The Transportation Brief®
A quarterly newsletter of legal news for the clients and friends of Scopelitis, Garvin, Light, Hanson & Feary
Spring 2023 | Vol. 30, No. 2
  • Almost every truck will break down, and many trucks will require towing services. Nearly as common, such services will be followed by an unexpectedly high tow yard bill. Martin O’Conner advises that, depending on the state, tow yards may be required to disclose the total cost of their services prior to towing. For example, under Illinois’ Commercial Safety Towing Law, if all costs related to towing are not disclosed before the towing services, a tow yard cannot charge for its services and must release the vehicle for free.
  • Reversing the trial court, the California Court of Appeals held that Prop 22, a successful ballot initiative led by Uber, Lyft, DoorDash, and other gig companies to create an independent contractor test separate from and notwithstanding California AB 5’s ABC test, was largely constitutional and not an improper usurping of the legislative power to enact workers’ compensation laws. Prasad Sharma advises that certain provisions within Prop 22 that limit its applicability, for example, it applies to app-based drivers and network companies and delivery services within 50 miles of the pickup location, means it will not be widely available to all members of the trucking industry, but it may be an option for certain courier or local delivery segments.
  • Prasad Sharma reported that on March 14, President Biden nominated Julie Su, the current Deputy (and now acting) Secretary of Labor and the former Secretary of the California Labor and Workforce Development Agency, to be the Secretary of Labor. Having been narrowly confirmed to her current position by a 50-47 vote, the current nomination has been met by vigorous opposition, due in part to her championing of AB-5 and misclassification initiatives against the trucking industry. Her hearing was scheduled for April 20, but confirmation is not a sure bet as universal support from Senate Democrats (or recent Independents, i.e., Sinema) is not guaranteed.
  • Kevin Phillips announced the release of the updated Warehouse Terms and Conditions for 2023. The Global Cold Chain Alliance (GCCA), along with its warehouse legal partner, Scopelitis Law Firm, updated the previous version of the Terms and Conditions, which was last updated in 2013. The updated version for 2023 includes important changes that will be beneficial for all warehousing companies and their customers.
  • In 2021, California finalized its adoption of the Advanced Clean Trucks (ACT) Rule, which imposes obligations on truck manufacturers to increase the percentage of zero-emission truck sales relative to their overall sales within California and includes a one-time reporting requirement for motor carriers and brokers. According to Prasad Sharma and Ron Morelock, several states, along with California, signed a Memorandum of Understanding and committed to advance the sale of truck zero-emission vehicles by 2050. Approximately six states have adopted California’s ACT Rule, and others are in the process. For example, New York and New Jersey had reporting deadlines on April 1 of this year, but more states are in the process of adopting the ACT Rule.
  • Claims that the use of fingerprints, facial scans, or other biometric information violate Illinois’s Biometric Information Privacy Act (BIPA) have increased substantially over the past five years. According to Scopelitis Chicago Partner Andy Butcher, the upward trend will continue following the Illinois Supreme Court’s February decision in Cothron v. White Castle Systems, Inc. holding a BIPA claim accrues each time a company scans a biometric identifier or transmits such a scan to a third party. Transportation companies operating in Illinois should assess if the technology the company utilizes—such as security access systems, timeclocks, or dashcams—capture biometrics and consider the implementation of compliant BIPA policies.
The Transportation Brief®

A quarterly newsletter of legal news for the clients and friends of Scopelitis, Garvin, Light, Hanson & Feary

The Transportation Brief®
A quarterly newsletter of legal news for the clients and friends of Scopelitis, Garvin, Light, Hanson & Feary
Spring 2023 | Vol. 30, No. 2

10 W. Market St, Ste. 1400
Indianapolis, IN 46204

FMCSA Rejects Item Response Theory (IRT) Model and Proposed Changes to BASICs

On February 14, 2023, the FMCSA issued a notice requesting comments on proposed changes to the Compliance, Safety, Accountability (CSA) system. The FMCSA rejected the National Academy of Sciences’ IRT statistical model and proposed significant changes to the current Safety Measurement System (SMS). According to the FMCSA, the proposed changes will allow the agency to better target the least safe motor carriers in the industry.

