Page 22 - ATR 1 2013

“Normally, wheN Two parTies eNTer iNTo a commercial TraNsacTioN,
each has To acT prudeNTly.”

—greg JoNes, aTTorNey,
wrighT, liNdsey, JeNNiNgs

workers’ compensation coverage when State Senator David Sanders discharging a contract, the carrier dam-
leasing to the company. Senator David (R-Little Rock) and Representative ages the load, the shipper’s dock or the
Sanders (R-Little Rock) is serving as the Reginald Murdock (D-Marianna) are property of a third party, it is expected
primary sponsor. cosponsoring the legislation that will in the carrier will pay for any such dam-
If strictly interpreted, Arkansas sponsoring legislation to protect owner ages. Likewise, if the shipper does
court decisions now make it almost operatorsSo, here’s what the legislation something wrong, resulting in damage
impossible for a trucking company to proposes: Motor carriers must offer to the load or its own or someone else’s
execute a lease agreement with an inde- workers’ compensation insurance to its property, the normal expectation is the
pendent contractor without risking the owner-operators and owner-operators shipper must make it right.”
state’s reclassification of the indepen- must be covered by workers’ compensa- But Jones said that some sophis-
dent contractor as an employee, holding tion, although the owner-operator does ticated shippers have periodically
the company responsible for back with- not have to use the coverage offered by required carriers to sign off on “indem-
holding taxes on earnings as well as the carrier. If an owner-operator is cov- nity agreements” that require the car-
workers’ compensation. ered by the carrier’s workers’ compensa- rier not only to commit to paying for
One Arkansas Court of Appeals tion, it will not terminate the driver’s any damages caused by the carrier’s
ruling stated that since the owner- independent contractor status. acts or omissions, but also for damages
operator displayed the trucking com- caused by the shipper. That approach
pany name that he contracted with (a aNTI-INdEmNIfICaTIoN sometimes is the result of unequal bar-
requirement under federal lease con- In the end, ATA’s third bill comes gaining power between the shipper and
tracts for motor carriers), the trucking down to common sense and fairness. the carrier, the latter feeling compelled
company ‘controlled’ the owner-opera- The legislation, sponsored by State to accept contract terms that otherwise
tor and was therefore an employee. Senator Jeremy Hutchinson (R-Little would seem extreme just so it can get
When that happens, the state may Rock), takes aim at clauses in contracts the shipper’s business.
nullify all lease agreements held by the between shippers and motor carriers Aside from the inherent unfairness
motor carrier and assess the carrier that require the trucking company to of that sort of arrangement, Jones said
retroactively for withholding and other hold the shipper harmless in the event that requiring the carrier to indemnify
taxes. In those cases, owner-operators the shipper causes any damage or injury the shipper for the shipper’s negligence
frequently go and join another compa- to a carrier’s equipment or drivers while represents bad public policy because it
ny, leaving the trucking company with on the shipper’s property. removes incentives for the shipper to act
an unfair tax liability. “Normally, when two parties enter prudently and safely. If the carrier has
There are approximately 6,800 into a commercial transaction, each to pay regardless of how unsafely the
trucking companies in Arkansas; more has to act prudently,” said Greg Jones, shipper acts, then the shipper has no
than 4,000 of which operate only one ATA counsel and an attorney with the financial reason to prevent accidents.
truck. These one-truck operations are Little Rock law firm of Wright, Lindsey, And yet some courts will enforce such
small businesses with owners who pay Jennings. “If in handling its end of the imprudent indemnity agreements.
their taxes and gain other deductions bargain, one does something improper Thirty-six (36) states have already
in operating their business. The vast or negligent, the legal system normally passed legislation that addresses this
majority of these entrepreneurs want to expects that party to make it right. Such issue in various ways.
remain owner-operators. is the case with shipping contracts. If in

22 arKanSaS truCKing report | issue 1 2013