FULL TRANSCRIPT – Protection and Safety in the Transportation Industry with Attorney David Smith
Natasha Cary: Welcome to Over the Threshold Podcast, produced by Certification of Delivery Excellence, also known as CODE. I’m your host, Natasha Cary, owner and president of CODE, where we offer online education for last mile delivery personnel. To learn more about CODE certifications, visit our website: codetrained.com. The purpose of this podcast is to deliver the journey of individuals in the Final Mile/Last Mile white glove industry. As CODE is an educational company, we hope through these stories you can learn something new. Maybe we teach you something about an individual you know, or we introduce you to someone you’ve always wanted to learn more about. Above all, we hope we can leave you inspired. Let’s get started.
Natasha: We are bringing you something a little different for this episode today. I’m spending time with attorney David Smith with Roberts & Associates based in Coral Gables, Florida. David’s going to share with us some business practices, policies and things business owners should consider to protect themselves from losses and claims. David focuses his practice on the representation of corporate and commercial interests in the transportation and insurance industries. He also manages transportation-related litigation regionally and nationally through a well-developed local council network. He also maintains a general business law practice providing corporate representation to small and mid-sized businesses. He offers advice on the selection of the proper corporate form and drafts customized contracts based on their needs. He covers many other things, which we’re going to talk about today. So welcome to the podcast, David.
David Smith: Well thank you very much for having me, Natasha.
Natasha: I’m excited to have you and to do something a little different than what we have done in the past, where we have been talking about people’s journeys. I want to talk about your journey, and I’m sure our subjects today, we could spend hours talking about them. But we’re going to focus on a couple of areas, like agreements with brokers and having terms and conditions, mini contracts, maybe we’ll get a chance to spend some time on Independent Contractor issues, and of course, COVID-19 has certainly changed how people do business with taking temperatures and maybe some updated policies that they should have. Before we get started, I’d love to spend a little bit of time getting to know where you’ve been, how your journey brought you to where you are today.
David: Sure. You know, it’s a funny question that I get a lot, both from other attorneys, when they’ll come through to me with a case or from other potential members of the industry at events like the Customized Logistics Delivery Association events, and the FMA events which is where I believe I met you…
David: …I always get that question. How did you find your way into this?
David: Because the law really is a broad area to practice in, and you kind of see that now. General practitioners have disappeared. You can’t really just hang a shingle as they used to do and say, “I’m a lawyer. Come to me with a legal problem”.
David: You know? It’s how I start a lot of my talks at events like the FMA with saying, “If you need a divorce or if your kid got a DUI last week, don’t call me. I can’t help with that. I might be able to refer you to someone, but it’s even more specialized than that”. And I’ve found my way interestingly into this little niche of transportation law and then through it into the sub-niche of working with couriers and regional delivery companies in an interesting manner.
Shortly after I’d graduated high school, I’d started off doing insurance defence, as many do because it’s such a large area in litigation. But I met Larry Roberts who’d been practicing in transportation for the majority of his career. He’s left [Crenshaw] in the last 90s to [inaudible] left there and started his own shop. Because he was their transportation department and thought, ‘Well, I might as well take it under my own roof.’ So I ended up joining him in 2006 and specialized in transportation. He actually comes from a railroad background, having worked for FEC in-house at one point, and we did a lot of work for Union Pacific at Northwest. Then I got into that practice, started a lot of inter-state motor carriers, and then…I want to say it was maybe 2009? I was at the Southern Motor Carrier, called SMP3 now, Southern Motor Carriers Annual convention, and I met Steve from Palm-It Delivery …
Natasha: Mhm. Yes.
David: …and so Steve and I met and started chatting. And he said, “Dave, I’ve got to have you come to the FMA. I’m the president” He was the in-coming president then or on the board, certainly. But ‘I’ve got to have you come to this, you’ve got to come, you’ve got to come.’ So I went to FMA the next year and the CLDA, and Steve’s been a client of mine now for about a decade or more. He brought me into this group, and it was really great learning about this area of the transportation industry, and it is the fastest-growing sector in transportation.
Natasha: That’s interesting.
David: So it’s really nice to have those meetings and conferences and learn about the industry so that I could figure out what it needed and how I could help. And so I’ve even developed the practice from there and spent more and more time going into employment issues and the Independent Contractor classification issues, and really building a specialized practice around that for the last decade or so, because that has been one of the things that’s scary to an owner of a courier service or a regional transportation provider.