The FMCSA proposed the following changes to the SMS:

  • Reorganized BASICs. The most notable change is the realignment of the BASICs into “safety categories.” The proposal eliminates the Controlled Substance and Alcohol BASIC and folds it into the Unsafe Driving safety category. It bifurcates the Vehicle Maintenance BASIC into two safety categories—Vehicle Maintenance and Vehicle Maintenance: Driver Observed. And it segments the Driver Fitness and Hazardous Materials safety categories based on the type of equipment the carrier operates.
  • Consolidating violations. The proposal combines the 959 violations currently used in SMS, with 14 new violations into 116 violation groups.
  • Updated severity weights. The proposal simplifies violation severity weights by assigning a severity weight of either 1 or 2, rather than using the scale of 1 to 10.
  • Proportionate percentiles. The proposal uses a proportionate percentile approach to reduce the impact of moving between safety event groups, which has historically resulted in significant negative swings for motor carriers.
  • Adjusting intervention thresholds. The proposal increased the intervention thresholds in the Driver Fitness and Hazardous Materials safety categories to better identify carriers with higher crash rates.
  • Greater emphasis on recent violations. Under the proposal, the FMCSA will not score carriers in a safety category if the carrier does not have a violation in that category in the last 12 months.
  • An updated utilization factor. The FMCSA proposed increasing the utilization factor mileage cap from 200,000 to 250,000 miles.

The FMCSA did not propose any changes to the SMS to address geographic enforcement disparity.

The proposed changes to the SMS could have a significant impact on the way motor carriers are evaluated.

Employers in Illinois Required to Provide Paid Leave

In less than a year, Illinois employers with one or more employees must provide at least 40 hours of paid leave on an annual basis. The new law, known as the “Illinois Paid Leave for All Workers Act,” becomes effective January 1, 2024, and will require covered employers to allow covered employees to accrue one hour of paid leave for every 40 hours worked, capped at 40 hours per 12-month work period. Covered employees can start taking paid leave after their 90th day of employment, regardless of other employer-mandated waiting periods.

While the Act is broad, the term “covered” excludes (among others) independent contractors, individuals employed less than full time, employees covered by some union contracts, and employers subject to local paid sick leave ordinances (e.g., Chicago and Cook County.) Employers can set a minimum incremental use for the time off not to exceed two hours per day and may require no more than seven days’ advance notice for foreseeable leave.

Unless employers “front load” the required 40 hours on the employee’s first day of employment or the first day of the 12-month period, employees are permitted to carry over up to 40 hours of any unused paid leave, but employers will not have to provide more than 40 hours of paid leave in each 12-month period. Finally, employers will be required to post the requirements of the Act and can obtain compliant posters and notices from the IDOL.

TSA Tightening Screening Rules for Air Cargo Exports

Since June 30, 2021, air cargo offered for export from the United States must be screened, regardless of whether the cargo flies on passenger or all-cargo aircraft. Because some cargo is impracticable to screen (referred to as ITS cargo), the Transportation Security Administration (TSA) has allowed air forwarders and air carriers to export ITS cargo under an amendment to their security programs. However, TSA recently announced that this amendment will expire for all parties on October 31, 2023.

Thereafter, ITS cargo can only be exported by air if it is accepted from a shipper that participates in the Certified Cargo Screening Program (CCSP). TSA has published guidance to shippers on joining the CCSP. Air forwarders, in particular, are advised to socialize this issue with customers who tender ITS cargo. Apart from diverting ITS cargo to other modes (which is often not feasible), TSA’s position is that those customers will need to join the CCSP by no later than October 31, 2023, a process that can take 90-120 days to complete.

Is your Interstate Fleet Exposed to a Use Tax Assessment?

