KING CITY, Ont. — Do you have your corporate lawyer on speed dial? If not, you may want to add them.
Speaking at the Private Motor Truck Council’s annual meeting, Heather Devine, a partner with law firm Isaacs & Co., gave an overview of the top 10 legal issues facing the trucking industry in 2016.
New regulations that will require the use of electronic logging devices (ELDs) will make it easier for plaintiff attorneys to inspect a carrier’s records and identify any hours-of-service violations, Devine warned.
She said fleets should already be taking steps to understand the new regulations and working with ELD suppliers to develop a system for storing those records.
Devine said most plaintiff attorneys are more comfortable dealing with electronic records than with paper logbooks, so they’ll be more effective at uncovering any discrepancies or violations. They’ll also want to compare truck ECM data to the e-log records to ensure there are no inconsistencies. Her advice to fleets is to get ahead of the regulation and ensure drivers are trained on how to properly use e-logs before they’re mandated. Also have a plan for managing the electronic records, Devine added.
Food Safety Regulations
The US is rolling out new food safety regulations that will affect Canadian carriers hauling food into the US. The new requirements apply to carriers, brokers, receivers, loaders and shippers. Some food products are exempt from the new requirements, such as frozen food and food that’s completely enclosed in a container. One of the requirements is that “equipment must be designed and maintained to prevent food from becoming unsafe,” Devine explained. Carriers must develop procedures to ensure food safety, adequate temperature controls throughout the journey and the separation of ready-to-eat food from raw food.
Carriers will need to develop a policy to show US shippers they comply with the new requirements.
“Have written procedures in place and follow them,” she advised.
The driver shortage
With Ontario developing mandatory entry-level training (MELT) standards for professional drivers, Devine said carriers need to revisit their own hiring practices and ensure they are only hiring qualified drivers.
“You better keep track of what your training standards are and update your policies,” she warned.
The murky employment status of drivers is the issue that keeps on giving…to lawyers, that is. To avoid problems related to the status of your drivers, Devine suggested carriers re-examine whethere there is really any cost savings to be had by employing independent contractors. Employing only company drivers will allow them to avoid this legal minefield altogether.
If independent contractors are absolutely needed, she said carriers must at least be clear about their designation as such.
If the company is deducting CPP, EI and income tax, then that driver is an employee, she noted. But Canada Revenue Agency (CRA) and the Ministry of Labour sometimes define independence differently.
If you don’t let your owner/operators haul freight for other carriers, they may be deemed an employee. If he or she wears your company’s uniform, they may be deemed an employee. Also, an independent contractor would be permitted to sub out loads a carrier has assigned him or her, often violating contracts with shippers. Taking it a step further, a carrier’s assignment of a load to an independent contractor could itself be interpreted as sub-contracting.
“When you get a load and you, the carrier, give it to an independent contractor then that independent contractor has been given a load by you – you subbed it,” she explained. “If he subs it in turn, they’re brokering.”
But if they’re truly an independent contractor, you as a carrier can’t prevent them from subbing out loads.
Devine noted this is important because many US-based customers put no-subbing clauses in their contracts.
Devine suggested looking at the lanes you’ll be travelling in the US and ensuring you have contacts such as lawyers ready should a problem arise in those jurisdictions, given the high awards being issued there.
She also mentioned the CBSA is now collecting data regarding mistakes carriers are making with loads at the border. Eventually, she said, the CBSA plans to score carriers and publish those scores, so sloppiness at the border could be on display to everyone, including customers.
“They are tracking the carriers who are making mistakes and when they have enough data they’re going to evaluate you and give you scores. It shocks the hell out of me,” she said, referencing how CSA scores in the US were publicly posted and used by shippers to select carriers.
Devine said many fleets that get victimized by cargo thieves later discover their insurance won’t cover the load.
“You’d be surprised by the number of people who think they have insurance, but don’t,” she said.
She cited the case of a carrier that landed a new contract hauling liquor. The company lost six loads through a well-orchestrated theft and then discovered its insurance policy excluded liquor.
“When you get new business, take a careful look (at your insurance policy),” she said.
Also be clear on whose policy will cover a stolen load. One fleet had $350,000 in coverage but lost a load worth $700,000. They were unsuccessful in getting the broker and shipper to cover the rest of the loss through their insurance.
“Ultimately, the carrier always has ultimate responsibility,” she said. “Make sure you have the right insurance.”
Ontario case law has affirmed carriers are only liable for $2 per pound of product hauled unless goods are declared “excess value.” Devine noted Ontario carriers should have a contract for carriage that reaffirms that they’re liable for only $2/lb unless the goods have been declared of excess value.
These contracts of carriage can be a simple two-page document and override the Bill of Lading, which isn’t even required in Ontario.
She said the contract of carriage should include language that says any excess value must be declared in writing, so adequate insurance can be arranged.
Shippers are increasingly placing more liability on the carrier and threatening fines, Devine noted. Make sure you know what any fines vaguely referenced in the contract actually mean.
“Watch and read some of these agreements,” she said of shipper contracts. She suggests carriers indicate in their contracts that no fines will be accepted or applicable unless the potential for the fine is explained in writing.
Legalization of marijuana
It’s widely believed that Canada will legalize marijuana for recreational use. This will affect trucking companies, Devine noted. She looked to Colorado as an example. When pot was legalized there, there was a spike in failed drug tests among drivers.
She said carriers should re-examine their drug and alcohol testing policies in anticipation of the more widespread use of marijuana.
The legalization of marijuana will also bring opportunities to the trucking industry, including the need for secure transportation and warehousing of product.
There’s a movement afoot among large shippers to force carriers into adopting new technologies by harshly penalizing them for inefficiencies and delays, Devine noted. For instance Target in the US has eliminated its two- to 12-day grace periods for delays and hiked fines for late shipments. Other retailers will follow, she warned.
But technology often delivers a safety benefit, so Devine suggested carriers try to parlay their use of these technologies into insurance premium reductions.
“It is a negotiating point for you and something I think is very important to keep your eye on,” she said of the use of emerging technologies.
James Menzies is editor of Truck News magazine. He has been covering the Canadian trucking industry for more than 15 years and holds a CDL. Reach him at email@example.com or follow him on Twitter at @JamesMenzies. All posts by James Menzies