Natasha: Yes. And that’s kind of what gave me the idea of doing this episode. When you and I met at FMAN, we met at a round table and were chatting about Independent Contractors and how there are still companies that are doing their own training and how that’s really something that they need to be careful of and where they should talk to us about stuff like that. So maybe we should start there. We should dive into that, because I know that we can probably talk about many things there, but where do you see Independent Contractor issues? Maybe let’s talk about the top two, three issues, or the things that you see that are concerning that business owners really need to be watching out for.
David: Right. So the difficult position that the courier business finds itself in is customers want more predictability, and they want greater control. So your customer might be a pharmaceutical provider. They want to know exactly where every package is at every moment. They want you to have everyone with secure badges and background checks and uniforms, and they want everything to operate like clockwork consistently, and that’s a reasonable expectation of a customer. The difficulty is implementing all of the customer’s rules and policies when the Independent Contractor model legally says you can’t exercise control or too great a degree of control over your Independent Contractor. So really, the trick is to have these courier companies act as more of a passport for these things. They’re the organizers, they are the ones that are finding the customers in need of delivery services, and they’re finding resources like CODE in particular. I fully support what you are all doing in the industry. You’re providing the necessary fit that I’ve talked about since honestly, long before we met at FMA. I’d been saying find outside resources to train your drivers. You cannot train them. Any training you give, any handout of paper is going to come back and haunt you in a misclassification suit.
David: I guarantee you. In one of the recent ones I did, they bought out every piece of paper this company had hung up or handed out to drivers for a decade. Even though only the prior three years [the staff didn’t go back a maximum of three years]. They still brought out every piece of paper trying to demonstrate that there was some control or that there were these specific requirements. And the key is that the courier has to again, act as a conduit for informing the driver of the conditions on this particular parcel delivery. And it’s up to the driver to then find a way to meet those conditions.
David: So what I always say is, advise them of ways to meet those conditions and only give a qualified driver those loads. And really, what with the courier industry and the IC model becoming more and more alike, is [inaudible]. And it’s funny, I’ve had a lot of companies come to me with that idea and even acclaimed brokers authority start to act more and more like a freight broker than a traditional motor-carrier and utilize their drivers as independent motor carriers…
David: …which is a really interesting model and a really interesting way to look at and compare these two models.
Natasha: Yeah, I‘d love to learn more about that. Now as far as the training issue, I think people have a need for their customer and they have to make sure that they get it right. So I understand the need of wanting to have them follow their policies and procedures. So how would they? What is the best way for them to communicate to them their standards and their policies without putting themselves in danger?
David: Sure, and that’s always the trick. Whenever you’re negotiating a contract with a customer, first of all, you need to make sure that they’re aware. The current business needs to have an attorney like myself involved in that negotiation with the customer. To say look, we did use the Independent Contractor model because it’s the only viable way to give you the rates that you need.
David: You know? Every customer wants a lot of requirements on there, but they’re not willing to pay quite enough per package to have you hire employees and have the added expenses that go with that. So you have to make that part of your negotiation with them and make them aware. And if they have specific trainings that they want, for instance, food safety handling certification, one of those types of things. If the customer wants that, then you have to say to your team of drivers, ‘Look, if we’re going to be carrying loads for this customer. All these loads are going to be opening up, but I can only give to people who have this certification…
David: …here’s where you can get it.’ And what I say to them is, to the couriers, go to your customers and say, if you want a particular training, show me what it is. Give me some document that we can build this training around, and then they should take that document and turn it over to a company like CODE…
David: …they’ll take care of the training of it.
David: They’ll need to have their guys trained on it, and I’m sure you can turn that around and have them have a customized training session for those drivers available. And the other thing is that the courier can’t pay you to do this, they give it to you and say, ‘Hey, will you offer this at whatever rate you can to our drivers?’ And then the drivers can go and take the course from you, paying for it themselves because they have to pay for their own equipment and training for certification in order to be an Independent Contractor…
David: …and then they come back with their gold sticker…
David: …saying “I’m here, I’ve completed the training!” Or I’m sure you have an online platform or portal through which…
David: …everything can be updated and double-checked to make sure that everybody is certified.
Natasha: Yeah. And we’re actually working with a couple of retailers to create custom training. It’s their content actually. We’re turning into a way for us to show them compliance. So we are able to track who took it, who watched it, who passed it, so that then we can prove that yes, here is somebody who has gone through your custom training. It’s a way to hold everybody accountable. Right? Should a business owner take the chance and say, ‘Well, I’ve kind of been doing this, and I think I’m okay.’ How big of fine are we talking about here that business owners really need to be aware of? How much hot water could they get into?
