Independent contractors (also known as owner-operators) are truckers that provide for their own vehicle, and are responsible for ensuring their vehicles are in compliance with federal, state and local laws and regulations, as well as ensuring their maintenance.[1]“Independent Contractor Defined | Internal Revenue Service,” October 14, 2021. www.irs.gov/businesses/small-businesses-self-employed/independent-contractor-defined. Because of the deregulation of the trucking industry in the US in 1980, thousands of truck companies were bankrupted, leading to the implementation of cost-saving business strategies. One such strategy was contracting truckers rather than hiring them as employees, shifting the responsibility of truck purchase and maintenance onto the truck driver while also allowing truck companies to reduce spending on employment taxes and employee benefits. As a result, the working conditions of truckers in the US today have deteriorated – truckers make 40% less in wages than they did in the 1970s, and about 10% of truck drivers were unionized in 1997.[2]Zabin, Carol, and Sam Appel. “Truck Driver Misclassification: Climate, Labor, and Environmental Justice Impacts.” UC Berkeley Labor Center (blog), August 22, 2019. … Continue reading
There are approximately 350,000 independent contractors in the U.S. now.[3]GlobeCon Freight. “Independent Owner Operator Statistics for the U.S. | GlobeCon,” June 18, 2015. www.globeconfreight.com/blog/independent-owner-operator-truck-driver-statistics-united-states/. Independent contractors typically earn lower income than trucking company employees. For example, long-haul employee drivers earned a median of $53,000 in 2018, while long-haul contractors earned a median of $44,520. Additionally, independent contractors tend to work significantly more than 40 hours a week – the average work week for independent contractor port truckers was found to be 59 hours.[4]Zabin, Carol, and Sam Appel. “Truck Driver Misclassification: Climate, Labor, and Environmental Justice Impacts.” UC Berkeley Labor Center (blog), August 22, 2019. … Continue reading Independent contractors are also far less likely to have health insurance or retirement benefits, and often cannot collectively bargain for wages.[5]Roosevelt, Margot. “Port Truckers Win $30 Million in Wage Theft Settlements – Los Angeles Times,” October 13, 2021. … Continue reading
An analysis by the UC Berkeley Labor Center shows that independent contractors have far greater rates of non-compliance with emissions standards.[6]Sinroja, Ratna, Sarah Thomason, and Ken Jacobs. “Misclassification in California: A Snapshot of the Janitorial Services, Construction, and Trucking Industries,” March 11, 2019. … Continue reading In California, where California Air Resources Board (CARB) enforces vehicle operation restrictions, engine emission standards for truck fleets (a group of trucks owned by an organization), and fleet requirements, the rate of non-compliance with CARB policies is highest when the fleet size is 1 to 3, which is the fleet size independent contractors typically have.
The reasons for this noncompliance is illuminated by an analysis by the International Council on Clean Transportation on the main barriers that truck drivers face when trying to adhere to environmental regulations.[8]Roeth, Mike, Rob Swim, Dave Kircher, and Joel Smith. “Barriers to Adoption of Fuel-Efficiency Technologies in the North American on-Road Freight Sector | International Council on Clean … Continue reading One important consideration truck drivers take into account when adopting new technology is the payback time – how much time until the fuel savings of the technology is greater than the additional capital cost to adopt the new technology. Independent contractors in particular prefer shorter payback periods at a higher percentage than other trucking entities, as shown by the figure below.
Even when the payback period of the vehicle is a relatively short time, many truck owners cannot pay the high upfront costs associated with environmental regulations. For example, in California, truck modifications required to adhere to pollution standards set by CARB have increased truck modification costs on average by $15,000.
Independent contractors receive lower incomes and have slimmer profit margins, both of which make them more averse to adopting zero-emission technologies that often have greater payback periods and higher upfront costs. As a real world example, the Ports of Seattle and Tacoma enacted a Clean Truck Program which would require truckers to own emission-compliant trucks by 2018.[10]Martinez, Steven. “Seattle’s Independent Port Drivers Get More Time to Buy Clean Trucks – Fuel Smarts – Trucking Info,” February 6, 2018. … Continue reading As a result, a group of independent contractors on PierTrucker.com posted an open letter on Facebook attacking this regulation for the undue financial burden it put on independent truck drivers.
