The “Statutory Employer“ Rule for Commercial Motor Carriers

By Richard W. Hendrix

Introduction

The motor truck industry is regulated in many different ways. In order to obtain operating authority, a carrier must demonstrate adequate financial ability, insurance coverage, and ability to serve the public in compliance with stringent safety requirements, both as to equipment and competence of drivers. When a carrier utilizes non-owned trucks in its business operations, and permits an unregulated truck and driver to be on the road, it makes it possible for the owner of that unregulated equipment and the driver thereof to do what otherwise he could not do.

As shown below, state and federal regulations make the carrier responsible for the owner/operator’s conduct. This conduct includes financial ability, insurance coverage, safety of equipment and competence of drivers. Absent such a policy, when innocent people are hurt or killed, there will be a round-robin of finger pointing by carriers, lessors owners, drivers and insurers, raising issues of independent contractor, frolic and detour, what instructions the driver had, agency and the like, in the attempt to evade responsibility for the carnage wrecked upon innocent motorists. A Victim/Plaintiff encounters much difficulty in fixing responsibility, for only the carrier and the owner/operator really know their arrangements. In these circumstances, a Plaintiff should not be required to bear this burden, nor should he be required to settle for a financially irresponsible defendant fathered by the carrier. In short, the policy enunciated in both state and federal regulations and most of the cases thereunder make the carrier responsible to the injured Plaintiff as a matter of law for the negligence of the owner/operator and its drivers.

The lessee carrier must, at its peril, exert care in its business arrangements and avoid agreements with “fly-by-night” truckers. The regulations and cases demand that the commercial motor carrier police such business arrangements just as it is policed by the federal and state authorities. Indeed, this is the basis of the “statutory employer” rule in trucking cases.

A. The Federal Regulatory Scheme for Commercial Motor Carriers

During the first half of the twentieth century, motor carriers attempted to immunize themselves from liability for negligent drivers by leasing trucks and nominally classifying the drivers who operated the trucks as “independent contractors.” See White v. Excalibur Ins. Co., 599 F. 2d 50, 52 (5th Cir. 1979), cert. denied, 444 U.S. 965, 100 S. Ct. 452,62 L.Ed.2d 377 (1979); see also Am. Trucking Ass’ns v. United States, 344 U.S. 298, 304-04, 73 S.Ct. 307,311-12, 97 L.Ed. 337 (1953) (detailing pre-amendment problems and abuses that threatened public interest and vitality of trucking industry); Empire Fire & Marine Ins. Co. v. Guaranty Nat’l Ins. Co., 868 F.2d 357, 362 (10th Cir. 1989) (same).

In order to protect the public from the tortious conduct of the often judgment-proof truck-lessor operators, Congress in 1956 amended the Interstate Common Carrier Act to require motor carriers to assume full direction and control of the vehicles that they leased “as if they were the owners of such vehicles.” Price v. Westmoreland, 727 F.2d 494,495-96 (5th Cir. 1984); Simmons v. King, 478 F.2d 857, 866-67 (5th Cir. 1973); Wirtz v. Dependable Trucking Co., 260 F.Supp. 240, 243 (D.N.J. 1966). The purpose of the amendments to the Act was to ensure that motor carriers would 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. See Integral Ins. Co. v. Lawrence Fulbright Trucking, Inc., 930 F.2d 258, 261(2nd Cir. 1991); Empire Fire & Marine Ins. Co., 868 F. 2d at 362; Alford v. Major, 314 F.Supp. 979, 983 (N.D.Ind.1970), aff’d, 470 F.2d 132 (1972); Wirtz, 260 F.Supp at 243; Graham v. Malone Freight Lines, Inc., 948 F.Supp. 1124, 1132 (D.1996), clarified on reconsid., 43 F.Supp.2d 77, aff’d, 201 F.3d 427, 1999 WL 1338356; see also Transam Freight Lines, Inc. v. Brada Miller Freight Sys. Inc., 423 U.S. 28, 36, 96 S. Ct. 229, 233, 46 L.Ed.2d 169 (1975).

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