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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.

COVID-19 Small Business Loan Relief Guidance - Updated April 8, 2020

Economic Action Plan for Clients Our legal and business crisis response team has collaborated with lending institutions in Ohio and Florida to advise small businesses with regard to the loans available due to the COVID-19 health and economic crisis. There are several loan options that may work for you, and we have also added a section for Frequently Asked Questions. For more information, please contact your primary BMD attorney and they would be happy to assist you in developing an Economic Relief Action plan for your business.

Paid Leave for Coronavirus: Department of Labor Issues Its Temporary FFCRA Rule

The Department of Labor issued its Temporary Rules under the Families First Coronavirus Response Act (FFCRA) pertaining to the Emergency Paid Sick Leave Act (EPSLA) and the Emergency Family and Medical Leave Expansion Act (EFMLEA). The rule became operational on April 1, 2020 and was officially published on April 6, 2020.

Florida’s “Stay-at-Home” Order and What it Means for Businesses

On April 1, 2020, in response to the State’s ongoing efforts to fight the spread of COVID-19, Governor Ron DeSantis issued Executive Order 20-91, which is State-wide “Stay-at-Home” Order. The Order goes into effect Friday, April 3, 2020 at 12:01 a.m., and expires on April 30, 2020, unless extended by subsequent order (the full text of the order is available here).

CMS Offers New Stark Waivers and More Flexibility to Health Care Providers Due to COVID-19

On March 30, 2020, the Centers for Medicare & Medicaid Services (CMS) issued several temporary regulatory waivers to further enable the American healthcare system to respond to the COVID-19 pandemic with more efficiency and flexibility. The official publication can be found here: Physicians and Other Clinicians: CMS Flexibilities to Fight COVID-19.

#CancelRent – What’s Next for Landlords?

Across the country, residential tenants, small businesses, and even national retailers such as Cheesecake Factory, Subway, and Mattress Firm have declared war on their landlords by refusing to pay rent on account of the Covid-19 pandemic (“COVID-19”). This has sent shockwaves through the real-estate industry. As of April 1st, residential tenants owe an estimated $40 Billion in rent. Estimates for the commercial sector are not far off. So far, federal, state, and local measures have focused on providing relief to residential and commercial tenants and even to some commercial landlords.