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Motor Carriers cannot charge owner operators for ELD costs… or can they?

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Motor Carriers cannot charge owner operators for ELD costs… or can they?

Before the Dec 18th, 2017 ELD Mandate was in effect, a court decision made it unlawful for a motor carrier to require  an owner-operator to pay the motor carrier for their specific ELD device or telematics fee as it would violate 49 C.F.R. § 376.12(i), the written lease requirements.

According to the U.S. Court of Appeals for the 10th Circuit of Fox v. TransAm:

TransAm violated 376.12(i) because it required truckers to purchase a service—the use of TransAm’s satellite communications system—as a condition of entering into a lease arrangement. We agree with the district court that, while TransAm can require truckers to use a satellite communication system, TransAm “cannot under § 376.12(i) require its independent contractors to purchase or rent this system from it”“  “Instead, truckers “must have the option of obtaining equipment or services—including satellite communications services—from an outside source”.

 

Now that the ELD Mandate is in effect, do the circumstances change? We asked one of our trucking attorneys and he brought more light to the situation.

“Will the analysis of Fox v. Transam actually apply to ELD’s after December of 2017? The Court stated that OOIDA v. Mayflower was inapposite because it addressed insurance that the carrier was required by law to purchase. Satellite services are not required by law, so yes, OOIDA was distinguishable to the case at bar. However, in December 2017 ELD’s become required by law. Just like insurance, the motor carrier will be required to have ELD’s. The motor carrier will be forced to choose an approved ELD for its fleet and pay for the associated fees. The ELD costs are set by the service provider just as the insurance carrier sets the cost of insurance premiums. It seems that those ELD costs are thus required by law and could be directly passed on to the owner operators under the analysis applied by the Seventh Circuit in OOIDA.”

 

The argument the lawyer makes is that once the ELD mandate went into effect, the purchase of this becomes the same as insurance and the carrier can make the O/O purchase a specific ELD.

Another lawyer in Washington D.C. agreed:

“We agree that the forthcoming legal requirement for our carrier client to have an ELD reporting/monitoring system is like the legal requirement for insurance in the Mayflower case. Therefore, we think we can require the o-o to pay a reasonable, pro-rated estimate of our ELD system operating costs.”

“On the other hand, we share [the] concern about making the o-o purchase a particular piece of ELD hardware. The compromise we are looking at is to invite the o-o to purchase the ELD hardware through our client’s program, but to allow use of a compliant device chosen by the o-o if it:

(1) is compatible with our client’s system, and

(2) can be installed at no more than X percent of the cost for installing the device offered in our client’s program. Any installation costs above that threshold would be borne by the o-o.”

 

There is controversy on both sides and different attorneys still have no clear direction yet. As this is untested in court, interpretation and guidance still to come. None of this is settled and it will be interesting to see how it plays out.

Check out more great information during our 2018 trucking safety and regulations conference. Watch videos now… 

 

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05 Feb, 18

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