“since [Northwest Seaport Alliance (NWSA)] tried to implement a fully unlawful mandate on the truckers about replacing their trucks for a newer models, nothing but discontent, frustration and plain anger against you is growing, we, the truckers, know first hand how useless and expensive is to try to run these newer models, you have heard from a lot of us how upsetting is to work even harder just to pay for repairs, it clearly shows that you don’t own a business, you don’t create jobs and certainly you don’t have the slightest idea what it takes to make even a small profit on your own, your idea of having a purpose on life is battling imaginary monsters, play saviors and put the burden on someone else to carry, in this case, truckers.”[11]PierTrucker.com/Seattle. 2018. “Truckers: Open letter to NWSA. Seattle WA. January of 2018.” Facebook, January 20, 2018. https://www.facebook.com/PierTruckerSea/posts/1636403396398091.
The burden on independent contractors of financing zero-emission vehicles is also exacerbated by the higher truck loan interest rates that independent contractors are subject to. While interest rates for private truck loans to large carriers are approximately 5%, truck loans to independent contractors are as high as 13.4%.[12]Martinez, Steven. “Seattle’s Independent Port Drivers Get More Time to Buy Clean Trucks – Fuel Smarts – Trucking Info,” February 6, 2018. … Continue reading This is the result of predatory lending practices by truck companies that target independent contractors.
Many independent contractors are also not contractors of their own will. Misclassified contractors, employees who are incorrectly classified by trucking companies as independent contractors when they still operate under the trucking company’s authority and do not direct their own work, are also a significant portion of independent contractors. In particular, misclassification is more prevalent in port trucking. “A 2010 report by the National Employment Law Project (NELP) found that 82% of port truckers are classified as independent workers, of which an estimated 80% are misclassified”.[13]Sinroja, Ratna, Sarah Thomason, and Ken Jacobs. “Misclassification in California: A Snapshot of the Janitorial Services, Construction, and Trucking Industries,” March 11, 2019. … Continue reading Misclassification of truck drivers allows companies to avoid providing employment rights such as overtime pay, workers compensation, and sick leave. Misclassifying employees as independent contractors allows trucking companies to offload “as much as 30% of payroll, equipment, and benefits costs” onto drivers.[14]Sinroja, Ratna, Sarah Thomason, and Ken Jacobs. “Misclassification in California: A Snapshot of the Janitorial Services, Construction, and Trucking Industries,” March 11, 2019. … Continue reading Widespread misclassification will result in more truck drivers being underpaid and unable to finance the high costs of zero-emission technologies.
Emissions regulations pose an undue financial and logistical burden on independent contractors, who experience low incomes, frequent wage theft by for-hire trucking companies that avoid paying for overtime work, and predatory truck loan programs. Thus, the pursuit of equitable incomes and employment structures is intertwined with the pursuit of sustainability initiatives. Reducing the prevalence of the contracting model in trucking will raise the incomes of truckers, allowing them to make the capital investment to switch to greener technologies.
The UC Berkeley Labor Center study recommends general policies and principles states and counties can adopt in order to address issues posed by the contractor business model in trucking. [15]Zabin, Carol, and Sam Appel. “Truck Driver Misclassification: Climate, Labor, and Environmental Justice Impacts.” UC Berkeley Labor Center (blog), August 22, 2019. … Continue reading
- Enforce “ABC” tests (as defined by California Supreme Court’s Dynamex decision [16]Loh, Peter. “California Supreme Court Rules Dynamex Decision Applies Retroactively,” January 27, 2021. www.foley.com/en/insights/publications/2021/01/california-supreme-court-dynamex.). This would ensure that a company should prove that the following three criteria are met to classify a driver as an independent contractor
(A) free to direct the work and the performance of the work
(B) performs work that is outside the hiring entity’s (the trucking company’s) business
(C) engages in independently established business of the same nature as the work performed for the hiring entity (the trucking company)
- Provide subsidies to companies that can document legal and responsible employment practices
- Specify in policies that the trucking company is the entity responsible for clean vehicle adoption, rather than independent contractor truck drivers.
In addition, states and counties can pass laws that enable independent contractor unionization, such as one similar to Seattle’s Independent Contractor Protections Ordinance [17]“Independent Contractor Protections Ordinance – LaborStandards | Seattle.Gov,” June 14, 2021, http://www.seattle.gov/laborstandards/ordinances/independent-contractor-protections-.. We would also recommend passing policies that enforce regulation in the truck loaning industry. Much more analysis is needed to assess the costs and benefits of such policies, and whether they are actually effective.
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