Arkansas Trucking Report: State of the Unions – What a resurgence of organized labor means for trucking
A brief tour of headlines this year suggests relations between companies and their workers are tumultuous. From the threat of a strike by UPS workers and West Coast port workers to actual strikes by Hollywood writers, actors and auto workers at the Big Three, organized labor has grabbed the spotlight. Organized labor has been aided by a White House led by the self-proclaimed “most pro-union President ever.” At the same time, only 10.1% of wage and salary workers were union members in 2022 compared to 20.1% in 1983, when the Bureau of Labor Statistics started tracking the data.
In trucking, the decline in union membership is even more precipitous. When first negotiated in 1964, the Teamsters-negotiated National Master Freight Agreement covered 450,000 truckers across 16,000 companies. With Yellow’s recent closure, there are now less than 40,000 Teamsters workers covered. What does organized labor’s reinvigorated approach mean for the trucking industry, which is still in the grips of a seemingly endemic driver shortage? While the future remains largely unknowable, trucking companies can prepare for choppy waters ahead.1
Strengthening Unions
Trends in wealth disparity may help explain why organized labor feels it has the wind at its back. A September 2022 analysis of trends in the distribution of family wealth by the Congressional Budget Office, a nonpartisan arm of Congress, found that between 2010 and 2019, the total family wealth held by the bottom 50% increased from $1.4 trillion to $2.3 trillion (just under $1 trillion). By comparison, the total family wealth held by the top 10% increased from $56.7 trillion to $82.4 trillion (over $25 trillion).
While the wealth gap has been increasing, so has public support for unions. Some findings from a recent Gallup survey on Americans’ approval of labor unions are telling. A record-high 61% of respondents said unions help rather than hurt the U.S. economy. In 2009, just 39% of respondents felt that way. Forty-three (43%) percent of respondents favored unions having more influence than they do today. By comparison, only 25% shared that sentiment in 2009.
Wealth disparity may also explain the surge in economic populism – once almost exclusively the realm of Democrats but increasingly explored by Republicans. The same Gallup poll found that among Republican respondents, 47% approved of labor unions compared to just 29% of Republican respondents in 2009. Perhaps it is no coincidence that we are seeing a smattering of Republican legislators support measures like a ban on non-competes and renegotiating trade agreements to provide more worker protections.
Threatened Independent Contractor Model
Perceived changes in public perception combined with a pro-labor Executive branch makes for a potent elixir that promises to pose challenges to trucking companies’ relationship with their workforce in the near-term. The National Labor Relations Board, with a 3-1 Democrat majority, has been zealously acting to make unionization easier, the U.S. Department of Labor is expected to finalize a regulation that will make it more difficult to classify owner-operators as independent contractors, and even the Federal Motor Carrier Safety Administration is pursuing organized labor’s agenda in unprecedented ways. And that’s just at the federal level. Labor continues to push for draconian California AB 5-like legislation intended to all but eliminate the independent contractor model. All this, despite median truckload driver wages increasing as a market response to the driver shortage by 18% from 2019 to 2021, and from $46,084 in 2013 to $69,687 in 2021.
As mentioned, the NLRB has been busy of late. Notably, the NLRB recently decided a case, The Atlanta Opera, overruling an earlier 2019 decision setting forth the test for determining whether a worker is an employee or independent contractor under the National Labor Relations Act in favor of a test that lessens the importance of entrepreneurial opportunity. The NLRB also enacted a rulemaking that would reduce the time between filing a petition for a representation election and the actual election to as little as 20 days, thus giving employers less time to advocate their views.
In another decision, Cemex Construction Materials Pacific, LLC, the NLRB offered up something just short of the card-check legislation organized labor has long sought in Congress. Under Cemex, an employer presented with signed authorization cards from the majority of a bargaining unit generally has the option of recognizing and bargaining with the unit or having to itself file a petition for election within 14 days. This effectively shifts the burden of demonstrating whether the union has majority support. Moreover, if the NLRB finds an employer commits an unfair labor practice during the time after the authorization cards are presented, the NLRB can order bargaining and forego the election.
And finally, the NLRB has issued a joint employer rule that will make it easier to find entities with indirect or intermediate control over a single essential term or condition of employment to be a joint employer subject to bargaining. Just as the UAW has said it will target non-union companies, trucking companies should take steps to be prepared for the Teamsters to target non-union companies.
