In light of the U.S. Department of Labor's (DOL) recent final rule, companies utilizing trucking services are encouraged to reassess their partnerships, particularly focusing on third-party logistics providers (3PLs) that employ drivers directly. This strategic shift can not only ensure compliance with the evolving legal landscape but also leverage the operational and financial benefits associated with hiring 3PLs with employee drivers.
About the DOL ruling
The DOL's comprehensive 339-page document delineates a new framework for classifying workers as either "employees" or "independent contractors" under the Fair Labor Standards Act (FLSA). The distinction is crucial, as it directly impacts wage, overtime, and job security protections. With the adoption of an "economic reality test," the DOL emphasizes a multifaceted approach to worker classification, scrutinizing aspects such as managerial skill, the permanency of work relations, and the degree of control over the work.
Why it matters
If an independent contractor believes they were misclassified and should have been treated as an employee, they may have grounds to sue the company that hired them for lost wages and benefits. This means that you, as the company hiring the drivers, can be sued for wages and benefits. Under the Fair Labor Standards Act (FLSA) and other labor laws, the distinction between an employee and an independent contractor is crucial because it determines eligibility for various protections, including minimum wage, overtime pay, and benefits.
If a worker classified as an independent contractor can demonstrate that their working conditions and relationship with the company align more closely with those of an employee, based on certain criteria (e.g., the degree of control the company had over their work, the permanence of the relationship, and the nature of the work as an integral part of the company's business), they might be able to argue that they were effectively employees. As a result, they could potentially claim entitlement to the wages, overtime, and benefits they would have received had they been properly classified.
Don’t risk it: Hire 3PLs with employee drivers
Partnering with 3PLs that have a workforce of employee drivers ensures a stable, committed, and professionally managed driver pool. This stability translates into more predictable costs, reduced legal risks, and enhanced operational efficiency. Employee drivers, protected under the FLSA, benefit from minimum wage guarantees, overtime pay, and job security provisions, contributing to higher job satisfaction and retention rates.
As the DOL's new rule reshapes the regulatory environment, companies leveraging trucking services stand at a critical juncture. By choosing to hire 3PLs with employee drivers, businesses can navigate the complexities of worker classification with confidence, ensuring legal compliance, operational efficiency, and a sustainable business model in the evolving landscape of labor regulations.
Headquartered in the Port of NY/NJ, Salson Logistics is a national 3PL that relies on its own employee drivers and its own equipment for drayage and final-delivery services on the East Coast and across the US. To learn more about the benefits of working with a national 3PL with its own employee drivers and equipment for drayage and final-mile delivery, contact Salson today.
