Amicus Curiae Brief — New Prime Inc., Petitioner v. Dominic Oliveira

Supreme Court briefJul 25, 2018

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No. 17-340

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In The

Supreme Court of the United States

-----------------------------------------------------------------NEW PRIME INC.,

Petitioner,

DOMINIC OLIVEIRA,

Respondent.

-----------------------------------------------------------------On Writ Of Certiorari To The

United States Court Of Appeals

For The First Circuit

-----------------------------------------------------------------BRIEF OF AMICI CURIAE

STEVE VISCELLI, DOMINGO AVALOS,

GABRIEL PROCEL, BRION GRAY, JAMES ZUBER,

HECTOR ZELAYA, DESIREE ANN WOOD,

THE WAGE JUSTICE CENTER AND

REAL WOMEN IN TRUCKING, INC.

IN SUPPORT OF RESPONDENT

-----------------------------------------------------------------D. MICHAEL DALE

Counsel of Record

KATE SUISMAN

NORTHWEST WORKERS’ JUSTICE PROJECT

812 SW Washington Street, Suite 225

Portland, OR 97205

Telephone: (503) 525-8454

Facsimile: (503) 946-3029

michael@nwjp.org

kate@nwjp.org

[Additional Counsel Listed On Inside Cover]

================================================================

COCKLE LEGAL BRIEFS (800) 225-6964

WWW.COCKLELEGALBRIEFS.COM

CRAIG J. ACKERMANN

SAM VAHEDI

ACKERMANN & TILAJEF, P.C.

1180 South Beverly Drive, Suite 610

Los Angeles, CA 90035

Telephone: (310) 277-0614

Facsimile: (310) 277-0635

cja@ackermanntilajef.com

sv@ackermanntilajef.com

M. NIEVES BOLAÑOS

POTTER BOLAÑOS LLC

111 East Wacker Drive, Suite 2600

Chicago, IL 60601

Telephone: (312) 861-1800

Facsimile: (312) 861-3009

nieves@potterlaw.org

www.potterlaw.org

Counsel for Amici Curiae

TABLE OF CONTENTS

Page

INTEREST OF THE AMICI CURIAE .................

INTRODUCTION AND SUMMARY OF ARGUMENT ...............................................................

A BRIEF HISTORY OF THE ORIGINS OF

LEASE-OPERATOR FIRMS ............................

ARGUMENT ........................................................ 13

LEASE-OPERATORS LIKE MR. OLIVEIRA

ARE MISCLASSIFIED EMPLOYEES ...... 13

A. Prime’s Lease-Operator Management

Model is Part of a Coordinated Labor

Supply and Management System ........ 18

B. Prime Employs Lease-Operators to Perform its Core Business.......................... 21

C. Prime’s Lease-Operators are Employees for all Intents and Purposes .......... 25

D. The Lease-Operator Model negatively

Affects Workers.................................... 26

II. THE LEASE-OPERATOR MANAGEMENT

MODEL IS A THREAT TO GOOD EMPLOYERS, CONSUMERS AND THE

ECONOMY ................................................ 34

A. Misclassification has contributed to a

Shortage of Truck Drivers ................... 34

B. The Lease-Operator Model is Growing ... 35

C. The Lease-Operator Model Negatively

Impacts the Trucking Industry ........... 38

TABLE OF CONTENTS – Continued

Page

III.

THIS COURT SHOULD NOT FOSTER

MISCLASSIFICATION OF DRIVERS BY

PERMITTING EMPLOYERS WHO MISCLASSIFY DRIVERS TO REQUIRE RESOLUTION OF DISPUTES THROUGH

ARBITRATION UNDER THE FAA ........... 39

CONCLUSION..................................................... 40

iii

TABLE OF AUTHORITIES

Page

STATUTE

9 U.S.C. § 1 ....................................................................3

RULE

Rule 37.6 .......................................................................1

OTHER AUTHORITIES

ICC Termination Act of 1995........................................7

Motor Carrier Act of 1935 (P.L. 74-255, 49 Stat.

543) ............................................................................5

Motor Carrier Act of 1980 ............................................7

INTEREST OF THE AMICI CURIAE1

Steve Viscelli is a sociologist at the University of

Pennsylvania who studies work, labor markets, and

public policy related to freight transportation, automation and energy. His primary research focuses on how

state policy and informal labor market institutions

shape the behavior of workers and firms. Viscelli’s last

research project examined the effects of deregulation

on labor markets and the labor process in the trucking

industry and culminated in a book, The Big Rig: Trucking and the Decline of the American Dream (2016, University of California Press), in which he examines how

long-haul trucking was transformed from being one of

the best to one of the toughest blue-collar jobs in the

United States. His current book project explores the

policy and politics of self-driving trucks and their potential impacts on truck drivers. He submits this brief

to provide a better picture of the economic incentives

at work in the trucking industry.

Domingo Avalos, Gabriel Procel, Brion Gray,

James Zuber, Hector Zelaya and Desiree Ann Wood are

current or former owner-operator or Lease-Operator

truck drivers.

The Wage Justice Center is a 501(c)(3) non-profit

organization that advocates for economic justice in

In accordance with Rule 37.6, counsel for the amici curiae

certifies that no counsel for any party authored this brief in whole

or in part and that no person or entity other than the amici curiae

or its counsel made a monetary contribution intended to fund the

brief ’s preparation or submission. Both parties have consented to

the filing of this brief.

California’s working communities. It represents lowwage workers facing nonpayment of wages and advocates for policy changes that benefit workers.

REAL Women in Trucking, Inc. is a 501(c)(6) trade

association that promotes safety, education, and support networks for truck drivers. REAL Women in

Trucking, Inc. helps those in the trucking industry assert their workplace rights and advocates for stronger

protections for truck drivers of all classifications.

This brief will aid the Court because it presents

arguments and insights on the history of the Ownerand Lease-Operators in long-haul trucking, as well as

public policy surrounding the issues presented that are

not represented in the lower court opinions or the parties’ briefs on record.

------------------------------------------------------------------

INTRODUCTION AND

SUMMARY OF ARGUMENT

Petitioner New Prime, Inc. (“Prime”), like other

trucking firms, operates under a relatively new economic structure: the “Lease-Operator” model. This system, however, often harms employees by misclassifying

them as independent contractors. It also poses a serious threat to the nation’s trucking industry which, in

turn, jeopardizes the economy.

Firms like Prime attract newcomers to the industry by promising autonomy and stable work. Under

the Lease-Operator arrangement, however, drivers can

easily work 40 hours or more per week and still end up

owing money to their employer. It should be no surprise

that “Lease-Operator” firms like Prime often have a

turnover rate of well over 100% on an annual basis.