The USDOL, staffed with political appointees who share the belief voiced by the Wage and Hour Division Administrator during the Obama administration that basically every worker is an employee, will soon finalize a rulemaking to repeal and replace a regulation setting forth the test for determining worker status under the Fair Labor Standards Act. Labor and its allies have pressed the USDOL and its acting Secretary, former California Labor Commissioner and AB 5 proponent, Julie Su, to fashion a test more likely to result in an employee status determination. From labor’s perspective, a finding that a worker is an employee for purposes of the FLSA will make it difficult for companies to maintain independent contractor status under the NLRA. Coincidentally, workers have to be employees to be covered by the NLRA and its protections for collective bargaining. Moreover, bringing class action lawsuit for misclassification-related claims has been a staple for plaintiffs’ attorneys.
While we await the final rule, there are many aspects of the proposed rule that, if adopted, will pose challenges for the trucking industry. For example, although a worker’s investment in their business is a common indicator of independence, the proposal would disregard investments in equipment to perform specific jobs. Does this mean an owner-operator’s investment in their truck — often their biggest investment — will be disregarded and instead considered indicative of employee status?
Moreover, the proposal sought to measure a worker’s investment in the business relative to the putative employer’s investment in the business. Under this relative comparison, a small investment would be indicative of employee status. In another example, measures implemented to comply with safety standards or customer requirements may be considered employer-like control. Organized labor often argues it is protecting the health and safety of workers, so it seems odd to discourage motor carriers from requiring safety standards that protect the worker.
Other Targets
One would expect labor advocates to be active and influential at the NLRB and the USDOL, but their influence is impacting an agency closer to home for trucking — the FMCSA. After years of dealing with class action lawsuits alleging failure to provide additional breaks under state meal and rest break laws (e.g., California and Washington), FMCSA found those laws preempted in 2018 and 2020, respectively. In updating its Hours of Service regulations, FMCSA had already addressed what breaks were necessary for driver health and safety.
The Teamsters opposed FMCSA’s preemption determination and challenged it in court, where the California preemption determination was upheld by the U.S. Court of Appeals for the Ninth Circuit. Earlier this year, while under pressure from the Teamsters for not doing more to step in to save Teamster jobs at Yellow, FMCSA took the remarkable step of inviting parties to submit petitions for a waiver from its preemption determinations. In essence, FMCSA understands its preemption determination to be legally sound but is inviting the Teamsters and others to initiate a new way to get around their conclusion. The absence of data proving the preemption determination has caused a degradation in motor carrier safety suggests this is a political, not safety, undertaking.
This FMCSA has also demonstrated a new-found willingness to wade into economic issues. Admittedly at Congress’s direction, FMCSA has convened a Truck Leasing Task Force (TLTF) that, in a fairly pre-judged manner, is examining how trucking equipment leases are inequitable. Having just convened its second meeting, the TLTF is still struggling to distinguish between an equipment lease and an operating lease agreement regulated by 49 C.F.R. Part 376, the latter of which Congress did not authorize the task force to address. Some might say it is mission creep. The same can be said for FMCSA’s study of detention time — an economic issue with unproven links to motor carrier safety.
In some states, the independent contractor model that has a long and important history of being a part of trucking remains under siege, because there is a belief that independent contractors, despite their intentional choice, need to be wrapped in a cocoon of employee status. This notion persists despite data indicating that independent contractors are very satisfied with the independence they have at work and can generally earn more net income on average than company employee drivers earn in wages. Again, organized labor’s interests are served when more workers are categorized as employees than independent contractors. That does not mean that an individual worker’s interests are similarly served.
Perhaps more slowly than some would have liked, the trucking industry has reacted to the market demands of a driver shortage by increasing pay and making intentional efforts to provide drivers more home time. Trucking companies will continue to have to respond to market dynamics. However, in the current political climate where organized labor appears resurgent, and with a willing partner in the Biden White House, trucking companies will also have to prepare for and respond to market distortions induced by laws and regulations. That may range from ensuring plans are in place to rapidly and appropriately respond to a potential union organizing campaign to routinely re-assessing contracts, policies, and procedures for carriers utilizing independent contractors. So, yes, the future is largely unknowable, but we do know the current environment will present challenges to trucking companies and their workforce.
1Any opinions expressed herein are solely those of the author and not necessarily those of Scopelitis, Garvin, Light, Hanson & Feary.
Original Story in Arkansas Trucking Association’s Arkansas Trucking Report Magazine: https://online.anyflip.com/teyn/mgjw/mobile/index.html#p=22
News from Scopelitis is intended as a report to our clients and friends on developments affecting the transportation industry. The published material does not constitute an exhaustive legal study and should not be regarded or relied upon as individual legal advice or opinion.
