RFX Blog

A Big Win for Massachusetts Owner-Operators

February 26th, 2015

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Refrigerated Food Express has been a Massachusetts-based owner-operator company since 1952. While we are an over-the-road motor carrier with truck operators domiciled in other states, Massachusetts is our home, and we have had some great relationships with Massachusetts-based owner-operators. That is why over the past several years, it has been difficult for us and other motor carriers like us to retain and recruit owner-operators in our own backyard. In recent years, we have been prohibited from signing owner-operators from our own state because of a Massachusetts statute governing the classification of owner-operators and independent contractors as “employees.”  In Massachusetts, there was a three-prong test that was impossible for us to pass and preserve the independent contractor status:

1.  The individual must be free from direction and control in connection with the performance of the service.
2.  The service is performed outside of the usual course of business of the employers.
3.  The individual is customarily engaged in an independently established trade, occupation, profession or business of the same nature as that involved in the service performed.

The consensus among Massachusetts-based motor carriers is that rule number 2 was a nail in the coffin for owner-operators. As an example, if Refrigerated Food Express, a motor carrier doing business in the transportation & logistics industry, hires an electrician to do some maintenance work around the office, that electrician by Massachusetts standards is an independent contractor, because the electrician is not in the same line of work as Refrigerated Food Express.  Conversely, an owner-operator would not fall under that independent contractor classification because he or she falls in the same line of work as the employer.  That has been the challenge that Massachusetts-based motor carriers have had to work with… until now!

On September 30, 2014, the First Circuit Court issued a decision REVERSING a ruling on the 2nd prong (service outside the usual course of business).  The judge ruled that the MA independent contractor law is preempted by federal law.  This means the service performed does NOT have to be outside of the usual course of business of the employer. On February 5, 2015, another case was heard in MA with the same results.   The MA state law governing independent contractors was preempted by federal law.

So what does this mean for Massachusetts-based motor carriers and owner-operators?

We have been advised by legal council that Massachusetts-based motor carriers CAN sign on Massachusetts-based owner-operators provided that they:

1.  Review all contract provisions between the motor carrier and the owner-operator to make sure that the language complies with independent contractor standards.

2.  Motor carriers do not exert direction and control.  For example, an owner-operator cannot be forced to accept a load that they don’t want to take.

3.  The owner-operator has set up a company name with a federal ID number.

4.  The owner-operator either has their own workers’ comp or occupational accident insurance.

As a Massachusetts business engaging in interstate commerce, we are excited and fortunate that the courts have created a level playing field by recognizing this policy as preempted by federal law.  It is truly a big win for Massachusetts Owner-Operators!

Posted on February 26th, 2015 in RFX News, Trucking Industry