The Federal Arbitration Act prohibits courts from

applying the statute to “contracts of employment of

seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce.” 9

U.S.C. § 1. The Court should include the employment

arrangements of drivers like Respondent who are misclassified by their employers within the definition of

“contracts of employment.”

A BRIEF HISTORY OF THE ORIGINS OF

LEASE-OPERATOR FIRMS

Respondent Dominic Oliveira is one of tens of

thousands of Lease-Operators, workers classified as independent contractors. Lease-Operators are workers

who lease equipment from the same motor carriers by

whom they are employed. Lease-Operators generally

pay all of the expenses associated with operating the

equipment. However, Lease-Operators do not have the

“operating authority” to contract to haul interstate

freight for customers in compliance with federal law.

Instead, Lease-Operators operate under the legal authority and within the operations of the motor carrier

for which they work.

Within these operations, Lease-Operators are

managed in a manner virtually identical to other

“company drivers” properly classified as employees by

the motor carrier.

Lease-Operators are most common at firms that

employ inexperienced truck drivers.2 Increasingly they

are, like Mr. Oliveira, completely new to the industry

and presented with the choice of being an employee or

a Lease-Operator as soon as they complete their initial

training to be a truck driver.

Contrary to the suggestion of Petitioners and their

amici, these Lease-Operators are neither a “longstanding tradition in the trucking industry” nor

critical to the bulk of freight movements in the U.S.

Instead, the Lease-Operator management model is a

labor strategy of relatively recent origin used primarily in two very competitive segments of the long-haul

industry – refrigerated truckload and dry van truckload. Firms engaged in these segments have employed

this strategy to gain a competitive advantage in labor

costs and to insulate themselves from the risk of the

inherently volatile markets in which they operate.3

Prime uses drivers like Mr. Oliveira to haul freight in

interstate commerce and treats them like employees.

It should not be permitted to shield this arrangement

from judicial review by relegating all disputes by its

drivers to individual arbitration.

Viscelli, Steve, 2016, The Big Rig: Trucking and the Decline

of the American Dream. Oakland: University of California Press,

Chapter 3.

Viscelli, Chapter 6.

For most of the twentieth century, large trucking

firms were profitable and truck drivers, most of whom

were members of the International Brotherhood of

Teamsters, were among the nation’s highest paid bluecollar workers.4 Before the 1970’s pushed the industry

to deregulate, extensive economic regulation – made

possible by the Motor Carrier Act of 1935 (P.L. 74-255,

49 Stat. 543) – helped the trucking industry restrict

both immediate price competition and market entry,

creating both profit for trucking companies and high

wages for drivers.

The Carrier Act was passed, in part, to address the

industry’s tendency to create excessive competition.

Two trucking-specific conditions led to this excessive

competition: First, because trucking lacks asset specificity, trucks are, for the most part, interchangeable

and readily available – lowering the barriers to entry.

As a result, at times when trucking is profitable, new

firms are able to enter the market and existing firms

can increase capacity quickly.

Second, because trucking is a derived-demand industry and subject to high market volatility, productivity is entirely dependent on the immediate demand for

its services from customers. When demand slackens,

some portion of equipment, facilities, and labor will be

immediately underutilized. When that happens, firms

may have strong incentives to “keep the wheels rolling”

Belzer, Michael, 2000, Sweatshops on Wheels: Winners and

Losers in Trucking Deregulation. New York: Oxford University

Press.

by cutting the rate they charge customers, even taking

a loss on individual loads to maintain market share or

generate revenue to cover fixed expenses and survive

down periods. These characteristics mean there is significant risk but very little, if any, profit made by

simply owning trucks as an asset.

During the mid-twentieth century, the rise of collective bargaining allowed for wages to be taken out of

competition and working conditions standardized

across much of the nation. The dominant firms, known

as less-than-truckload (“LTL”) firms, hauled relatively

small loads and used terminal systems to combine the

types of goods they had the federal authority to haul

based on origins and destination. Firms that held similar authorities set rates cooperatively amongst themselves, which then were approved by the ICC and made

public. In short, trucking firms in most segments of the

industry did not compete based on how much they paid

workers or working conditions. Because regulation restricted market entry, these firms were able to pass

higher labor costs on to consumers in the form of

higher prices.5

The late 1970’s ushered in a new wave of deregulation to “promote competitive and efficient transportation services” and “allow a variety of quality and

price options to meet changing market demands.”6 The

See James, Ralph C., and Dinerstein, Estelle, James Hoffa

and the Teamsters. Princeton: Van Nostrand, 1965. Also, Sloane,

Alfred, Hoffa. Cambridge. MA: MIT Press, 1991.

49 U.S.C. § 13101 (LexisNexis, Lexis Advance through P.L.

115-196, approved 7/7/18).

Motor Carrier Act of 1980 significantly reduced the

level of federal regulation in the trucking industry.

Then, with the ICC Termination Act of 1995, Congress

finally ended sixty years of motor carrier regulation.

This act eliminated virtually all economic control of

motor carriers and abolished federal oversight over the

industry.

The consequences of this deregulatory push were

swift and robust. The Motor Carrier Act of 1980

plunged the industry into chaos as destructive competition immediately became the norm. By freeing carriers from needing hauling authorities for specific goods

and places, the vast majority of the leading LTL firms

were driven out of business as new “truckload” firms

began by-passing terminals and hauling whatever

freight they could find. Intense cost-cutting competition triggered lower wages, greater amounts of unpaid

work, and less desirable working conditions for truckers. Total employee compensation per mile fell by 44%

in long-haul trucking from 1977 to 1987.7 Within two

decades of deregulation conditions had deteriorated so

much that Dr. Michael Belzer, a leading economist of

the industry, characterized some long-haul trucks as

“sweatshops on wheels.”8 These conditions upended

Corsi, Thomas M., and Stowers, Joseph R., 1991, “Effects of

a Deregulated Environment on Motor Carriers: A Systematic

Multi-Segment Analysis.” Transportation Journal 30:4-28.

Belzer, Michael, 2000, Sweatshops on Wheels: Winners and

Losers in Trucking Deregulation. New York: Oxford University

Press.

labor-capital relations and worker churn became the

norm.

To survive, carriers began subcontracting to independent owner-operators. Subcontracting to these

owner-operators, who worked primarily in the unregulated field of agricultural hauling, allowed larger motor

carriers to shed the costs of expensive, inflexible unionized labor. Trucking firms also used independent

owner-operators as a means to avoid the risk of owning

their own trucks under the chaotic and hyper-competitive market conditions of the time.9

Still, the shift to independent owner-operator labor

was short-lived. Despite carrier interest, by the mid1980’s this labor supply declined rapidly as intense

competition and declining freight rates bankrupted

many trucking firms, including owner-operators. That

allowed the most profitable for-hire motor carriers to

quickly grow truckload firms and generate profits by

leveraging non-union employee drivers and altering

route planning and selection. Independent owneroperators were squeezed by declining rates and were

no longer able to invest sufficiently in their equipment,

which led to poor customer service and a loss of productivity.10

Nickerson, Jack A. and Silverman, Brian B., 2003, “Why

Firms Want to Organize Efficiently and What Keeps Them from

Doing So: Inappropriate Governance, Performance, And Adaptation in a Deregulated Industry.” Administrative Science Quarterly 48 (2003): 433-65.

