Employers such as motor carriers are required to complete I-9s for their employees, but NOT for people considered to be independent contractors. This appears straight forward enough, but things can quickly get complicated since calling someone an independent contractor does not necessarily make them so. In fact, I believe, if memory serves me right, there is case law that says that this is “just a label” and means nothing.
The definition of an independent contractor depends on many factors centered on how independent the worker really is. For example, can the worker set his/her own hours and work methods, do they bring or utilize their own equipment or tools, do they work for others, etc. These are just some of the factors to consider, and they may sound familiar, since they are also used by the IRS to determine if a person is self-employed for tax purposes. However, the fact that the IRS considers a worker to be self-employed does not necessarily mean that the worker will be considered an independent contractor or subcontractor for I-9 verification purposes.
What escapes many is the various state laws. Every state has three (3) departments – the Unemployment Department, the Wage and Hour Department, and the Workers’ Compensation Department. Even though these three departments are all in the same state, they do not necessarily have the same guidelines as to who is an employee and who is an independent contractor. Assuming that the worker is an independent contractor, the company could still be held liable for penalties if it uses the subcontractor or independent contractor with the knowledge that they are unauthorized.
Back in 1986, the Immigration Reform & Control Act (IRCA) was signed into law. The IRCA says that “knowing” includes “constructive knowledge” and defines constructive knowledge as “knowledge which may be fairly inferred through notice of certain facts and circumstances which would lead a reasonable person, through exercise of reasonable care, to know about a certain condition.”
There are a variety of contractual provisions a company might use to protect itself. Employers should consider using contract language imposing on the contractor the duty to comply with all the immigration laws, state and federal, and to require indemnification for any fines or legal fees incurred by the employer because the independent contractor’s employees are not authorized to work in the US. Counsel should be used to draft the appropriate language. Other contract provisions could include requiring contractors to furnish their I-9s and other documentation or require the contractor to submit to an audit.
Switching gears, let’s look at the Safety Fitness Standards. The Federal Motor Carrier Safety Administration (FMCSA) is the governing body for all motor carriers and, as such, it determines a company’s compliance using the Safety Fitness Standard. Based on their findings during a compliance review, the FMCSA determines a Safety Rating for the fleet based on the Safety Fitness Standard. They will receive one of three ratings – conditional, unsatisfactory or satisfactory.
The FMCSA auditors conduct compliance reviews and audits as warranted – either remotely or onsite – usually after they receive a legitimate complaint about a carrier, if the carrier is involved in a high-profile crash, or if their CSA BASIC scores are above a reasonable threshold. In these cases, auditors use the Safety Management Cycle (SMC) to determine what safety management processes are in place, which processes might be breaking down, why they are breaking down, and how they can be fixed. Following is information about each of the safety ratings.
Conditional – this rating indicates a carrier does not have adequate safety management controls in place to ensure full compliance. The company needs to make some changes to show it is working on the problem areas. Although the carrier is not required to take action after getting a conditional rating, it’s not something to take lightly. It could mean higher insurance rates and a reduced ability to attract and retain customers and qualified drivers. Unsatisfactory – this rating indicates that a motor carrier does not have adequate safety management controls in place to ensure compliance, and its violations are to such a degree that they are prohibited from operating any commercial motor vehicles. Satisfactory – this rating indicates the motor carrier’s safety is satisfactory and that management controls are considered functioning and adequate.
All new fleets (known as New Entrants) are given a “new entrant registration” status, and their safety management practices are monitored for 18 months. The FMCSA will do a new entrant safety audit once the carrier has been in operation long enough to have sufficient records to evaluate the adequacy of its basic safety management controls – typically within the first three months of operation. The compliance documents and processes for new entrants are the same as for those companies that have been in business for years. The safety audit monitors and assists a new company in establishing a sound safety program from the onset. It is for educational purposes and will not result in a safety rating. However, if inadequate basic safety management controls are found during a safety audit, the new entrant will be unable to continue operating.
Anyone can view safety ratings on the SAFER website, making it essential to stay on top of your rating. Use your CSA BASIC scores as an advanced warning system. They can alert you to future enforcement actions – if your scores go higher, so do the odds of an audit or other review. Be proactive. Ensure your CSA data is accurate. If you see bad data in the system, challenge it using the DataQs system. Look for trends in the types of violations you’re seeing. Download your violation and inspection data for each BASIC and analyze it. Take action. Use a “continuous improvement” model when you find any deficiencies. The Safety Management Cycle is a great place to start. By monitoring, analyzing, and acting on your CSA scores and other data found in the CSA system, you can stay off the FMCSA’s radar and out of trouble.