On March 23, 2023, the Massachusetts Department of Revenue released a Commissioner’s Directive addressing the application of Massachusetts use tax to “rolling stock.”  This guidance describes rolling stock generally as tractors and the trailers that are pulled by tractors.  Rolling stock owned or leased for at least 12 months is deemed subject to Massachusetts use tax if it is stored or used in the state for more than 6 days during a 12-month period.  Each 12-month period is considered separately. A use tax liability can be overcome or reduced if the rolling stock was previously subjected to Massachusetts or another state’s sales or use tax (via a full or partial credit).  Interstate motor carriers operating rolling stock (or other types of vehicles) in Massachusetts should consider an internal fleet review for potential use tax liability.

The Commissioner’s Directive imposes use tax if an interstate vehicle is stored or merely operates more than 6 days during a 12-month period in and through Massachusetts.  This is an extreme position.  The more typical approach taken by state tax authorities is to impose use tax if an interstate vehicle is based in that state (e.g., at a terminal).  Under this more typical approach, potential use tax audit exposure may arise on an interstate vehicle purchased, titled, and/or registered exempt from sales and use tax in one state, but is based in another state.  Interstate carriers with vehicles based in multiple states should regularly review internal sales/use tax compliance to ensure exemptions are properly claimed, and potential use tax exposure is identified and addressed.

The Firm can assist with this review and is familiar with strategies to help eliminate or minimize potential use tax exposure.

 

 

Spotlight: Scopelitis Workers’ Compensation Practice

Workers’ compensation claims in the transportation industry can give rise to many potential pitfalls and problems. For example, multiple states may have jurisdiction over traveling employees, leading to questions about insurance coverage requirements, independent contractor status, benefit requirements, available defenses to injury claims, recovery in third-party litigation, settlements in multiple jurisdictions, and other issues.

Claims Defense

Scopelitis workers’ compensation attorneys work from several of the Firm’s office locations to represent employers and insurance carriers nationwide. Firm attorneys assist with all facets of a work injury claim, from compensability determinations to litigation and appeal. Some claims have similarities that allow for expedient treatment. Many other claims involve unique factors or circumstances that require creative defenses or alternative resolutions that eliminate or minimize the potential cost of the claim for clients.

Scopelitis attorneys remain mindful of litigation costs when working with claims administrators, human resource managers, and risk management personnel to analyze and consider the most cost-effective strategy for resolving the many issues that can arise in a workers’ compensation case. Some of the key issues that can impact the cost include:

  • Surveillance
  • Owner-operator/independent contractor status
  • Proper jurisdiction
  • Light-duty options
  • Compensability decisions
  • Multi-state benefit calculations
  • Complex medical issues
  • Settlement

Workers’ Compensation Insurance Law

Scopelitis national practice attorneys have a detailed understanding of the rules and guidelines published by the National Council on Compensation Insurance and the variations of such rules and guidelines among and between independent and monopolistic states. Some of the issues that are regularly addressed include:

  • Experience modification ratings
  • Rating classification codes
  • Proper determination of wages and premiums
  • Assigned risk pool ramifications
  • Proper determination of independent contractor status as it affects premium
  • Jurisdictional issues that determine premium calculations
  • Other regulatory issues involving the interplay between insurance law and workers’ compensation law
  • Interstate operations of motor carriers

The Firm’s attorneys also assist insurance carriers and employers in designing and implementing specialized insurance products, such as occupational accident insurance coverage that was designed with the assistance of the Firm to respond to the unique needs of the trucking industry.

Contact the Firm’s experienced team of workers’ compensation attorneys for assistance in navigating claims and related matters: Carla Hounshel, Mary Beth Hughes, Margaret Krei, Andrew Marquis, Michael McFarlane, Victor Shane, Michael Tauscher, and Timothy Wiseman.

Congratulations to Scopelitis President & Managing Partner Greg Feary for being selected as one of the National Home Delivery Association’s Pinnacle Award Honorees for 2023.  Mr. Feary will receive this award at the NHDA Pinnacle Awards Dinner & Reception on August 2, 2023 at the JFK Library and Museum in Boston.