Corsi, Thomas M. and Grimm, Curtis M., “ATLFs: Driving

Owner-operators into the Sunset.” Journal of Transportation

The high asset utilization rates achieved by the profitable long-haul truckload companies that emerged after

deregulation required dependable trucks and drivers

that would accept nearly every load that was assigned

to them. These needs intensified as the biggest firms

developed increasingly sophisticated load planning

with the assistance of new communications technologies in the 1990’s.

Most important in terms of technology were satellite-linked computers onboard trucks, like the Qualcomm unit that Prime required Mr. Oliveira to use

while working for Prime.11 Truck drivers at Prime are

monitored on a regular basis via satellite-linked computers, commonly referred to as “Qualcomms” – the

name of the most common systems manufacturer.

Prime’s contracts require that all lease-purchase operators use Qualcomm units in their trucks. These Qualcomm units, as suggested above, are extensively used

in the industry and can be configured to collect a range

of information depending on the settings of the basic

software and various add-on software packages available from Qualcomm. The system can also inform managers whether the truck is running, the vehicle’s speed,

how much fuel it has used, its odometer reading, and

a whole range of potential other information, all

in real time. The most central features of the basic

Research Forum 29 (1989): 285-90. Also Corsi, Thomas M. and

Grimm, Curtis M., “Changes in Owner-Operator Use, 1977-1985:

Implications for Management Strategy.” Transportation Journal

26, no.3 (Spring 1987): 4-16.

JA66.

software allow for regular updates of vehicle location

and speed. This information is sent at regular intervals

that can be specified by the firm. Authorized software

users, typically including driver managers, can also

“ping” trucks, requesting this information from the

truck. This information allows managers to track the

progress of trucks and determine whether they are ontime to meet delivery estimates provided to customers.

Qualcomm records produced in another case

against Prime show that driver managers use this information to directly manage Lease-Operators as one

would expect for employees.

These satellite systems allowed firms, for the first

time, to monitor drivers in real time and to use that

information to direct drivers’ activity and coordinate it

with that of other drivers. These tools became essential

to ensuring efficient operations and creating the level

of service customers came to expect in the era of increasingly lean inventories.12

As this system developed, independent owneroperators were increasingly seen as unwilling or unable to submit to monitoring and control of these new

management systems and maintenance schedules that

came to dominate long-haul truckload trucking of refrigerated and dry freight. As a result, although the

For a detailed account of how this technology allows Prime

to monitor Lease-Operators to ensure on-time delivery, see

USDOL Hr’g Tr. 58-59, In the Matter of: Cynthia Rae Ferguson v.

New Prime, Incorporated, 2011 DOL Ad. Rev. Bd. LEXIS 81, on

file with author Steve Viscelli.

low pay and reduced capital costs of independent

owner-operators were appealing, the number of loads

hauled by independent owner-operators in these segments dropped dramatically.13

Post-deregulation, the need for control and expensive equipment led the leading truckload carriers to

generally favor non-union employee labor. But continually deteriorating pay and working conditions caused

increasingly high levels of employee turnover and associated costs. In an attempt to retain drivers longer

and gain the cost advantages of the independent

owner-operators of the past, carriers began experimenting with new management models. Independent

owner-operators with the capital to buy the reliable

trucks did not offer sufficiently cheap labor and they

clearly did not afford carriers the necessary degree of

control. Thus, firms began transforming the labor market institutions around contracting to create a new

breed of owner-operator that would fit their needs: the

Lease-Operator.14

Key characteristics of traditional owner-operators

– such as choosing when to work and what loads to

haul based on price competition – are fundamentally

at odds with the approach taken by the dominant

truckload firms. Lease-Operator firms like Prime need

workers who, despite having no capital or credit, will

Corsi, Thomas M., and Stowers, Joseph R., 1991, “Effects

of a Deregulated Environment on Motor Carriers: A Systematic

Multi-Segment Analysis.” Transportation Journal 30:4-28.

See Cullen, D., “Owner-operators: A Measure of Success.”

FleetOwner, June 1, 1998, p. 36. Also see Viscelli, Chapter 3.

pay for equipment and take whatever load is offered to

them. These firms have re-framed this practice on paper to make it appear as though they are not telling

their drivers what to do, but instead encouraging them

to do what it takes to meet the needs of their customers

and a smart way to “run their own small business.”

Through various individual and industry-wide

recruitment and informational efforts (e.g., trucking

newspapers), a handful of trucking firms began to create a pool of Lease-Operators which were very different from the past owner-operators.15 In the mid-1970’s,

a majority of all owner-operators were union members

in many segments; virtually none are today.16 Just before deregulation 33% of all owner-operators owned

more than one truck and 16% of all owner-operators

owned more than five trucks.17 By 1997, less than 14%

of all owner-operators owned more than 1 truck and

less than 2% owned more than five trucks.18 Perhaps

most importantly, by 1997 90% of Lease-Operators

In this paragraph the term owner-operator is used because

due to different survey methodologies and the changing nature of

owner-operator/motor carrier relationships after the mid-70s, independent owner-operators and Lease-Operators were not always

clearly distinguished in research.

Wyckoff, Daryl D. 1979, Truck Drivers in America. Lexington,

MA: Lexington Books.

Agar, Michael, 1986, Independents Declared: The Dilemmas

of Independent Trucking. Washington, DC: Smithsonian Institution

Press.

Belman, Dale L., Monaco, Kristen A., and Brooks, Taggert J.,

2005, Sailors on the Concrete Sea: A Portrait of Truck Drivers’

Work and Lives. East Lansing, MI: Michigan State University

Press.

received their payments through a permanent lease to

haul freight exclusively for a single company.19 In contrast, only 50% of all owner-operators were under

leases of thirty days or more in the mid-1970’s and

most of these drivers retained the right to haul for

other carriers.20

Before deregulation, 75-80% of owner-operators

hauling for larger motor carriers were paid a percentage of the load revenue and could haul for other carriers, which caused them to turn down loads to wait

for better paying ones.21 Lease-Operators, like Mr.

Oliveira, in contrast, are dependent on work from a

single carrier for all of their revenue, and thus are very

unlikely to refuse loads. Today, there are very few independent owner-operators in the market Prime competes in, which moves primarily food freight for large

customers.

