TRALA Supports Owner-Operator Lease Model in Brief with OR Appellate Court
The Truck Renting and Leasing Association is urging an Appellate Court of Oregon to preserve the ability for motor carriers to enter into agreements with owner-operators who voluntarily "lease" themselves, along with a vehicle, to said motor carriers. TRALA, along with the American Trucking Associations (ATA), has filed an amicus brief in support of CEVA Freight in the case of CEVA v. Oregon Employment Department, after the Office of Administrative Hearings for the Employment Department essentially ruled that owner-operators who had voluntarily leased themselves to CEVA Freight were employees, and not independent contractors. If the initial ruling is not overturned, CEVA Freight and other companies using the same business model will have to pay Oregon unemployment tax on the compensation paid to the independent contractors.
TRALA is involved with this case because some TRALA members lease trucks directly to owner-operators, who will then "lease" themselves to a motor carrier. TRALA also has member companies with logistics operations who may lease owner-operators to haul freight, and TRALA wants to ensure that its members can continue to conduct business as usual without worrying about governmental overreach and, subsequently, unexpected tax obligations that have the potential to end some business agreements.
The TRALA/ATA brief filed with the Appellate Court makes a few key arguments that rebut the findings of Judge Han from the Office of Administrative Hearings. The first point is that the type of arrangement in question is mutually beneficial to both the owner-operator and motor carrier. Often times it can be critical to carriers needing to be able to keep up with fluctuating demand to have independent contractors available. In turn, those contractors have indicated high levels of satisfaction given the fact that start-up costs can be relatively affordable for a trucker who wants to purchase or lease a truck and start their own business.
Secondly, the brief states that simply meeting customer requirements and complying with government regulation does not indicate an employer-employee relationship. The brief states, "Courts routinely recognize the distinction between - on the one hand - control exercised over the manner and means of a contractor's performance, and - on the other hand - steps taken to assure the achievement of shared performance goals." The brief also goes on to explain that "Courts have also routinely recognized that 'the fact that a putative employer incorporates into its regulations controls required by a government agency does not establish an employer-employee relationship.'"
Finally, the brief argues against the idea that because an owner-operator might drive under the operating authority of a motor carrier, they cannot be an independent contractor. "Whether or not an owner-operator has his or her own operating authority 'is completely inconsequential and irrelevant for him to provide his services to a motor carrier,'" the brief states.