David: You know, it’s not a fine issue. First of all, I think we need to step back here just a little bit to the biggest red flag for a courier using Independent Contractor law. And the first thing I always tell everyone is: it’s not a bulletproof vest. You need to make sure that your IC agreement, your Independent Contractor agreement, is up to date with the law as it exists today and that it doesn’t overreach. Overreach is the biggest thing that I find. Honestly, everyone that walks through my door, members of the CLDA, FMA, every single one of them who come to me with a contract revision, I say, [inaudible] nicely and I’ll revise them [inaudible]. Every single one has some overreach in some department. Most of them, it ends up being the form of non-compete…
David: …very often. They’ll have a non-compete provision in there where they’re saying, ‘Hey, you can’t service any of our customers, you can’t steal our customers’ because they don’t want these guys turning around and just opening up a shop just like this the next day. You can’t have a non-compete…
David: …in an Independent Contractor agreement. That’s the biggest way, the fastest way, to turn an Independent Contractor into an employee. The other thing they have though, very often…and everyone’s kind of heard that more and more in the last two years, but the next evolution is that it doesn’t matter if you title each section of a contract. Those headings don’t matter. And it’s funny; there actually used to be a boilerplate paragraph at the end of all contracts which they had: the headings herein are for information for organizations [laughter] they don’t have any legal meaning.
David: Everyone put that culpatory clause for the drafter in there. And that’s how courts have always viewed them, and that paragraph doesn’t ever need to be in the contract because, you know: ‘ignore headings’ [inaudible]. They’ve all changed the reality of what the paragraph says. And so as a long way to get to this point, everyone has a non-solicitation agreement in their contracts. But many of these non-solicitation agreements are actually non-compete agreements. Just with an improper heading.
David: And the way I always reference this is the duck principle: if it walks like a duck and quacks like a duck. If your non-solicitation provision acts as a non-compete provision, if it stops the other companies from competing with you in the market, it’s a non-compete. So again, it has to be done properly and delicately and honestly, in the best situation, it shouldn’t be done at all. The other thing that I like to tell couriers looking at that when I’m convincing them that they don’t need the protection of a non-compete is, “Look, do you really think your drivers can do what you can do?” If you think they can turn around tomorrow and build what you’ve built right now and do it just as good or better than you so that your customer’s going to leave you, you might not be long for this industry. You have to know that you’re doing this as well as possible, you know the struggles you face, you know the difficulties of it. This isn’t an easy business to be in. This isn’t an easy business to start up or build something real, and it’s not easy to find teams of drivers. It’s not easy to find enough customers to keep you afloat, and that are consistent. And it’s not easy to grow and expand and deal with Independent Contractor disputes and cargo claims issues, and the occasional theft issue that’s going to pop up—especially operating in South Florida where I’m at. That’s just a reality. The cargo theft here that I think being in a port city has always lent itself to, and it permeates even this final mile sector. Though far less to the degree that it does for the long haul and international shifts.
But it’s an important thing to look at this realistically and say, “Am I overstepping my bounds in this concept? Am I exercising too much control?” Any time you can have less control, you should. Contractors often say: You can’t require employees to show up at 9 am every day. You have them show up when cargo they’ve agreed to carry is ready for them to carry.
David: And whatever time that happens to be is what time that happens to be. But I like to make client engagement opportunities available to them, and they choose whether or not to accept those clients because it’s an opportunity to then go [inaudible].
Natasha: Right. And there’s a finesse that you need to deliver that information. It’s not that you must arrive and do these things, it’s here the job and here’s the requirements, do you accept it?
David: Exactly. And that is a big part of it, just keeping that role as a passthrough and not giving directions as Bob’s courier, but as ‘here’s what the customer wants.’ It’s a whole team working to serve this customer.
Natasha: Right. So it’s about having good relationships with your customers, with your vendors, with your ICs so that everybody’s clear and communicating clearly. I know it’s not necessarily a fine, but if you’re brought up in misclassification, it could be millions of dollars, right? You could lose your business.
David: Well, certainly a lot of these cases do end up as an [existential litigation] and by that, it’s going to put you under.