------------------------------------------------------------------

ARGUMENT

LEASE-OPERATORS LIKE MR. OLIVEIRA

ARE MISCLASSIFIED EMPLOYEES.

While there is no question that true independentowners exist in the trucking industry, Prime’s drivers

certainly do not meet this classification. Independent

owner-operators are distinguished on numerous

Belman, Monaco & Brooks, 2005.

Wyckoff, 1979; Agar, 1986.

Maister, David H. 1980, Management of Owner-Operator

Fleets. Lexington, MA: Lexington Books.

dimensions from Lease-Operators but primarily by the

fact that they:

Lease-Operators

Owner-Operators

Operate under the au- Must have their own haulthority of a motor carrier ing authority (they are in

fact single truck or very

small for-hire motor carriers, with the legal authority to haul freight).

Do not deal directly with Deal directly with customcustomers and generally ers in finding and pricing

have no knowledge of the loads

rates or pricing used for

loads

Are assigned loads and Set the rates they charge

paid a fixed rate set by the to customers based on

trucking firm

market conditions both

relative to their costs and

competition

Work for large trucking Tend to serve predomifirms

nately small shippers or

concentrate on highly specialized freight that requires

specialized knowledge or

equipment (e.g., hauling

heavy equipment) that does

not provide a return to the

economies of scale crucial

to large truckload firms

Because Lease-Operators lease a truck and pay for

fuel, maintenance, and insurance, firms can potentially

shift a significant amount of capital and operating

costs to them, translating into much lower labor costs

per unit of work. And, though Lease-Operators are often nominally free to choose what loads they haul, they

are generally under greater pressure than employees

to accept whatever work is offered to them and to

spend more days working because they need to work

many more hours per day and days per year to meet

fixed expenses and then earn take-home pay at levels

even close to what they would earn as company drivers. Getting workers to stay on the road longer is critically important. Prime reports that its company

drivers typically stay out three to four weeks at a time,

Lease-Operators typically stay out five to six weeks at

a time.22

Because of their financial vulnerability and the

feared costs involved in breaking contracts and switching firms (e.g., loss of funds in escrow accounts, deposits required to lease equipment and future lease

payments), Lease-Operators feel less free than company drivers to quit bad firms, resulting in lower turnover than employees when labor markets are tight and

there is upward pressure on wages.

Quite simply, Lease-Operators solve the challenge

of simultaneously achieving high asset utilization and

customer satisfaction with cheaper labor. With LeaseOperators, when workers don’t work as hard, get sick

https://www.primeinc.com/paid-apprenticeship-cdl-training/

or go home, they pay the cost of the idle equipment assigned to them. At the same time, firms don’t lose the

ability to manage that labor as they would any other

employee. Simply because firms like Prime have refined the Lease-Operator management model and now

depend on it for the bulk of their labor, does not mean

they do not have the ability to adapt or that there are

no other working models for sustainable labor in the

industry. In contrast to Prime’s practices, many other

large truckload carriers still rely predominantly on

very inexperienced company drivers.23

Prime is a firm organized for the purpose of making a profit, not as a small business incubator. The circumstances in which Mr. Oliveira found himself were

deliberately structured by Prime to meet its goals. The

behavior, opportunities and consequences for Prime’s

Lease-Operators are the result of that economic relationship. The question is: what is the nature of that relationship? Was Mr. Oliveira a misclassified employee

of Prime at all times during his employment or, as the

petitioners claim, was he an independent small business person while working as a Lease-Operator for

Prime?

When the needs and goals of Prime are understood, what workers like Mr. Oliveira do is clearly best

seen not as the result of a “business model” carried out

by truck drivers such as Mr. Oliveira but, rather, a labor management strategy designed to increase the

Burks. 2007.

productivity of employee drivers and Prime’s overall

profitability.

Furthermore, the nature of Prime’s business requires that Prime directly manage Lease-Operators

like Mr. Oliveira in the same manner as it would any

employee truck driver in order to realize its own interests. Prime does not “buy” discrete units of trucking

service from Lease-Operators as one business would

from another (using a contract that specifies a particular outcome). Instead, Prime “makes” trucking service

– that is its core business – and Prime utilizes LeaseOperator labor to carry out that business. Prime manages the labor activity of Lease-Operators as they go

about doing their work to ensure that they meet

Prime’s customers’ demands, increase the utilization of

Prime’s assets, etc. Prime also monitors the labor activity of Lease-Operators and, when Prime management perceives that the firm’s goals are in jeopardy

(e.g., that a delivery to a valued customer might be

late), it intervenes by directing the Lease-Operator’s

labor activity or by coordinating the labor activity of

the Lease-Operator with that of other workers (e.g.,

it swaps loads between tractors to ensure on-time delivery).24 From an economic perspective, monitoring,

directing and/or coordinating the labor activity of

workers in order to realize one’s own economic interests of making a profit is the very essence of what it

means to employ.

Ferguson USDOL Hr’g Tr. 56-58.

A. Prime’s Lease-Operator Management

Model is Part of a Coordinated Labor

Supply and Management System.

The Lease-Operator model is one component of the

overall labor recruitment and management strategy at

Prime. It is important to understand how it fits with

the other components, particularly to understand how

and why, in the event they are actually given a choice,

workers might choose to become Lease-Operators

without appreciating the consequences. Recruiting and

training inexperienced drivers allows firms like Prime

to home-grow Lease-Operators. Firms want drivers to

follow a career path from trucking school to employee

trainee to lease-operating. This is what firms in the industry refer to as their labor “pipelines.” Again, the

Lease-Operator management model is not a “business

model” but a central part of Prime’s overall labor supply and management system.25

Some trucking carriers provide better compensation to their workers, have more experienced drivers

and save on training, recruitment, insurance and other

costs. Instead of paying high wages, firms like Prime

use inexperienced workers, pay them less and employ

a number of coordinated strategies to delay worker exit

for experienced workers without raising wages.

Relying on completely inexperienced drivers requires training them, and the need to train new workers has segmented truckload employers into those

https://www.trucknews.com/features/prime-inc-travelleda-rocky-road-to-prosperity/

firms that recruit and hire inexperienced drivers and

those that do not. While small- and medium-sized

firms are unlikely to hire drivers with less than one

year of experience due to the cost of training and insuring them and their lower productivity, several

dozen of the largest firms, including Prime, have established training programs that allow them to hire drivers with no experience at all.

Operating a training program is a major undertaking and potentially a significant cost to carriers.

Prime, like others, uses a contract that requires workers to work for them for a year or pay for training.

