(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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Travis
That is great news these big trucking companies have been sticking it hard working truckers for decades.
You have to be not of your right mind to lease a used beat up truck from these companies.
Crazy
Jose Ramirez
How is this going to affect other bogus pyramid scam leases? Who have been scamming rookie drivers this way for years. Maybe a class action Law suit across the board of all theese major Carriers with thier in-house lease option scams.
Snowman
From 2017-2018 I leased a truck to Schneider from SFI and found myself in the same situation as the plaintiff. And while SFI did go above and beyond for me on weeks when I struggled, Schneider was always an obstacle. I mean, it’s blatantly obvious that they use the SFI owner-operators to their advantage.
At one point they removed a load that I had self-dispatched on the load board with the pretense that the customer had canceled. I found another load from the same customer, this time a live-load. When I showed up to pickup the load, there was Schneider company driver picking up the pre-loaded one that they said had been “cancelled”. If you found a sweet spot to run a specific region and go home for a reset, those loads would not be available to you all of a sudden. There’s a lot more to this that has been talked about in forums, youtube and even at the terminals between drivers.
When I tried to take my truck to another carrier, I was given an estimate of $5,000 to re-write the lease plus security deposit. They also said I would have to take the truck to a shop of their choice to get their pump and compressor removed (liquid bulk division), of course pay for the removal but they couldn’t say how long it would take to get the job done.
So even thought you are an “IC” you have very little control of your business.
D
I’m not understanding what goes on with some drivers. I’ve been doing this for 18 years now. I went to Schneider for the first time in November of 2012. I used sfi to purchase (lease) my first truck. A 2006 Peterbilt 387. I paid it off in 1 year and 3 months. I still have that truck. I left Schneider in February 2014 because I felt as if Schneider was bs also. After a couple of months at another carrier I realized how much better and easier making money was at Schneider was but I stayed with the other carrier. I was home every night with no problem budealt with bs. Decided to come back to Schneider in June 2019 purchased another truck through sfi. 2017 kw. Paid it off in 2 years 8 months. I’m not leaving this time. I only work 3 to 5 days a week and of them days I’m home most of them nights. I only went without a check maybe 2 times a year but the next week would be a week I actually run a full 5 days. That would be to make up for not making a check the week prior. Due to me taking off or something. It would be a shame for a lot of us that understand the system to no longer have the opportunity to do what works for us. Some things are not for some people.
Michael Blunt
It’s so true but all lease purchase should be looked at by the federal government I leased a truck through Schneider and although I completed my 2yrs lease at times it was hell and my terminal was Charlotte and when I asked for a change of business advisor I was told no. My BOA V.FOSTER was hell to deal with was treated like a company driver. So I turned truck in to keep me from going into the terminal and seeking him out.
Jim
This is why AB5 exist! I’ve bought a truck from Schneider and it’s not for those that don’t have a strong mental capacity and backbone. Schneider needs to do better and stop double, triple brokering their loads before finally giving the crumbs to their independent contractors. This practice in itself is illegal and should be investigated and prosecuted to the highest level as this is human trafficking, slavery, and a form of indentured servants. Some one please stand up and help free us from this Schneider plantation. Many has been brainwashed in likes of Jim Jones or David Koresh. Most drivers are not the smartest and Schneider has figured this out and put us in a corporate noose choking the life out of us daily as they’re fattening their pockets on the backs of extremely hard working men and women. PLEASE FREE US ( Schneider Slaves).
William
Great day for truck drivers that are abandoned and left penny less and are kicked off
the lot because they were victims to this sham that made Mega carriers rich . You
complain and they retaliate but starving you to death .
Thagearjammer25/8
Let’s go after the load tracking bs next. We’re not your employees! It’s easily manipulated and shouldn’t be trusted. Should be an option at the least.
Vincent E Imes
This guy doesn’t understand business and thus he needs to go and be a company driver and advertorial his failure.
I’ve been leased on to SNI for more than 2 years and even with a higher than normal truck note still managed to turn a profit.
I had and still have the ability to work with other carriers this guy is not a good example of the business model that’s required to be a leased on owner op.
So because he failed he jeopardizes me and my families well being.
One bad apple spoils a bunch.
Precious Underwood
If you don’t have access to other load boards and can only haul what Shneider is offering you are their employee. If you have to pay a fine to lease on to another carrier, you are not free to haul for another carrier while with them. You guys are doing nothing more than paying the truck note for these companies.