The PRO Act is a new National Labor Relations Bill, that sounds a lot like California’s infamous AB5 Bill. That is the Assembly Bill that California owner-operators, trucking associations, and carriers have been fighting to block for over a year.
The AB5 Bill was a major concern not just for trucking companies in California but nationwide. And that is because some of the stipulations outlined in the bill would make it impossible (and illegal) for carriers to work in conjunction with owner-operators. That’s a big deal (we’ll explain more about that later).
Now, Congress will hear The PRO Act, which is the Protecting the Right to Organize (PRO) Act. It is being praised as a step forward for trucking and supply chain unions. But while that could provide some benefits for hourly or fleet-employed truckers, it could have a potentially devasting impact on owner-operators. And the carriers that work in partnership with them.
Why Do Trucking Companies Work with Owner-Operators?
The demand for freight can be as unpredictable as the weather in Texas. Stick around for a day or two and it will change on you, from cold to hot, from dry to pouring rain. Global supply chains are an essential service, but the demand for those services can also be extremely unpredictable.
So, imagine you are a trucking company. You have a responsibility to be able to provide both the equipment (tractors, specialized chassis) and highly skilled safe drivers. No matter what, you must have enough personnel and equipment to meet the demands of your commercial customer. And if you can’t provide it? Someone else in the industry will.
Over time, the American trucking industry has devised a great solution. That is to work in conjunction or in partnership with owner-operators. These are men and women (and sometimes team drivers) that own their own tractor.
They are both truck drivers and entrepreneurs, running their rig like a full-time business. Owner-operators must look for contracts (like any other contract worker) to maintain their income and to keep a full-service schedule.
a) Benefits for Owner-Operators
Did you know that CDL owner-operators often make much more money than hourly drivers? That is because when you drive for a fleet, you are set to a certain schedule. You know what your payment is going to be every week, just like any other job. But it is not like that for owner-operators in the trucking industry.
Owner-operators can shop for some of the best-paying contracts. They aren’t limited to working with only one trucking company. So, they can competitively seek other contracts to make more money. And within the hours of service and other safety regulations, owner-operators can set their schedule to optimize their earnings. And spend time with their family, because they set the weekly work schedule. And many truckers like that, because it makes family time much easier.
Some owner-operators do a lot of jumping around. If they have a sleeper berth, they aren’t limited to working with local trucking companies. They can literally drive where the work is, and sleep in their truck. And that means higher earning potential and more work for an experienced truck driver that owns his or her own rig.
But have you ever thought about why carriers outsource to trusted CDL drivers? It benefits both the carriers and the owner-operator truck driver.
Working Long-Term with One or More Carrier
Other owner-operators take leased contracts from carriers but prefer to work with the same carrier long-term. This is where lawmakers have a bit of a problem with that. They seem to be a little confused about the difference between a trucker with leased contracts and an employee.
The truth is that if you are an owner-operator and you love working with 2-3 different carriers who can keep you busy? That’s a good thing. And if they value you and treat you with respect? That’s just another great reason to work with fewer carriers and stay loyal to the ones that provide the best rates for truckers. Why would you shop around for more carriers, when you can have a couple that you love working for, and working with to deliver good, safe and affordable freight services.
b) Benefits for Trucking Companies (Carriers)
That flow of demand? It’s enough to put some trucking companies out of business, as we have witnessed during the first year of the COVID-19 health emergency. There were major downturns in freight between China vs. USA trade war, followed immediately by a temporary (but painful) shut down of container shipments from China.
That taught the U.S. trucking industry that there could be even more volatility in the modern demand for drayage and logistics services. Hiring many truck drivers as employees would subject them to the same volatility. Imagine having a full-time job where you were laid off frequently throughout the year? That would be the life for most truckers working short-haul or hourly for a fleet.
By offering leased contracts, carriers can sustain work for the best and most reliable local trucking contractors. And over time, the trucking company does establish a relationship of trust with the owner-operator. Leased contracts can be modified or even canceled if demand for freight goes downhill. As it does cyclically, and then it bounces straight back up. To levels that the U.S. trucking industry can barely keep up with current demand, as the Nation rebounds from the COVID-19 health crisis.
The ABC Test of the PRO Act: How to Differentiate a Contract Owner-Operator from an Employee
The part of the California AB5 bill that got the whole nationwide trucking industry upset? It was the criteria outlined to determine if an owner-operator is a contractor, or if he or she is an employee of the company. Poised as a contractor. Because that seems to be important for labor law, federal and state taxation, but not helpful considering the Nation’s largest truck driver shortage (possibly in history).
The PRO Act states that there is a test of three criteria that will determine whether a trucker is a salaried or hourly worker, versus a truck contract worker. Contract drivers or owner-operators are not promised that they will always have work. But they are guaranteed competitive rates and the support of a carrier relationship.
The three questions that independent owner-operators must meet include:
1. That the truck driver is not being controlled or overly directed to maintain minimum work hours. There can be no expectation of a contract worker to put in a specific number of hours. It is up to the owner-operator to choose how many hours they work.
2. That the commercial truck driving services are conducted outside of the place of business. That means the owner-operator is on the road, and not deploying daily from the carrier’s parking lot. The location where they deliver the services determines whether they are an employee or not.
3. That the contractor has established their own independent business. That means that they have their own truck, insurance, chassis, tractor, and other equipment. However, independent operators can borrow specialty tractors or chassis (i.e., featherlight rigs for overweight freight). For example, Canal Cartage has hundreds of companies-owned chassis to accommodate the increased volume of freight.
Director of Legislative Affairs for OOIDA (Owner-Operator Independent Drivers Association (Bryce Mongeon) feels that passing the three-part test for most owner-operators across the country may be hard.
This is according to a report from TheTrucker.com.