Economists Hoffman and Burks (2013) concluded that

training contracts have reduced quitting at trucking

companies significantly.26 Carriers typically charge

drivers more than what they expend on actual training

costs. Prime’s training contract for what they characterize as a “paid-apprenticeship” requires drivers to

work for a year or pay the company $4,475.27 And, thus,

many of the workers who try out trucking every year

do so under a modern form of debt peonage.

Once workers can leave without penalty from the

training contract – one year of safe driving experience

makes a big difference in this labor market – options

at better-paying truckload, local, niche, or private

Hoffman, Mitchell and Burks, Stephen V. 2013. Training

Contracts, Worker Overconfidence, and the Provision of FirmSponsored General Training, available at: http://dx.doi.org/10.

2139/ssrn.2220043

https://www.primeinc.com/paid-apprenticeship-cdl-training/

carriers with better work routines and pay begin to

open up. To retain these more experienced drivers,

truckload carriers, trucking media, and third-party

“business consultants” convince workers to become

Lease-Operators, promising that lease-operating will

be financially rewarding and give workers additional

control over working conditions. But, as suggested

above, being a lease-operator ends up being worse for

most truckers than being an employee. Simply put, it

allows carriers to pay more productive drivers far less

than they are worth in relation to other employers in

terms of productivity.

Prime and several of its closest competitors in refrigerated truckload freight, like CR England, have recently taken the Lease-Operator management model

to a new level. While other firms in the segment typically do not encourage workers to become Lease-Operators until they have six months or a year of experience

in the industry, these firms aggressively recruit drivers

with no experience at all to be Lease-Operators right

out of their initial training – as Prime did with Mr.

Oliveira. One of the biggest changes in the LeaseOperator model in recent years is that workers brand

new to the industry are paying the entire cost of operating trucks before they can earn any take-home pay.

As the evidence in this case makes clear, these drivers

not only pay all of these costs but can receive no pay in

some weeks that they work. During such weeks, not

only does Prime benefit by their drivers’ free labor, but

they also prosper from the drivers’ covering all of the

expenses for their trucks. This simply could not occur

in the traditional employment context, and it is difficult to imagine a labor management strategy that

would make Prime more competitive than that.

B. Prime Employs Lease-Operators to Perform its Core Business.

Prime’s core business is hauling truckload refrigerated freight for large customers. In simple terms,

Prime’s profitability rests on two core activities: (1)

sales activities to find the highest revenue freights to

haul; and (2) operations oriented to deliver that freight

at the lowest possible cost while fulfilling contracts

and satisfying customers. Truckload refrigerated firms

like Prime use their resources and relationships with

customers to find the highest revenue freight based on

predictions of where Prime trucks – both company and

Lease-Operator – will be in the future. The sales staff

then makes commitments to Prime’s customers based

on predictions of the operational capacity of the company. In other words, sales staff make contracts to

haul freight at a particular price with a given set of

characteristics and requirements without any input

from or agreement with the drivers – company or

Lease-Operators – that will haul it. Prime, in conducting the sales side of its business, does not distinguish

between the freight that will be hauled by LeaseOperators and employee drivers. That is a future concern dealt with by the planning and dispatching staff

in operations. This means that Prime conducts all of

this important work with an eye toward its own interests.

It is then the operations side of the business that

is charged with producing the outcomes promised – the

delivering of freight from and to particular locations

within specified times to Prime’s customers as efficiently and profitably as possible. That work will be

done by Prime’s drivers, whether they be LeaseOperators or company employees.

All drivers at firms like Prime, whether company

or Lease-Operators, are not given specific information

about what work is available, why work gets assigned

to them, and, consequently, what latitude there is to

change work assignments. They are told only that

there is little flexibility, it is costly and difficult to

change load assignments, and that load planning is

done systematically and with the greatest possible efficiency and fairness. All of those things are true.

The key to success in load planning is finding the

most immediately-available load for each truck while

minimizing the number of miles all trucks travel

empty to reach that load, known as deadheading. The

job of load planners is to find the optimal match of

available loads to available trucks.28 This approach is

the most profitable way to act in truckload freight markets and requires flexibility in terms of drivers’ work

schedules and geographic range. The assignment of

loads is interdependent and so if Lease-Operators turn

down loads, it can cause a major headache for load

planners, who must often rework other drivers’ assignments in order to compensate. Driver managers have

Ferguson USDOL Hr’g Tr. 25.

plenty of leverage over Lease-Operators to ensure that

they take the loads assigned to them – they can simply

threaten to idle them because nothing else is available.29

Nearly all truck drivers working in the over-theroad truckload industry are paid either by the mile, as

Prime’s company drivers are, or by a percentage of the

load, as Prime’s Lease-Operators are. Truckers try to

find the most efficient ways to organize their work

tasks in order to increase their pay – regardless of

whether they are employees or Lease-Operators.

Drivers will make essentially the same kinds of

decisions to drive as many paid miles as possible.

Though having the ability to choose loads and how

they haul loads is common in the rhetoric about the

differences between Lease-Operators and employees,

at firms like Prime there is no meaningful difference

in how these workers are assigned work or managed

as they carry it out. Prime controls and assigns all

work available to its Lease-Operators. What leaseoperating does is raise the stakes for workers to ensure

they make the most out of the equipment they are paying for, something that makes them more productive

and thus more profitable for Prime. In fact, Prime’s

founder and CEO Mr. Low often refers publicly to the

firm’s move from employees to owner-operators as one

intended to achieve “alignment” of interests.30

Viscelli, Chapter 4.

https://www.trucknews.com/features/prime-inc-travelleda-rocky-road-to-prosperity/

Despite this alignment of interests through the

compensation scheme, once a driver is under way with

a load, Prime driver managers do extensive monitoring

and direction of Lease-Operators.31 Their job is what

their name implies: to manage drivers. They do this because ultimately Prime is responsible for making ontime trucking service and Prime retains the authority

to manage workers to achieve that end.

Perhaps the clearest indication that Lease-Operators are treated like employees is that their labor activity is coordinated with that of other employees of

Prime. The clearest example of this is when a driver

manager “repowers” loads.32 A repower is essentially

any time when a driver is given a load to haul but cannot complete it in the time required and so Prime coordinates the load being handed off to another driver to

ensure on-time delivery.

This kind of management is entirely inconsistent

with the idea that Prime is buying or contracting the

services from a separate, distinct transportation company. This would be like you or I contracting with

FedEx to transport a parcel for us and, as we are tracking the progress of the parcel online, we realize it will

not arrive when we want it to. We would then call a

UPS driver and instruct him on when and where to

meet the late FedEx driver to ensure a hand off of the

package for on-time final delivery. What Prime is doing

Ferguson USDOL Hr’g Tr. 58-63.

Ferguson USDOL Hr’g Tr. 56-57.

when it repowers loads is clearly directing workers in

the making of trucking services.

