Insights - October 2016 - 11

EXPO - from page 9 you could get away with ignoring Y2K, but you needed to prepare in order to survive SOLAS." Craig, director of government affairs for C.H. Robinson, saw this as an example of what can be accomplished through collaboration and interaction of various stakeholders. "For those who are in the industry it was a case study in how we can work through associations," he said. Looking at the impact of regulations on intermodal, Bruno Maestri, vice president of government relations for Norfolk Southern, said the money spent on meeting burgeoning safety requirements endangers the railroads' ability to invest in projects designed to improve service. Among these is the Surface Transportation Board's proposal to require railroads to have two-man crews on all trains. "We currently run two-man crews on all of our trains," he said, pointing out that as future innovations lead to more automated train operations, the STB's rigid rule will end up standing in the way of railroads adopting what ultimately could be a revolution in rail safety. Moving Forward If there was no single theme dominating the conversations at Intermodal EXPO, it may be a reflection of the maturity the intermodal industry has achieved. As Don McInnes, former senior vice president of intermodal for Santa Fe Railway and BNSF - as well as IANA's first chairman - noted early in the program, "Intermodal has come a long way, and it makes me proud to look back on where we were in 1991 and how far we have come." Intermodal's current challenges reflect its growth. That it continues to face them head-on with resources and active participation across stakeholders, promises a similar trajectory over the next 25 years. Oregon Cases Offer Lessons for Use of Owner-Operators From the desks of Benesch Transportation & Logistics Practice Group. Part one of two, to be continued in the November issue of Intermodal Insights. On July 20, 2016, Judge Garrett of the Court of Appeals for the State of Oregon issued four favorable decisions in cases challenging the classification of drivers as independent contractors. These cases are worthy of closer review even if your business has no independent contractor operations in Oregon for at least two reasons. First, more so than most judicial opinions, these practically sequential decisions highlight the important nuances between the use of owner-operators in, for example, manufacturing, versus the trucking industry, where state and federal governments impose regulations on motor carriers that, if ignored or misunderstood, can lead a judge (or panel of judges) to improperly conclude that carriers direct and control all of the means and methods used by owner-operators in the performance of services to those carriers. To that end, the Oregon decisions further stand as excellent examples of judicial panels that took the time to consider the economic realities of the independent contractor owner-operator business model within the context of the trucking industry. Second, and perhaps more importantly, the four decisions underscore the significance of carefully crafting written agreements with your owner-operator fleets. At minimum, the Oregon Court of Appeals shows carriers how to properly use written agreements to avoid ambiguities and unintended consequences. In Delta Logistics v. Employment Department Tax Section, Delta appealed the Administrative Law Judge's decision that services provided by Delta's owneroperators constituted employment. Delta disagreed because, under Oregon law, transportation services performed by any person that "leases their equipment to a for-hire carrier and that personally operates, furnishes and maintains the equipment and provides service thereto" are exempt from employment. Surprisingly, the ALJ agreed that Delta was a for-hire carrier, it did not own its own trucks, the trucks used were furnished by owner-operators who either personally operated those trucks or hired drivers to operate them, and the owneroperators maintained the trucks. Nevertheless, the ALJ still determined that the exemption did not apply because Delta's agreement with its owner-operators did not constitute a lease under the statute. The ALJ reasoned that there was "no transfer of legal possession and use of the vehicle in exchange for compensation" under Delta's agreements with its owner-operators. On appeal, however, the Court concluded that "an arrangement that has the effect of transferring to the for-hire carrier the right to legal possession and use of the vehicle, while requiring the owner to retain physical possession, control, and use of the vehicle" meets the requirements of a lease under the exemption statute. The ALJ also ruled that that the owner-operator agreements were not leases because they did not specifically "include a provision for remuneration for Delta's use of the vehicles." The Court of Appeals found that while the Owner Operator Contracts did not allocate a portion of Delta's payment to the owner-operators for the lease of their vehicles, the Court was unaware of a requirement that such leases contain a specific allocation or that consideration was required to be "separately stated." Last, the Employment Department argued on appeal that the ALJ's order should be affirmed as to owner-operators who hired drivers and did not personally drive their vehicles. Owner-Operators - continued on page 13 October 2016 | Intermodal Insights 11

Table of Contents for the Digital Edition of Insights - October 2016