Private fleets warned of Top 10 legal threats to their businesses

TORONTO, Ont. – The Private Motor Truck Council of Canada’s (PMTC) annual conference went digital this year, but a familiar face was there to kick things off with a rundown of the Top 10 legal issues facing the trucking industry. Heather Devine, a partner with Alexander Holburn-Beaudin & Lang, had no shortage of legal pitfalls to warn trucking company managers of. And they began with the omnipresent legal quagmire of independent contractors.

The erosion of the independent contractor model

Legal challenges to the independence of Uber Eats delivery drivers have been observed by the Supreme Court of Canada, following a case in the Netherlands in which the driver’s independence was ruled against.

“The bottom line is, the ruling in a nutshell found drivers can’t contract out of their Employment Standards Act rights,” Devine said, citing things like vacation pay, overtime and benefits.

(Photo: iStock)

Trucking companies should protect themselves by ensuring independent contractors have a corporate profile report and tax status showing they are independent. Devine urged fleets to invest in an updated independent contractor agreement, which differentiates between the user and provider of the services. They should also minimize their control over independent contractors – this means allowing them to take work from other companies, and have meaningful exposure to profit and loss.

Changes in customer demand

Devine noted changes in customer demand, such as an increase in e-commerce and evolving consumer buying habits, must be accommodated by trucking providers. “We have seen more frequent and shorter shipments,” she said, adding these require carriers to establish networks and new partnerships with brokers and other carriers.

“Our recommendation is to review and update customer agreements,” Devine advised. “If you have a change in business, get an agreement reflecting that change.”

Review insurance

The drastic changes affecting transportation in 2020 have made trucking providers vulnerable. Devine urged fleets to manage risk by reviewing insurance policies carefully. “Some cover business interruptions and some do not,” she pointed out.

Complying with legislative changes

The Covid-19 pandemic has meant fleets must comply with an even broader range of legislative requirements, including The Quarantine Act.

Devine said while drivers are exempt from quarantining when not exhibiting Covid-19 symptoms, she urged attendees to be cautious as the guidance continues to evolve. At the office, companies must adhere to federal, provincial and local guidance related to social distancing and sanitization.

Keeping employees safe, and feeling safe

Put into place policies that protect and keep safe drivers and other staff. This may mean waiving customer signature requirements and equipping drivers and employees with personal protective equipment.

She also recommended taking advantage of contact tracing, similar to how restaurants now require a name and cell phone number from diners.

Find value in communication

The pandemic has required trucking companies to become more flexible and innovative, and Devine noted some of those recently adopted practices may be here to stay. For example, increased use of touch-free technologies and the adoption of electronic Bills of Lading. When conducting Zoom meetings, she stressed the importance of keeping them secure.

Use a confidential meeting ID, create a new ID for every meeting, and make attendees wait and be approved before joining the meeting. She also suggested disabling private chat.

Making valuable assets ‘sticky’

With more employees working from home and accessing confidential information remotely, Devine offered some advice to protect valuable assets. “Businesses are losing talent, who are taking confidential information to competitors,” she acknowledged. “In that situation you want to look at the agreement that sets out when (an employee) and you part ways, how do you make your information sticky?”

Non-compete agreements are rarely enforceable, she noted, adding they should be no longer than three to six months and very specific about the type of work the employee cannot do. A non-solicit clause can prevent a former employee from approaching certain customers, but again Devine said they should be short – no longer than one or two quarters – and indicate exactly who the departing employee can’t solicit. Judges are more sympathetic to employers when it comes to protection of confidential information clauses, but they must designate clearly exactly what information is confidential (ie. client lists, costs, lanes, etc.)

Canada’s ELD mandate

Should Canada’s ELD mandate be delayed?

That’s a position the PMTC has taken and Devine agreed lawmakers should consider delaying implementation due to the pandemic and in light of the fact a third-body certifying body has not yet been designated. “Don’t assume your ELD will be compliant,” she warned. “June 12, 2021 is coming up, we don’t have 12 months, we are in a pandemic…should we have a delay?”

Force Majeure

When using the Covid-19 pandemic as an excuse to escape contractual obligations, be sure it is included within the contract as Force Majeure. “It must be expressly in the contract,” Devine said, but added Covid-19 as a novel virus won’t be identified specifically. “It must fit within broader terms such as ‘pandemic,’ ‘disease’ or ‘public health emergency.’ There may be some events where Covid-19 fits in there, but maybe not.”

New Force Majeure contracts can be written to incorporate Covid-19 specifically. “When drafting contracts today, anticipate how the disease might affect your commercial agreements,” she said. “Be specific. Try not to use boilerplate clauses off the Internet.”

Cybersecurity

Ensure your insurance policy covers cyberattacks, Devine warned, and understand your obligations to customers if you’re attacked.

Conduct self-audits to determine your vulnerability to attacks.

Regularly install security system updates and have an incident response plan in place, Devine suggested.

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