Arkansas Trucking Report: State of the Unions – What a resurgence of organized labor means for trucking
A brief tour of headlines this year suggests relations between companies and their workers are tumultuous. From the threat of a strike by UPS workers and West Coast port workers to actual strikes by Hollywood writers, actors and auto workers at the Big Three, organized labor has grabbed the spotlight. Organized labor has been aided by a White House led by the self-proclaimed “most pro-union President ever.” At the same time, only 10.1% of wage and salary workers were union members in 2022 compared to 20.1% in 1983, when the Bureau of Labor Statistics started tracking the data.
In trucking, the decline in union membership is even more precipitous. When first negotiated in 1964, the Teamsters-negotiated National Master Freight Agreement covered 450,000 truckers across 16,000 companies. With Yellow’s recent closure, there are now less than 40,000 Teamsters workers covered. What does organized labor’s reinvigorated approach mean for the trucking industry, which is still in the grips of a seemingly endemic driver shortage? While the future remains largely unknowable, trucking companies can prepare for choppy waters ahead.1
Strengthening Unions
Trends in wealth disparity may help explain why organized labor feels it has the wind at its back. A September 2022 analysis of trends in the distribution of family wealth by the Congressional Budget Office, a nonpartisan arm of Congress, found that between 2010 and 2019, the total family wealth held by the bottom 50% increased from $1.4 trillion to $2.3 trillion (just under $1 trillion). By comparison, the total family wealth held by the top 10% increased from $56.7 trillion to $82.4 trillion (over $25 trillion).
While the wealth gap has been increasing, so has public support for unions. Some findings from a recent Gallup survey on Americans’ approval of labor unions are telling. A record-high 61% of respondents said unions help rather than hurt the U.S. economy. In 2009, just 39% of respondents felt that way. Forty-three (43%) percent of respondents favored unions having more influence than they do today. By comparison, only 25% shared that sentiment in 2009.
Wealth disparity may also explain the surge in economic populism – once almost exclusively the realm of Democrats but increasingly explored by Republicans. The same Gallup poll found that among Republican respondents, 47% approved of labor unions compared to just 29% of Republican respondents in 2009. Perhaps it is no coincidence that we are seeing a smattering of Republican legislators support measures like a ban on non-competes and renegotiating trade agreements to provide more worker protections.
Threatened Independent Contractor Model
Perceived changes in public perception combined with a pro-labor Executive branch makes for a potent elixir that promises to pose challenges to trucking companies’ relationship with their workforce in the near-term. The National Labor Relations Board, with a 3-1 Democrat majority, has been zealously acting to make unionization easier, the U.S. Department of Labor is expected to finalize a regulation that will make it more difficult to classify owner-operators as independent contractors, and even the Federal Motor Carrier Safety Administration is pursuing organized labor’s agenda in unprecedented ways. And that’s just at the federal level. Labor continues to push for draconian California AB 5-like legislation intended to all but eliminate the independent contractor model. All this, despite median truckload driver wages increasing as a market response to the driver shortage by 18% from 2019 to 2021, and from $46,084 in 2013 to $69,687 in 2021.
As mentioned, the NLRB has been busy of late. Notably, the NLRB recently decided a case, The Atlanta Opera, overruling an earlier 2019 decision setting forth the test for determining whether a worker is an employee or independent contractor under the National Labor Relations Act in favor of a test that lessens the importance of entrepreneurial opportunity. The NLRB also enacted a rulemaking that would reduce the time between filing a petition for a representation election and the actual election to as little as 20 days, thus giving employers less time to advocate their views.
In another decision, Cemex Construction Materials Pacific, LLC, the NLRB offered up something just short of the card-check legislation organized labor has long sought in Congress. Under Cemex, an employer presented with signed authorization cards from the majority of a bargaining unit generally has the option of recognizing and bargaining with the unit or having to itself file a petition for election within 14 days. This effectively shifts the burden of demonstrating whether the union has majority support. Moreover, if the NLRB finds an employer commits an unfair labor practice during the time after the authorization cards are presented, the NLRB can order bargaining and forego the election.
And finally, the NLRB has issued a joint employer rule that will make it easier to find entities with indirect or intermediate control over a single essential term or condition of employment to be a joint employer subject to bargaining. Just as the UAW has said it will target non-union companies, trucking companies should take steps to be prepared for the Teamsters to target non-union companies.