C. Prime’s Lease-Operators are Employees

for all Intents and Purposes.

Prime’s Lease-Operators are employees, not small

business owners. Prime’s Lease-Operators cannot and

obviously do not “make” trucking services on their own.

Prime’s Lease-Operator business model is part of the

firm’s overall labor supply and management system. In

fact, Lease-Operators are managed right alongside

and simultaneously with company drivers. The only

important difference between company drivers and

Lease-Operators is that Lease-Operators are responsible for fixed and operating costs, which allows Prime to

work them harder and pay them far less.

Prime staff actively manages Prime Lease-Operators as if they were employees, regularly monitoring

their activity in real time. There are also clear indications that Prime coordinates the labor of the LeaseOperators with other workers in order to achieve its

goals, most importantly, ensuring on-time deliveries of

loads. From an economic perspective, the use and management of Prime Lease-Operators is a central part of

Prime core business and thoroughly integrated in the

most critical processes of that business with the labor

of employees.

Prime Lease-Operators do not and cannot independently perform many of the essential tasks required to provide trucking services to customers. In

other words, they simply could not move freight without Prime. They do not find loads, engage with customers to negotiate prices for their services, provide

meaningful capital investments or do a wide range of

other kinds of work that is required for participation

in the business of trucking, including the most fundamental requirement of obtaining the legal authority to

provide freight services.

Despite the terms applied by Prime to their situation and behavior, Prime Lease-Operators clearly behave and are treated like employee truck drivers.

D. The Lease-Operator Model negatively

Affects Workers.

True independent contractors make daily choices

about their working conditions. They can refuse a load

that does not pay well. They can take a break when

they are tired. As explained below, misclassified drivers do not enjoy these same freedoms.

The experience of amicus curiae Domingo Avalos

provides an example of a Lease-Operator who is micromanaged by his employer as he does the company’s

core business.33 Mr. Avalos has been a truck driver for

XPO Cartage Inc. (“XPO”) at the Ports of Los Angeles

and Long Beach in California since 2010. The State of

California’s Department of Industrial Relations, Division of Labor Standards Enforcement (“DLSE”) found

All information in this section is based on an interview

conducted with Mr. Avalos on July 5, 2018.

in December 2016 that Mr. Avalos has been misclassified as an independent contractor. The DLSE further

found that he is owed $171,938.25 in back wages, reimbursable business expenses and interest.34

Mr. Avalos picks up freight containers at rail yards

in the Los Angeles area and delivers them to XPO’s

customers throughout Southern California. Despite

being classified as an independent contractor, Mr. Avalos conducts only the regular work of XPO, which is

transportation and logistics. He has no customers or

accounts of his own and does not interact with any of

XPO’s customers. He does not have an incorporated

business of any type. XPO dispatches Mr. Avalos to all

of his jobs. When Mr. Avalos drives, his truck bears an

XPO logo. He may not change or remove the logo, nor

put another logo alongside it. He may not make deliveries for companies other than XPO. His routes are set

by XPO. When he is not carrying loads for XPO, he is

required to park the truck in XPO’s lot.

The DLSE found that when properly classified as an employee, Mr. Avalos is owed $128,396.48 in back wages, $38,290 in

reimbursable business expenses and $5,251.77 in interest. XPO

has appealed this determination. These amounts accrued over a

period of three years, between January 26, 2013 and January 26,

2016, the date on which Mr. Avalos filed his complaint with the

DLSE. Under California law, the Statute of Limitations for claims

based on statutory rights is three years from the date the right to

reimbursement occurred. Mr. Avalos began working for XPO on

June 1, 2010. The wages the DLSE found to be owed to Mr. Avalos

represent about half the total he would be owed if some of his

claims were not time-barred. Order of the Labor Commissioner of

the State of California, Case Number 05-66468 KR.

After about two years of driving a truck for XPO,

Mr. Avalos was told by his employer he would have to

lease a truck from the company to continue driving for

them. He was required to sign all the paperwork in a

large stack of documents. Mr. Avalos is a native Spanish speaker, and estimates that he understands about

10% of spoken English. He cannot read or write in English. Despite this, Mr. Avalos did not have the opportunity to review the paperwork before signing. His

employer told him where to sign and initial the documents, which were provided in English exclusively.

Among these papers was an agreement to arbitrate.

Also included was the lease agreement, whose terms

Mr. Avalos was eventually unable to meet. Within

three years, he had to give up his lease on the truck.

Since this time, he has been driving other drivers’

trucks for XPO, and paying the other drivers a fee to

do so.

The story of amicus curiae Gabriel Procel provides

an example of the limited control over the terms and

conditions of work some owner-operators enjoy. Mr.

Procel has been a truck driver at the Port of Elizabeth

in New Jersey since 1998.35 During this time, Mr.

Procel has worked as an owner-operator for about 15

trucking companies.

When Mr. Procel first applied to be a truck driver,

he was not offered a contract for full-time employment.

Instead, he was offered an independent contracting

All information in this section is based on an interview

conducted with Mr. Procel on July 12, 2018.

agreement. Under the terms of this agreement, the

trucking company would lease Mr. Procel’s truck in order to insure it when it was carrying their loads. This

prevented him from driving for any other companies.

He was also instructed to set up his own company. He

was referred to a nearby accountant who assisted him

in setting up a company in his name. Mr. Procel was

then considered an owner/operator of his own company. As such, he was responsible for paying his vehicle

insurance, gas, tolls, International Fuel Tax Agreement licensing fees and taxes, all maintenance of his

vehicle and parking costs. He received instructions on

where to pick up and take the cargo from a teller’s window at the company. He was given a large sticker with

the company logo to affix to his truck, and was told it

must remain on the truck at all times. If Mr. Procel rejected an assignment, dispatchers would retaliate by

withholding dispatches for two-or-three days, or by offering inconvenient jobs with long unpaid waiting

times. Though he worked for 15 different companies,

each company had substantially similar written and

unwritten policies.

Mr. Procel worked eight to sixteen hours a day,

five-or-six days a week, or between forty-five and

ninety-six hours a week. He estimates that 50% of his

take-home pay was used to pay insurance, gas, taxes,

maintenance and the other expenses enumerated

above.

Mr. Procel recently left his employment as a truck

driver to join the Teamsters union as an organizer. He

is currently organizing workers who are misclassified

as independent contractors.

The account of amicus curiae Brion Gray illustrates how difficult it can be to make a living as an

owner-operator.36 Mr. Gray has been driving a truck in

the Northeast Corridor for the past six years. He currently drives for Maritime Delivery Services Inc. Mr.

Gray’s necessary business expenses as an independent

contractor are $1,690 to $1,990 a week. For the last

month, Mr. Gray has been living in his truck after becoming unable to afford the rent at his apartment in

Hightstown, New Jersey based on his earnings as a

full-time owner-operator of his own truck. In his words,

the company “owns” him.

