasing rules. OOIDA has sought to have these suits certified as class actions on behalf of large numbers of owner-operators who drive, or drove, for each of the fleets.

Many trucking executives rightly fear that if OOIDA prevails in these cases, it will go after large numbers of other carriers. In addition, other plaintiffs are sure to file similar or copycat suits, particularly because a recent change in law has given successful plaintiffs attorneys in such cases a better shot at large attorneys awards.

The suits to date allege numerous violations of federal leasing rules: several forms of mishandling escrow accounts; excessive or improper charge-backs; inadequate disclosure of treatment of compensation and expense items; overcharging or nondisclosure of insurance; and requiring drivers to purchase products, equipment, or services from authorized carriers.

The industry has fought back on both jurisdictional and substantive grounds. At a recent meeting of the Truckload Carriers Assn.s Independent Contractor Division, two industry lawyers provided a status report and tips on how to protect yourself.

Daniel R. Barney, now in private practice after 13 years as general counsel of the American Trucking Assns. (ATA) and head of the ATA Litigation Center, said industry lawyers have argued that the cases belong before the Federal Highway Administration (FHWA). Although one court agreed with this position, FHWA has refused to take jurisdiction and the case is now on appeal. The battle is likely to rage on for quite awhile.

Other carriers will be affected by its outcome. With the exception of the Supreme Court, federal court decisions apply only in the geographical area over which the court has jurisdiction. In contrast, FHWA rulings would apply nationally, assuring that carriers with the same fact pattern would be treated identically. Also, if a carrier received a favorable ruling from FHWA, the company would not have to refight the same battle in different regions. In addition, the rules regarding damages, class actions, and attorneys fees are more favorable to carriers if the cases wind up with FHWA instead of the courts, making further suits less appealing to bring.

Meanwhile, what can other carriers do to avoid becoming targets or to arm themselves with the best possible facts if they do get involved? James Sullivan of Shughart Thomson & Kilroy, P.C. in Kansas City, Mo., who has defended some of the sued carriers, recommends these 10 steps:

1. Review the lease agreement carefully to ensure that it complies with the regulations. The agreement should be precise and clear.

2. Be sure any escrow accounts or funds held to meet future contingencies comply with the escrow rules.

3. Clearly identify all charge-back items in the lease and state the amounts. 4. Specify responsibility for all expenses and operational costs.

5. Identify all insurance responsibilities completely and clearly, and specify all insurance charge-backs.

6. Review all settlement procedures and documentation. Settlement statements should be precise and understandable.

7. Review all relationships with affiliated companies, particularly where a driver purchases or leases from an affiliate.

8. Review all training and procedure manuals concerning the leasing practices and settlements.

9. Aside from the documents themselves, review the implementation of leasing practices to ensure practical compliance with the regulations.

10. Keep current on new developments.

The bottom line: Although you cant always avoid being sued, you can take steps in advance to make it less likely that a suit will fit your facts. Even more important, the list of good practices above may help smooth relations enough with your owner-operators that they wont sue you in the first place.

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