The USDOL, staffed with political appointees who share the belief voiced by the Wage and Hour Division Administrator during the Obama administration that basically every worker is an employee, will soon finalize a rulemaking to repeal and replace a regulation setting forth the test for determining worker status under the Fair Labor Standards Act. Labor and its allies have pressed the USDOL and its acting Secretary, former California Labor Commissioner and AB 5 proponent, Julie Su, to fashion a test more likely to result in an employee status determination. From labor’s perspective, a finding that a worker is an employee for purposes of the FLSA will make it difficult for companies to maintain independent contractor status under the NLRA. Coincidentally, workers have to be employees to be covered by the NLRA and its protections for collective bargaining. Moreover, bringing class action lawsuit for misclassification-related claims has been a staple for plaintiffs’ attorneys.
While we await the final rule, there are many aspects of the proposed rule that, if adopted, will pose challenges for the trucking industry. For example, although a worker’s investment in their business is a common indicator of independence, the proposal would disregard investments in equipment to perform specific jobs. Does this mean an owner-operator’s investment in their truck — often their biggest investment — will be disregarded and instead considered indicative of employee status?
Moreover, the proposal sought to measure a worker’s investment in the business relative to the putative employer’s investment in the business. Under this relative comparison, a small investment would be indicative of employee status. In another example, measures implemented to comply with safety standards or customer requirements may be considered employer-like control. Organized labor often argues it is protecting the health and safety of workers, so it seems odd to discourage motor carriers from requiring safety standards that protect the worker.
Other Targets
One would expect labor advocates to be active and influential at the NLRB and the USDOL, but their influence is impacting an agency closer to home for trucking — the FMCSA. After years of dealing with class action lawsuits alleging failure to provide additional breaks under state meal and rest break laws (e.g., California and Washington), FMCSA found those laws preempted in 2018 and 2020, respectively. In updating its Hours of Service regulations, FMCSA had already addressed what breaks were necessary for driver health and safety.
The Teamsters opposed FMCSA’s preemption determination and challenged it in court, where the California preemption determination was upheld by the U.S. Court of Appeals for the Ninth Circuit. Earlier this year, while under pressure from the Teamsters for not doing more to step in to save Teamster jobs at Yellow, FMCSA took the remarkable step of inviting parties to submit petitions for a waiver from its preemption determinations. In essence, FMCSA understands its preemption determination to be legally sound but is inviting the Teamsters and others to initiate a new way to get around their conclusion. The absence of data proving the preemption determination has caused a degradation in motor carrier safety suggests this is a political, not safety, undertaking.
This FMCSA has also demonstrated a new-found willingness to wade into economic issues. Admittedly at Congress’s direction, FMCSA has convened a Truck Leasing Task Force (TLTF) that, in a fairly pre-judged manner, is examining how trucking equipment leases are inequitable. Having just convened its second meeting, the TLTF is still struggling to distinguish between an equipment lease and an operating lease agreement regulated by 49 C.F.R. Part 376, the latter of which Congress did not authorize the task force to address. Some might say it is mission creep. The same can be said for FMCSA’s study of detention time — an economic issue with unproven links to motor carrier safety.
In some states, the independent contractor model that has a long and important history of being a part of trucking remains under siege, because there is a belief that independent contractors, despite their intentional choice, need to be wrapped in a cocoon of employee status. This notion persists despite data indicating that independent contractors are very satisfied with the independence they have at work and can generally earn more net income on average than company employee drivers earn in wages. Again, organized labor’s interests are served when more workers are categorized as employees than independent contractors. That does not mean that an individual worker’s interests are similarly served.
Perhaps more slowly than some would have liked, the trucking industry has reacted to the market demands of a driver shortage by increasing pay and making intentional efforts to provide drivers more home time. Trucking companies will continue to have to respond to market dynamics. However, in the current political climate where organized labor appears resurgent, and with a willing partner in the Biden White House, trucking companies will also have to prepare for and respond to market distortions induced by laws and regulations. That may range from ensuring plans are in place to rapidly and appropriately respond to a potential union organizing campaign to routinely re-assessing contracts, policies, and procedures for carriers utilizing independent contractors. So, yes, the future is largely unknowable, but we do know the current environment will present challenges to trucking companies and their workforce.
1Any opinions expressed herein are solely those of the author and not necessarily those of Scopelitis, Garvin, Light, Hanson & Feary.
Original Story in Arkansas Trucking Association’s Arkansas Trucking Report Magazine: https://online.anyflip.com/teyn/mgjw/mobile/index.html#p=22
News from Scopelitis is intended as a report to our clients and friends on developments affecting the transportation industry. The published material does not constitute an exhaustive legal study and should not be regarded or relied upon as individual legal advice or opinion.