Amicus curiae Hector Zelaya attempted to work

for more than one trucking company at a time, and

found out he did not have the independence to make

such a choice. Mr. Zelaya is an owner-operator who

works in and around Southern California for K&R

Transportation LLC (“K&R”).37

When Mr. Zelaya went to work for K&R, they gave

him explicit instructions on how to register a company

in his name. Once registered, K&R installed a GPS system on Mr. Zelaya’s truck, as well as a variety of stickers and licensing decals bearing the company name.

The company told Mr. Zelaya he was required to have

All information in this section is based on an interview

conducted with Mr. Gray on July 18, 2018.

All information in this section is based on interviews conducted with Mr. Zelaya on July 10 and 21, 2018.

the GPS system turned on at all times. He is paid a set

amount for each delivery of a load K&R assigns to him.

He has no power to negotiate his rates nor the option

to refuse an assignment.

When Mr. Zelaya questioned the profitability of an

assignment (i.e., when an assignment would require

excessive unpaid inspection time at a port), he was told

he could go somewhere else if he did not like it because

there are other drivers to take his place. In fact, Mr.

Zelaya does not have the ability to go elsewhere. He

tried. When the company was not giving him many

jobs, Mr. Zelaya tried to use his truck to help a friend

transport cargo. When K&R became aware of this,

likely through the GPS tracking system it had installed, it threatened to take away his privileges, including use of the company parking lot and diesel

stations, if he did not stop.

In contrast to the above accounts, amicus curiae

Desiree Ann Wood is an experienced, self-employed

truck driver who books her own freight.38 Before becoming a true independent contractor, Ms. Wood believes she was misclassified. She drove a company

truck and could not take on additional loads for other

trucking companies. She was paid by the drive mile,

and could not negotiate this rate. Her former employer

would send Ms. Wood on multiple jobs in a single day,

each with only a short drive required. This resulted in

Ms. Wood spending much of the day waiting for cargo

All information in this section is based on an interview

conducted with Ms. Wood on July 10, 2018.

to be loaded or unloaded. Because her wage was tied

solely to mileage, Ms. Wood was making a pittance despite working the maximum 14 hours a day allowed

under Federal Motor Carrier Safety Administration

regulations.39 Despite the long hours, sometimes her

take home pay was only $105.00 per day.

Eventually, Ms. Wood was forced out of the job. She

applied for unemployment insurance but was denied

simply because the company claimed she was classified

as an independent contractor. Though she provided

ample evidence that she had exercised no control of or

independence in her work, the unemployment board

accepted the company’s classification of her without an

analysis of the nature of the relationship. Ms. Wood

was left without any source of income for weeks.

Currently, Ms. Wood is a true independent contractor. She is based in Florida but makes trips throughout

the lower forty eight states, while contracting for a

company that operates out of Delaware. This new company provides insurance for the tractor and cargo, as

well as administrative support. In return, Ms. Wood

gets paid up to 98% of each load rate and is able to decide which loads to accept. She can now negotiate load

rates based on the ever-fluctuating rate boards. She

works when she chooses, makes a living wage, and is

truly independent.

Workers’ rights organizations such as amicus curiae Wage Justice Center offer a broad perspective on

49 C.F.R. 395.3(a)(2).

the employment relationship between a truck driver

and a trucking company. Jay Shin, Directing Attorney,

has represented many workers including truck drivers

in class actions and other forms of litigation.40

Nearly half of container imports to the United

States come through the Ports of Los Angeles and Long

Beach (“the Ports”).41 In 2008, the Port of Los Angeles

instituted the Clean Truck Program, which put in

place environmental standards for all trucks entering

the Ports.42 According to Mr. Shin, most workers who

had succeeded in purchasing a truck quickly learned

that their trucks did not meet the Ports’ new environmental standards. Unable to afford to purchase compliant trucks on their own, many drivers entered into

leases with trucking companies. When a driver left a

company or was fired, his or her truck remained with

the company. All equity a driver had accrued in a truck

became the property of the trucking company.

In Mr. Shin’s view, instances of misclassification

greatly increased at this time. Due to this shift in the

power dynamic as a result of the Clean Truck Program,

workers found themselves at the mercy of the trucking

company whose truck they were leasing.

Over the five-and-a-half years the Wage Justice

Center has been representing truck drivers, its attorneys have rarely if ever seen a truck driver who is truly

http://wagejustice.org/our-team/

USA Today, Brett Murphy, June 16, 2017, “Rigged. Forced

into Debt. Worked Past Exhaustion. Left with nothing.”

https://www.portoflosangeles.org/ctp/idx_ctp.asp

an independent contractor, though almost all are

so classified. Mr. Shin has represented many truck

drivers who sleep in their trucks, unable to afford to

pay rent on their take-home pay. He has had multiple

owner-operator clients file for bankruptcy due to the

large deductions from their paychecks for fuel, lease

payments, insurance, maintenance and other business

expenses.

Amicus curiae REAL Women in Trucking, Inc. has

advocated for truck drivers since 2010. In addition to

driving a truck full-time, Desiree Ann Wood is the

President of REAL Women in Trucking, Inc. In her experience, misclassified drivers rarely see the rate

board that she, as a true independent contractor, uses

daily to negotiate the best rates for her loads. After

paying for fuel, maintenance, taxes and other costs,

many misclassified drivers make less than minimum

wage. Many live in poverty despite working full-time.

II.

THE LEASE-OPERATOR MANAGEMENT

MODEL IS A THREAT TO GOOD EMPLOYERS, CONSUMERS AND THE ECONOMY.

A. Misclassification has contributed to a

Shortage of Truck Drivers.

The misclassification of drivers like Mr. Oliveira

as independent contractors is part of a broader set of

labor recruitment and management practices of workers by Prime and similar firms. This constellation of

practices creates a direct disadvantage to the misclassified drivers and other honest employers, and more

broadly threatens the economy by contributing to a

growing shortage of truck drivers in the United States.

This poses a serious threat to the nation’s economy

which is largely dependent on the movement of goods.

Through extensive advertising, a few dozen firms,

including Prime, have established themselves as gateways to the industry for perhaps as many as 150,000200,000 new truck driver recruits in some years.43

Those workers are drawn to the trucking industry by

the promise of a stable career and wages sufficient to

support a family. While traditional employers throughout the trucking industry provide stable jobs for the

bulk of truck drivers, they are now starving for labor

as the entry segments of the industry, where most new

truckers are initially recruited and trained, are increasingly influenced by firms like Prime who use the

Lease-Operator management model.