Greg Feary has also been named a 2023 Thomson Reuters Client-Nominated Stand-Out Lawyer.

Becky Trenner, a Partner in the Firm’s Indianapolis Office, has been appointed to the Women in Trucking Association’s Content Advisory Counsel.

We are pleased to announce that Megan Escobosa and Nicholas McTarnaghan have joined the Firm’s Chicago Office. Ms. Escobosa’s practice will focus primarily on Class Action Defense and Complex Litigation, while Mr. McTarnaghan’s focus will be on Civil Defense Litigation.

The Association of Corporate Growth (AGC) Houston honored Scopelitis Law Firm and client Adams Resources & Energy, Inc. in both the 2022 Deal of the Year and Transportation & Logistics Deal of the Year categories for Adams Resources & Energy’s acquisition of Firebird Bulk Carriers and Phoenix Oil.  Scopelitis Partner Todd Metzger served as buyer counsel for the deal, on which he collaborated with client Adams Resources & Energy CEO Kevin Roycraft, Executive Vice President Tracy Ohmart, and GulfMark Energy President Greg Mills.

Transportation Lawyers Association’s 2023 Executive Committee Meeting

Attendees: Fritz R. Damm,

Fritz Damm will attend the Transportation Lawyers Association’s Executive Committee Meeting as Past President, and Chair of Membership and Recruiting, July 28-29, in Houston, Texas.

July 28, 2023 | Houston, TX
2023 ATA Litigation Center Legal Forum

Crash Course on Class and Collective Litigation

Presenters: Jared S. Kramer, James H. Hanson, Charles Andrewscavage, Adam C. Smedstad, Angela S. Cash,

This panel discussed several problems motor carriers face in dealing with class and collective action lawsuits and how best to avoid them.

Using federal and state laws, plaintiffs’ lawyers sue carriers for, among other things, minimum wage violations, underpayment of wages, improper wage deductions, expense reimbursements, and
privacy violations. Carriers can implement policies and take other actions to avoid the crashes, potholes, and detours litigation causes.

July 17, 2023 | La Jolla, CA
American Trucking Associations’ 2023 Trucking Legal Forum

Independent Contractor Panel

Presenters: Gregory M. Feary, Braden K. Core, Shannon M. Cohen, Prasad Sharma, Jeffrey S. Jackson,

Attendees: Allison O. Smith,

July 16, 2023 | La Jolla, CA
Defense Research Institute’s 2023 Trucking Litigation Essential Seminar

Attendees: Michael K. Roberts, Fritz R. Damm,

Michael Roberts will attend the Defense Research Institute’s Trucking Litigation Essential Seminar, June 13-14, in Charlotte, North Carolina.

Fritz Damm will also attend as a Steering Committee Member.

June 13, 2023 | Charlotte, NC
Conference of Freight Counsel’s 2023 Summer Conference

Recent Decisions on Cargo Claims and Freight Damages

Presenters: Kathleen C. Jeffries,

Attendees: Michael J. Tauscher,

Kathleen Jeffries will present “Recent Decisions on Cargo Claims and Freight Damages” at the Conference of Freight Counsel’s Summer Conference, June 10-12, in Pittsburgh, Pennsylvania.

Mike Tauscher will also attend as chairman and presiding officer.

June 10, 2023 | Pittsburgh, PA
Indiana Motor Truck Association’s 2023 Future Leaders of Indiana Conference

State of the Industry Regarding Lawsuit Abuse

Presenters: Jannie E. Steck,

June 7, 2023 | Ft. Wayne, IN
International Warehouse Logistics Association’s 2023 Legal Symposium

Ask Me Anything: Fulfillment, Alternate Terms and Conditions, and More

Presenters: Eric J. Meyers,

May 11, 2023 | West Palm Beach, FL
American Trucking Associations’ 2023 Mid-Year Management Session: IC Policy Committee Meeting

