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Motor Carriers Beware - Lack of Written Independent Contractor Agreement Can Be Costly

Given recent changes in Ohio workers’ compensation law, “motor carriers” (as defined by Ohio law) operating in Ohio should carefully review their arrangements with independent contractor drivers and promptly implement changes to ensure compliance with statutory criteria. 

This past year, the Ohio Legislature revised the definition of “employee” as applicable to motor carriers. The statutory revisions can be viewed as either a burden or benefit to the motor carrier. For the motor carrier that carefully examines its practices and ensures compliance with the statutory criteria, the new law can certainly be viewed as additional protection against increased exposure to administrative actions, lawsuits, and substantially higher workers’ compensation premiums. 

Until recently, Ohio courts and the Bureau of Workers’ Compensation (and Industrial Commission) utilized a test developed at common law to determine whether a driver performing services for a motor carrier was an independent contractor or employee. The common law test required an analysis as to whether the carrier controlled the means and manner of the driver’s work – a test often subject to inconsistent application and, consequently, inconsistent rulings by the applicable tribunal. Motor carriers were left with little direction. 

Revised Code 4123.01(A)(1)(d) provides the motor carrier with a test which, if followed, should help the decision-maker find that the carrier’s independent contractors remain as such in the eyes of administrative agencies and the courts. If the driver meets the following seven criteria, the driver will likely not be regarded as an “employee” for purposes of workers’ compensation: 

  1. The contractor owns the vehicle or vessel that is used in performing the services for or on behalf of the carrier, or the contractor leases the vehicle or vessel under a bona fide lease agreement that is not a temporary replacement lease agreement. For purposes of this division, a bona fide lease agreement does not include an agreement between the contractor and the motor carrier transporting property for which, or on whose behalf, the person provides services;
  2. The contractor is responsible for supplying the necessary personal services to operate the vehicle or vessel used to provide the service;
  3. The compensation paid to the contractor is based on factors related to work performed, including on a mileage-based rate or a percentage of any schedule of rates, and not solely on the basis of the hours or time expended;
  4. The contractor substantially controls the means and manner of performing the services, in conformance with regulatory requirements and specifications of the shipper;
  5. The contractor enters into a written contract with the carrier for whom the contractor person is performing the services that describes the relationship between the contractor and the carrier to be that of an independent contractor and not that of an employee;
  6. The contractor is responsible for substantially all of the principal operating costs of the vehicle or vessel and equipment used to provide the services, including maintenance, fuel, repairs, supplies, vehicle or vessel insurance, and personal expenses, except that the carrier may pay the contractor from the carrier’s fuel surcharge and for incidental costs, including tolls, permits, and lumper fees; and
  7. The contractor is responsible for any economic loss or economic gain from the arrangement with the carrier. 

With this test, motor carriers operating in Ohio should expect greater predictability in terms of application and enforcement. Motor carriers that do not effectively implement the necessary changes may find themselves deemed “noncomplying” by BWC and thus subject to costly lawsuits by injured drivers, loss of common law defenses, and administrative enforcement proceedings and assessments. Note that this test is also now used to determine the driver’s status for purposes of unemployment compensation and minimum wage and overtime laws. Motor carriers should be quick to examine their written agreements and practices.

For more information on these recent changes, contact Stephen Matasich or Richard Williger.

Vaccination Considerations for Employers

Today, three Covid-19 vaccines have tested as highly effective (90%+ efficacy) and are advancing in the process for emergency use. This is especially welcome news in Ohio, which has skyrocketing cases and our strategic response has been to turn the entire state into the small town of Bomont with strict curfews and bans on social gatherings.

Did You Receive More than $750,000 in Provider Relief Funds?

The Provider Relief Funds (“PRF”) - authorized under the CARES Act - has been a vital tool for health care providers during the COVID-19 public health emergency. These funds have allowed providers to stay open and continue to offer care during these pressing times. While helpful, these funds do come with several important obligations. First, fund recipients are required to comply with certain record-keeping requirements as well as comply with certain balance billing prohibitions. See our Client Alert. Second, fund recipients are required to report their intent, use of funds, and other data elements, which helps promote transparency to the federal government. Please see our Client Alert on provider relief fund reporting requirements. Third, and perhaps a new concept for many providers, fund recipients of more than $750,000 must undergo a “single audit” to ensure program compliance and appropriate use of funds.

Important Updates Every Provider Should Know: Information Blocking

In December 2016, Congress passed the 21st Century Cures Act (“Cures Act”) which: (1) authorized funding for the National Institutes of Health to promote medical research and drug development, (2) implemented provisions aimed at addressing the prevention and treatment of mental illness and substance abuse, and (3) reformed certain standards of the Medicare program and federal tax laws to foster healthcare access and quality improvement.

PPP Update: Loan Necessity Questionnaires

On October 26, 2020, the Small Business Administration (“SBA”) published a notice in the Federal Register which foreshadowed the release of two new forms seeking information from for-profit and nonprofit organizations that received Paycheck Protection Program (“PPP”) loans of $2 million or more. If approved, the SBA would use information from these forms to evaluate and determine whether economic uncertainty made a PPP loan request necessary.

Exposure to COVID-19 Flow Chart

Exposure to COVID-19 Flow Chart