Overcoming the Independent Contractor Defense

Overcoming the Independent Contractor Defense

Our firm handles a wide range of personal injury and wrongful death cases throughout Pennsylvania, Ohio and West Virginia concerning tractor trailer collisions. Most of these are not simple, slam-dunk cases. Often, we have to contend with a rat’s nest of convoluted, multi-layered liability defenses. Among those is often the “independent contractor” defense. The company that is the prime mover in an activity may cloak itself behind an “independent contractor” shell game, capturing most of the profits while trying to outsource all the risks of harm to others.

Effective representation of a seriously injured person requires that counsel reach the pockets of a responsible entity with sufficient insurance coverage or assets to pay a judgment. That often requires reaching behind a screen of independent contractor business relationships erected to evade financial responsibility. The general rule is that a defendant is not liable for the negligence of an independent contractor, but there are many exceptions. While not comprehensive, this paper seeks to outline major theories for overcoming the independent contractor defense.

So first we need to ask what is an Interstate Motor Carrier? Prior to 1956, interstate motor carriers commonly sought to evade financial responsibility by hiding behind “independent contractor” arrangements. In 1953, while addressing carriers, the United States Supreme Court described such practices as “evils that had grown up” in the industry, and that the ICC need not “sit idly by and wink at practices that lead to violations of its provisions.” American Trucking Ass’ns v. United States, 344 U.S. 298, 301, 311 (1953). 

The history of the regulations of motor carriers reveals that after the commencement of regulation in 1935, a substantial number of carriers began to use equipment owned and driven by truckers who had no such ICC operating authority. This use was accomplished by a variety of leases, trip leases, and by other arrangements under which owner-operator truckers carried on the operations of the carriers with operating authority. In contracting with such persons, the carriers took care to constitute the lessors as independent contractors which enabled them to avoid the commission’s safety, financial, and insurance regulations that had been prescribed for equipment and drivers in order to protect the public. Many of the owner-operators without authority were itinerant truckers known as “gypsies,” fly-by-night truckers with poor, unsafe equipment who had little financial ability. They may or may not have had adequate insurance. The hard core of the problem was the trip lease and its attendant evils which permitted an indifferent carrier to evade its safety and financial responsibility. The practice of leasing made it difficult in collision cases to fix responsibility, and certified carriers could thus escape the consequences of the regulations and responsibility for accidents by employing irresponsible persons as independent contractors who were not financially accountable and who had no insurance or were under-insured.

The use of non-owned vehicles led to public confusion as to who was financially responsible for accidents caused by those vehicles. Thus, interstate motor carriers often were able to escape liability for virtually all motor vehicle accidents occurring in the motor carrier’s business. Cincinnati v. Haack, 708 N.E.2d 214 (Ohio Ct. App. 1997). In such cases, it was “clear that the scheme as a whole is a mere subterfuge, an unpermitted evasion, not a real avoidance of the provisions of the law.”  

Since 1956, federal law has treated independent contractors as statutory employees of a motor carrier in the interstate motor carrier context. The 1956 amendment to the Interstate Common Carrier Act was intended to require a motor carrier to be fully responsible for the maintenance and operation of the leased equipment and the supervision of the borrowed drivers, thereby protecting the public from accidents, preventing public confusion about who was financially responsible if accidents occurred, and providing financially responsible defendants. The purpose is “to protect persons who are injured in highway accidents, by increasing the likelihood that a substantial entity will be available to respond to any judgment rendered.” This eliminates “the defense of independent contractor by making the owner/operator of the equipment the ‘statutory employee’ of the carrier.” Shell v. Navajo Freight Lines, 693 P.2d 382 (Colo. Ct. App. 1984).

The Federal Motor Carrier Safety Regulations, 49 C.F.R. § 390.5, defines the term “employee” as, “any individual, other than an employer, who is employed by an employer and who in the course of his or her employment directly affects commercial motor vehicle safety. Such term includes a driver of a commercial motor vehicle (including an independent contractor while in the course of operating a commercial motor vehicle), a mechanic, and a freight handler.”

The Regulatory Guidance to 49 C.F.R. § 390.5 , at Question 17, explains:

The term “employee,” as defined in § 390.5, specifically includes an independent contractor employed by a motor carrier. The existence of operating authority has no bearing upon the issue. The motor carrier is, therefore, responsible for compliance with the FMCSRs by its driver employees, including those who are owner-operators.

These regulations were intended to safeguard the public by preventing motor carriers from circumventing applicable regulations by leasing the equipment and services of independent contractors exempt from federal regulation. The definition of “lease” as “contract or arrangement” extends to any arrangement by which a carrier allows another to haul its freight for compensation. Any other construction would defeat the Congressional policy of requiring financially responsible interstate transportation.

If you or a loved one has been involved in a collision involving a tractor trailer we would be happy to answer any question you may have.


Today's blog: Independent Contractors can be hired by anyone - even the trucking industry. Chris McCabe provides some information on what this means for you if you find yourself in a lawsuit with an 'independent contractor' via a trucking company.