Rise in gig economy sparks complex legal challenges in transportation sector

The expansion of the gig economy post-COVID-19 has significantly impacted the delivery and transportation industry, leading to a rise in self-employed or by-the-job workers. This trend is now affecting CDL jobs, with many individuals working as independent contractors or owner-operators for various retail stores, shipping warehouses, and trucking companies.

These contractors often lack appropriate insurance coverage. When injured on the job, they may seek to establish an employment relationship with one of the entities in their contractual chain to access workers’ compensation benefits. Various states have statutory provisions that facilitate such claims.

A typical scenario involves multiple parties: the company needing shipment ("shipper"), the initially contracted trucking company ("initial contractor"), a subcontracted trucking company ("subcontractor"), and the driver who gets injured ("claimant"). In many cases, claimants are unaware of their exact position within this hierarchy and might name any entity they can think of when filing a claim.

The defense against such claims often hinges on proving that an individual is truly an independent contractor under state laws or that the defendant is not the correct business entity involved. State definitions of "independent contractor" and "separate business entity" vary but generally include factors like contract existence, payment methods, absence of employer-provided benefits or equipment, separate incorporation, and independent insurance maintenance.

Some states have specific statutory protections for claimants. For example, New York's Commercial Goods Transportation Fair Play Act presumes employment for individuals injured while shipping commercial goods. New Jersey's Section 79 holds general contractors liable if subcontractors lack coverage.

Best practices for businesses involve knowing their position in the contracting ladder, ensuring contracts contain specific provisions regarding employee relationships and responsibilities, requiring notification of incidents involving contracted drivers, and limiting subcontracting without express consent.

If faced with a potential employment claim from an injured contractor, it is crucial to engage local counsel promptly due to state-specific timelines for denying claims. Essential documentation includes accident notices, police reports if applicable, contracts with entities or individuals involved, proof of payments like 1099s, bills of lading (if applicable), bonding proofs, insurance details at contract creation time, names of potential witnesses from regional directors concerning subcontracted drivers' use.

Understanding whether an individual qualifies as an employee versus a subcontractor or independent contractor relies heavily on case facts. Contracts between business entities play a critical role in resolving these disputes.

Nathan J. Milner specializes in defending workers’ compensation claims related to self-employed and by-the-job workers within transportation industries while striving to minimize business disruption during claim resolution processes.