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O/O for Schneider described as employee as appeals court kicks case back to lower court

Appellate court reverses decision on independent contractor status

(Editor’s note: Following discussions with Schneider, the original headline and article have been changed to emphasize that the final determination of the worker’s status will be at the lower court level.)

In the midst of numerous battles regarding independent contractor status, a federal district court has sided with a driver who claimed in a lawsuit against Schneider National that he was effectively an employee rather than an independent owner-operator.

The suit was filed in July 2020 by Eric Brant, who drove for Schneider on a lease arrangement between December 2018 and August 2019. The decision from the U.S. Court of Appeals for the 7th Circuit comes down almost completely on the side of Brant, whose allegations are the core of the criticism that has been leveled for years over the status of owner-operators under lease to a carrier.

The appellate court ordered the case back to the district court.  The higher court’s decision’s solely moves the case to the lower court; its repeated references to Brant being an employee do not have the force of law.

A lower court in May 2021 had ruled in favor of the trucking company “by giving decisive effect to the terms of Schneider’s contract,” according to the appeals court decision. Such an approach by the lower court “in many areas of law … would be sound. … But not under the Fair Labor Standards Act (FLSA).”

Independent contractor status under the FLSA is one area of the battle as the National Labor Relations Board considers whether to move away from what is known as the Super Shuttle precedent and substitute the Federal Express standard that was in place a few years earlier. That move would be more favorable to defining workers as employees rather than independent contractors. 

The definition of independent contractor status also is in limbo at the Department of Labor, where the Wage and Hour Division, after having been rebuffed once in an effort to withdraw a Trump administration rule on independent contractor status, is now seeking input on a new rule. 

And the ABC test in California looms as an appellate court decision rejecting legal efforts to keep AB5 from being implemented in that state means it is on the verge of becoming law. That comes after the Supreme Court declined to hear an appeal from the California Trucking Association.

In the middle of all that, there is now a federal appeals court decision that is mostly unsparing in rejecting Schneider’s defense of the independent owner-operator arrangement it had with Brant.

In its decision earlier this month, the 7th Circuit turned to the “economic realities” test to determine whether Brant was truly independent. The economic realities test is a multipronged test used by courts to help determine independent contractor status. It is flexible; the Trump administration rule on independent contractor status that for now remains on the books at the Wage and Hour Division of the Department of Labor looks to the economic realities test but highlights several of them as “core,” and failure to not reach all of them doesn’t automatically render the worker as an employee. 

According to the court’s recap of the Brant-Schneider relationship, the lease involved Brant leasing a “relatively new” Freightliner and an operating agreement in which Brant leased the truck back to Green Bay, Wisconsin-headquartered Schneider and got 65% of the gross revenue for freight he hauled for the company. 

“The operating agreement purported to give Brant substantial control over his work,” the decision said. “It also included provisions permitting him to haul loads for other carriers and to hire other drivers to assist if he desired.” 

But the court noted that Schneider “retained sole discretion … to deny him permission to haul loads for other carriers.”

The two sides “provide starkly different accounts of Brant’s actual work,” the court said. 

Among the charges that Brant made in his original lawsuit:

  • He could not act independently. “He simply had to say yes to as many loads from Schneider as he could, even when they were highly undesirable.” The court said Brant claimed that during the week of May 2, 2019, he drove five times for 3,000 miles and his paycheck after expenses was zero.
  • He tried to end his operating agreement so he could haul for other carriers and was presented with a bill for a security deposit that was so high as to be unaffordable.
  • “Schneider controlled him in the manner of an employee without respecting his rights under federal and state employment laws,” according to the court’s recap of Brant’s arguments.

The court’s recap of Schneider’s view was:

  • Brant had “freely engaged to haul freight for the carrier and was free to accept or reject the shipments he was offered while retaining total operational control of his business.” 
  • “To Schneider, the operating agreement and lease show that Brant was an independent contractor whom Schneider enabled to manage his own operations, to hire additional drivers or to haul loads for other carriers.”

But the court ultimately held for Brant on almost all of the charges in his original suit. The driver alleged that Schneider didn’t pay him minimum wage under the Fair Labor Standards Act and Wisconsin law; the contracts were “unconscionable”; Schneider “unjustly enriched itself” through deductions from Brant’s pay; and the contracts violated truth-in-leasing regulations. 

On most of the points, the appellate court came down for Brant with little ambiguity. As to the charge that there were weeks when Brant didn’t even make a minimum wage, “Brant satisfies the point easily.” Brant’s claims that he had no control over his job — a significant point under the economic realities test — “weighs in favor of finding Brant was an employee of Schneider.” 

Despite provisions in the contract that on the surface seem to allow Brant the ability to profit from the lease arrangement beyond what he was hauling for Schneider, “Brant had no realistic option other than to take the shipments that Schneider offered, even when they were unprofitable” is how the court sums up Brant’s claim. “This factor also weighs in favor of considering Brant to have been an employee of Schneider.”

The 40-page decision has numerous recaps of Brant’s charges and in almost all of them it concludes that the evidence favors finding Brant as an employee, not an independent contractor under the economic realities test.

“Based on the facts alleged in the complaint, Brant had little true control over the conduct of his work and was totally dependent on Schneider to turn a profit,” the court wrote. What the court sees as the facts of the case means that “he must be considered an employee as a matter of economic reality.”

A representative from Schneider had not responded to an email from FreightWaves by publication time. 

