TORONTO — There’s a huge push underway south of the border to redefine independent contractor status.
At the federal level, a bill sponsored last year by Senator John Kerry (D-Mass) proposes to eliminate Section 530 of the Revenue Act of 1978. Known in some circles as the “safe harbor“ provision, it allowed companies to rely on the test of long-standing, recognized practice to determine whether a worker is an employee or an independent contractor.
If passed, the bill would reverse the burden of proof, forcing companies to show they have a “reasonable basis” for not treating an individual as an employee.
As American Trucking Associations (ATA) deputy general counsel, Robert Digges Jr. puts it, “…a motor carrier would need to spend significant resources to defend independent contractor classification under a fact-intensive review. That would, in some instances, be prohibitively expensive.”
It would probably also push out of the industry plenty of owner-ops — many already on the endangered species list — since there was something appealing to buying their own equipment in the first place.
Note that President Obama himself strongly supports efforts to outlaw employee misclassification and has made it a priority. In Canada, where unions are already allowed very lenient guidelines to collectively bargain on behalf of owner-ops (even against their will), can a push to strip them of independent status be far behind?
Maybe it’s time we took a fresh approach to the tired old labor/management relationship that exists between carriers and owner-operators, if not just to forestall the challenges that are bound to arise following the American initiative, but simply to strengthen the bond between what are really business partners.
How about a franchise model? Many do not see the carrier owner-operator relationship in that light, but taken to its logical conclusion, that’s what it is. So why not solidify it without all the confusion and encumbrances. Set them up as franchisees.
The typical franchise model doesn’t work perfectly for owner-operators as currently defined, but with a little imagination, it could. Owner-ops are extensions of the carrier. They often fly the company colors and they are certainly beholden to the carrier in terms of policy and procedure, compliance requirements, and more. The carrier does most, if not all of the marketing and the owner-op — in theory — benefits from an association with a strong business model and recognized brand.
The franchisee operates at arm’s length from the franchisor, but is obliged under terms of the agreement to operate in a certain manner. This relieves the carrier of the burden of proof in terms of the employee/ contractor debate, while providing both parties with a degree of both autonomy and obligation.
Current owner-op/carrier relationships really don’t serve the owner-op well, but the confines of Part III of the Canada Labour Code don’t give either party a lot of latitude to make change.
As for unions who scrutinize the amount of control a company has over an independent worker, it can be easily argued that corporate McDonalds, for example, has more oversight and control over a retail franchisee than a carrier ever would over an owner-op.
A bone fide franchise deal for owner-ops would take the Labour Code right out of the equation, and allow two independent businesses to maximize their strengths and help each other achieve certain goals without complication.
All it takes is a little imagination.
– By Jim Park
(For more on how drivers and owner-ops are dealing with today’s hyper regulatory environment, check out our weekly online Feature, The Case of the Disappearing Divers, click here).
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