B. The Lease-Operator Model is Growing.

Prime and similar firms use deceptive practices

and government subsidies to create a revolving door

for would-be truck drivers that allows them to undercut the freight rates of competitors while ensuring

healthy profits.44 Unfortunately, such strategies allow

Burks, S.V., J. Carpenter, L. Gotte, K. Monaco, K. Porter,

and A. Rustichini, “Using Behavioral Economic Experiments at a

Large Motor Carrier: The Context and Design of the Truckers and

Turnover Project.” IZA Discussion Paper No. 2789 (May). Bonn,

Germany: IZA, 2007.

For example, for the importance of contracts to pay for training and the overestimation of workers in their potential earnings in

these firms to grow rapidly despite their driver turnover, which often exceeds 100% annually.45 Moreover,

this business model has been gaining traction, threatening to become a requirement of operating in certain

segments due to the nature of the competition. This

threatens not just Prime’s competitors but the stability

of the country’s freight movement system, which the

American Trucking Association (“ATA”) forecasts is

currently short more than 50,000 drivers. By 2026, the

ATA expects that number to more than triple.46

While just 3.5 million jobs in the U.S. require

workers to have a commercial driver’s license (“CDL”)

(these include not just heavy-truck drivers, but other

truck drivers and drivers of commercial passenger vehicles), there are around 10 million CDL holders currently in the US.47 Firms like Prime have built a

business model around the practice of cycling through

a publicly-subsidized stream of new workers and debt

peons. Some workers use public retraining grants

making motor carriers profitable. See Hoffman, Matthew and

Burks, Stephen V., “Training Contracts, Worker Overconfidence,

and the Provision of Firm-Sponsored General Training,” May 31,

2013, available at: http://ssrn.com/abstract=2220043

See Harrison, H.D. and Pierce, Julianne, “Examining Driver

Turnover and Retention in the Trucking Industry.” Center for Intermodal Freight Transportation Studies: Memphis and Nashville, March 2009.

http://www.trucking.org/article/New%20Report%20SaysNational-Shortage-of-Truck-Drivers-to-Reach-50,000-This-Year

Costello, B. and Suarez, Rod, Truck Driver Shortage Analysis 2015. Arlington, VA: American Trucking Associations. October, 2015. p. 4.

intended for unemployed workers and veterans to pay

for training while others become indebted to carriers

and associated training schools to pay for their training.48 Over the last two decades these firms have

brought into the industry several million workers who

quickly left after working as employees and living out

of the trucks they operate for weeks at a time, sometimes earning less than minimum wage. These inexperienced employees are often convinced for a time that

the solution to their problems is to become Lease-Operators, which, they are told, will give them greater

control over their work and lives.49

Unfortunately, lease-operating has the opposite effect, instead placing even greater pressure on workers

to work continually, sometimes for months at a time.

When these workers do return home for a few days,

they will end up earning very little take-home pay,

many times even owing the motor carriers they work

for hundreds of dollars. This outcome is a result of how

firms structure their relationships with Lease-Operators. In such weeks, workers like Mr. Oliveira can easily work what most Americans would consider a fulltime week of 40 hours or more and still end up owing

money to their employer.50

Hoffman, Matthew and Burks, Stephen V.

Viscelli, Chapter 3.

See Viscelli, Chapter 4.

C. The Lease-Operator Model Negatively

Impacts the Trucking Industry.

While these practices have come to set the competitive standard in some segments over the last decade

or so, the negative impact of these practices has not

affected traditional employers throughout much of the

trucking industry until quite recently.51 Better employers have historically enjoyed a stable workforce with

very low turnover.52 Now, as that workforce has aged

and is beginning to retire at greater rates,53 the practices of these high-turnover carriers will affect more of

the industry and consumers through higher prices.54 In

short, a large portion of what should have been the nation’s next generation of truck drivers has been cycled

in and out of trucks under the control of firms like

Prime and, as a result, has written off trucking as a

place to make a career.

Longton, Linda, March 21, 2018, “Special Report: Day of

Reckoning in Driver Shortage Saga.” Commercial Carrier Journal. https://www.ccjdigital.com/part-1-day-of-reckoning-in-drivershortage-saga/

American Trucking Associations, 2012, Benchmarking

Guide for Driver Recruitment and Retention. Arlington VA: American Trucking Associations.

Costello, Bob, Truck Driver Shortage Analysis 2017, October 2017. Arlington VA: American Trucking Associations.

Large firms are already experiencing much higher freight

costs, for example see: https://money.cnn.com/2018/05/14/news/

companies/truck-drivers-freight-costs/

III. THIS COURT SHOULD NOT FOSTER MISCLASSIFICATION OF DRIVERS BY PERMITTING EMPLOYERS WHO MISCLASSIFY

DRIVERS TO REQUIRE RESOLUTION OF

DISPUTES THROUGH ARBITRATION UNDER THE FAA.

Workers who must arbitrate their claims are 59%

less likely to win than those who take their case to federal court and 38% less likely to win than workers litigating in state courts.55 The median award in

mandatory arbitration is 21% of the median award in

the federal courts and 43% of the median award in the

state courts.56

Because arbitration clauses typically now include

a bar to collective enforcement, it will be difficult for

workers to bring the issue of misclassification in the

trucking industry forward. Since arbitration awards

are not normally reviewable on appeal, and have no

stare decisis effect, arbitration will not be an effective

tool for remedying the widespread abuse caused by

misclassification in the trucking industry.

Employers who misclassify employees stand to

gain significantly by using forced arbitration to resolve

disputes. This Court should not read the FAA in a way

that allows them to require arbitration of disputes

about the nature of employment in the industry.

-----------------------------------------------------------------55

Economic Policy Institute Report: https://www.epi.org/files/

2015/arbitration-epidemic.pdf pm19-20

Ibid.

CONCLUSION

The judgment for the Court of Appeals for the

First Circuit should be affirmed.

Respectfully submitted,

D. MICHAEL DALE

Counsel of Record

KATE SUISMAN

NORTHWEST WORKERS’ JUSTICE PROJECT

812 SW Washington Street, Suite 225

Portland, OR 97205

Telephone: (503) 525-8454

Facsimile: (503) 946-3029

michael@nwjp.org

kate@nwjp.org

CRAIG J. ACKERMANN

SAM VAHEDI

ACKERMANN & TILAJEF, P.C.

1180 South Beverly Drive, Suite 610

Los Angeles, CA 90035

Telephone: (310) 277-0614

Facsimile: (310) 277-0635

cja@ackermanntilajef.com

sv@ackermanntilajef.com

M. NIEVES BOLAÑOS

POTTER BOLAÑOS LLC

111 East Wacker Drive, Suite 2600

Chicago, IL 60601

Telephone: (312) 861-1800

Facsimile: (312) 861-3009

nieves@potterlaw.org

www.potterlaw.org

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.