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29 Comments

  1. Years ago I leased a truck from a company out of Iowa ( to protect my interest just Call the the GOLD TEAM ) . They repoed my truck after I decided that I was tired of waiting for them to give me a load . All I had was MY TRUCK nothing of theirs , not even a trailer . So I bobtailed from Gary Indiana back to Palatka FL … even went through a D.O.T inspection that I passed when entering FL . Told D.O.T I was thinking about just buying truck outright and going elsewhere because of the scam the company was playing with lease operators. ( Most people think they tried to report truck stolen but since I didn’t have ANY OF THEIR EQUIPMENT I WASN’T IN POSSESSION OF ANY STOLEN VEHICLES ) . My wife made me clean out truck so I did … good thing because they stole my truck in middle of the night . I was going to report it stolen but instead I brought the state Labor Department down on them . The state found that they wanted me to be an o/o who acted like a company driver therefore I was a company driver and not a lease operator . I could have actually gone after them for the money I wrongfully paid as a COMPANY DRIVER but they couldn’t damage my credit report with a default ( because that would have caused them legal problems after I was found to be an employee ) and I was back to work for a good company in a month . So I took the lesson learned , linked my wounds and got on with life knowing I beat them at their own game and it pissed them off … no money can replace or top that victory LOL

  2. Bernie Brown, they guy who ran National Freight in Vineland, NJ decades ago is the schmoozer who started ALL of this crap…50 years ago or so. “Lease you a truck with no money down”, “put you in business”, control your life and when he was ready after a year or so of you breaking your back to make it work and were starting to lose the warm and fuzzy feeling, the loads would interestingly start to decline. To the point the “slaves” couldn’t make their truck payments to National and couldn’t work the truck anywhere else. They’d get thrown out like garbage. Then the truck would get repossessed, leased to the newest sucker, and the cycle would begin all over again. As P.T. Barnum said “a sucker is born every minute’. Ever notice that National Freight is still on the road, albeit from a new headquarters in Cherry Hill, NJ. If he’s not alive, Bernie Brown should burn in hell for all the lives he impacted in a negative way and the families he brought tears to. Midwestern Distribution, Schneider, Werner, Prime, Swift, etc. and all the rest of these con-artists and fast-talkers continued the tradition of promising dreams to hard working folks and delivering only sorrow. This is why unions get started and while I’m not a big union fan, it’s undeniable that among all their ills and corruption, they generally DO take care of their members and fight the kinds of fraud perpetrated by the Bernie Browns of the world. These poor souls think they’re independent but they really are pawns and should be classified as employees. They have no rights in these lease arrangements are many aren’t sophisticated enough to realize it. Sad.

  3. I worked for Schneider back in 2017 as a employee and the equipment they give to me was trash out and everything inside of it was broken and I was out on a run for them and the crap I had to put up with from this company when things didn’t go there way was very unprofessional out of them!! As we all know as drivers never put your trust in your drivers management because they will let you set three days without a load and your supposed to be off that truck on that fourth day because as you are a driver that has a emergency back in your home state and they don’t care about you all they care about is there company wallet!! So to be honest with you all I called a rental company for a vehicle and came back to the truck and cleaned my things out of it and left that truck in there yard in a other state then the one I was Assigned too but it wasn’t abandoned it was in there Company yard !! And I called my drivers manager and told him the keys was in the cup holder and I was heading home and they can keep there job I quit!! And I will say stay away from CR England trash company as well !!

  4. Just another way for a huge company to take Advantage of uneducated people. They should be classified as employees, because they are. They aren’t subcontractors or independent, they only pull for one company and that one company controls ever6they do or make.

  5. one of many ! Brant Driver/employee/owner operator a Schneider driver companies like Schneider, prime, CR england, Swift, Knight, Landspan , RPS what is now FedEx and many more companies, ALL/Employees/Drivers/owner operators are required to take COMPLETE responsibility of equipment and all customer demands for hours and days these drivers/Employees/owner operators never seen a penny , experiencing this situation myself year after year a Employee/Driver/ owner operator would invest a thousand hours or more a year at these trucking companies and customers doing their duties have complete responsibilities to take care of this equipment and ANY customer demands with absolutely NO pay , this does NOT include transporting the load and all duties that require transporting the load , at the same time the trucking/transportation companies would be charging all expenses to the Employee/ driver/ owner operator, for there Equipment these companies boldly would tell the employee/driver/owner operator/you will receive layover, work pay and or hourly pay, Thousands of drivers Never ! received Any Pay …

  6. Funny, I’ve been leasing through Prime Inc for two years now and have made a lot of money….in a brand new truck. It’s all about how the individual handles their business. Some people just aren’t cut out to make their own money. Plain and simple.

      1. It’s not hard to make very good money leasing under Prime. Anytime I’m talking to someone and they doubt my pay, I show them my settlement. I’m not here to keep people away from making good money. There’s plenty to be made.

  7. If you own your truck, you have the title and it is in your name only and you lease to a carrier, you aren’t independent. You have to answer to whoever you are leased to. If you have your own authority and your own customers/freight then you are independent. That changes if you use broker freight. So, is anyone in trucking really ” independent ” 100% of the time? I’m sure even large carriers use brokered freight at some time. Is anyone in trucking really independent, they are required/forced to follow Government rules and regulations? They are told when and what they can do on just about everything.

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John Kingston

John has an almost 40-year career covering commodities, most of the time at S&P Global Platts. He created the Dated Brent benchmark, now the world’s most important crude oil marker. He was Director of Oil, Director of News, the editor in chief of Platts Oilgram News and the “talking head” for Platts on numerous media outlets, including CNBC, Fox Business and Canada’s BNN. He covered metals before joining Platts and then spent a year running Platts’ metals business as well. He was awarded the International Association of Energy Economics Award for Excellence in Written Journalism in 2015. In 2010, he won two Corporate Achievement Awards from McGraw-Hill, an extremely rare accomplishment, one for steering coverage of the BP Deepwater Horizon disaster and the other for the launch of a public affairs television show, Platts Energy Week.