Attendees: Gregory M. Feary, Shannon M. Cohen,

May 5, 2023 | Hollywood, FL
Transportation & Logistics Council’s 2023 Annual Conference

Law of the Land, Law of the Jungle

Presenters: Kathleen C. Jeffries,

April 30, 2023 | San Diego, CA
Transportation Lawyers Association’s 2023 Annual Conference

The Justice League: How Companies Team Up to Challenge Industry Threats They Cannot Handle Alone

Presenters: Christopher C. McNatt, Jr.,

Attendees: Kathleen C. Jeffries,

Chris McNatt presented “The Justice League: How Companies Team Up to Challenge Industry Threats They Cannot Handle Alone” at the Transportation Lawyers Association’s Annual Conference April 28, in San Diego, California.

Kathleen Jeffries attended the Conference and Executive Committee Meeting.

April 28, 2023 | San Diego, CA
  • Almost every truck will break down, and many trucks will require towing services. Nearly as common, such services will be followed by an unexpectedly high tow yard bill. Martin O’Conner advises that, depending on the state, tow yards may be required to disclose the total cost of their services prior to towing. For example, under Illinois’ Commercial Safety Towing Law, if all costs related to towing are not disclosed before the towing services, a tow yard cannot charge for its services and must release the vehicle for free.
  • Reversing the trial court, the California Court of Appeals held that Prop 22, a successful ballot initiative led by Uber, Lyft, DoorDash, and other gig companies to create an independent contractor test separate from and notwithstanding California AB 5’s ABC test, was largely constitutional and not an improper usurping of the legislative power to enact workers’ compensation laws. Prasad Sharma advises that certain provisions within Prop 22 that limit its applicability, for example, it applies to app-based drivers and network companies and delivery services within 50 miles of the pickup location, means it will not be widely available to all members of the trucking industry, but it may be an option for certain courier or local delivery segments.
  • Prasad Sharma reported that on March 14, President Biden nominated Julie Su, the current Deputy (and now acting) Secretary of Labor and the former Secretary of the California Labor and Workforce Development Agency, to be the Secretary of Labor. Having been narrowly confirmed to her current position by a 50-47 vote, the current nomination has been met by vigorous opposition, due in part to her championing of AB-5 and misclassification initiatives against the trucking industry. Her hearing was scheduled for April 20, but confirmation is not a sure bet as universal support from Senate Democrats (or recent Independents, i.e., Sinema) is not guaranteed.
  • Kevin Phillips announced the release of the updated Warehouse Terms and Conditions for 2023. The Global Cold Chain Alliance (GCCA), along with its warehouse legal partner, Scopelitis Law Firm, updated the previous version of the Terms and Conditions, which was last updated in 2013. The updated version for 2023 includes important changes that will be beneficial for all warehousing companies and their customers.
  • In 2021, California finalized its adoption of the Advanced Clean Trucks (ACT) Rule, which imposes obligations on truck manufacturers to increase the percentage of zero-emission truck sales relative to their overall sales within California and includes a one-time reporting requirement for motor carriers and brokers. According to Prasad Sharma and Ron Morelock, several states, along with California, signed a Memorandum of Understanding and committed to advance the sale of truck zero-emission vehicles by 2050. Approximately six states have adopted California’s ACT Rule, and others are in the process. For example, New York and New Jersey had reporting deadlines on April 1 of this year, but more states are in the process of adopting the ACT Rule.
  • Claims that the use of fingerprints, facial scans, or other biometric information violate Illinois’s Biometric Information Privacy Act (BIPA) have increased substantially over the past five years. According to Scopelitis Chicago Partner Andy Butcher, the upward trend will continue following the Illinois Supreme Court’s February decision in Cothron v. White Castle Systems, Inc. holding a BIPA claim accrues each time a company scans a biometric identifier or transmits such a scan to a third party. Transportation companies operating in Illinois should assess if the technology the company utilizes—such as security access systems, timeclocks, or dashcams—capture biometrics and consider the implementation of compliant BIPA policies.