David: That’s why it’s important to have, and I have said this mantra for a lot of years, and at every event that I’m at, you must have a class-action waiver, and you should have an arbitrary [improvision]. The class action waiver will keep it from being accidental in one single case, and then basically the class action waiver just says, based on this contract, you will agree to recede in any dispute you and the courier business, that you’ll do it as an individual and not as part of a class or group. And that allows you to take on each one of these cases separately on the merit. It also makes it harder for the plaintiff’s lawyer who wants to come in and start signing up your drivers. This is the other thing that I see, by the way. A plaintiff’s lawyer is like a virus, to put it in the metaphor of our times right now.
Once that virus gets in your door, it will spread, okay? So every time I see a case, and Independent Contractors do this just about every time, there’s been some other noise about that. Understand, it’s usually not the first one. It’s the second or third one when they come to me. And what they’ve done is making a mistake of feeding the stray on the first claim. Going, ‘Oh well, it’s going to be easier to give this former driver 30k to make him go away than it is to defend this case, which is probably going to cost me more.’
David: That’s correct; it will cost. That’s one of the big problems of this area. So if you get an FLSA suit, plaintiffs are part of the strange areas of the law where attorneys [can only go in one direction]. The American legal system has reciprocal — all key divisions are reciprocal if they exist. If you put a [inaudible] provision in a contract and you say it only goes [inaudible]. Well, of course, we’ll interpret that as to be reciprocal and make it apply to whoever wins the dispute. But the FLSA is written as a statute in the opposite manner. It says only the plaintiff can get these. So if you win as a courier, you get none of your fees back.
David: if you lose, you’re not only paying your lawyer fees and the damages awarded to the driver, but you have to pay the driver’s attorney’s fees as well. Which are going to be double what your own legal fees were because these plaintiff’s lawyers don’t work for an hourly. They don’t have an hourly agreement with the client [inaudible]. But the other thing is they’re going to claim they’re an $800 an hour lawyer. I don’t know many $800 an hour lawyers who are actually worth it or who actually get away with charging that. Unless they’re in patent litigation, and you’re a very skilled patent lawyer, that way is pretty troubling for litigation. Especially this type of litigation.
David: So to make a long story a little bit shorter, you’ve got to really watch out for them getting in the door and watch out for those first couple of cases. If you settle them, what you’ve done is you’ve spent money. They’re not going to go away. They’re just going to find another driver. They’re going to tell that driver, “Ok, now go tell five of your buddies you worked with over there that I’ve just got you 30k.”
David: By the way, I have an issue with the lawyer telling them to do it, but they do it. Plenty of employees do this. It’s the reality.
David: I’ve seen it happen. I know for a fact that it does happen. So they’ll come back and then you’ll wind up with another suit three months later and another one three months after that until you fight and win. Eventually, once you do, they go away.
David: Because once there’s a case where you’ve won, and the court has upheld your Independent Contractor model, then it’s not worth it. Now that famous lawyer who’s just spent eight months working that case, working those hours, all that time, and gotten nothing for it. So he’s worked for free. So if he gets too many of those, that’s how plaintiff lawyers go out of business. They lose the money. So they don’t want that, and they’re not going to take high-risk cases, they’re only going to take it against companies they think will settle and they’re going to push you to settle the whole time. But if you beat them once, you’ve restored that balance. And really, that a metaphor in poor taste right now…
…to a certain extent. But it is a fitting one.
Natasha: Well then, we can then pivot. It’s a good lead up to talk about COVID and how that may have changed policies or policies that should be in place. Because if there aren’t specific policies that have been communicated in writing or whether to customers or to contractors and something happens where it can be traced back, they could have some liability there. So what is some advice that we can tell these business owners surrounding COVID these days?
David: Sure. First of all, I’d just like to say to all the courier businesses out there, thank you on behalf of myself and really every American right now. Because without your essential services, throughout this quarantine and lockdowns in the last almost six months now, of really, the inability to live our lives the way we’re used to. It has been the courier, final mile, regional delivery business that has made this all possible. Getting people’s necessary medication home delivered to them, getting people’s medications from distribution points to the pharmacies. Getting every little toy that you needed, that you had to order online to make it through this. Getting every device for our children that you needed to do their online education. Truly, the courier industry has shown itself to be as essential as any in this country…
David: And I recommend to every company listening right now, make note of that and use that. And I want you to take that and weaponize that feeling right now against or to your local representative and say, ‘Look, we’re an essential business that helped people get through this. What we need now is a little help. We need a little more clarification on Independent Contractor law. We need you to create exceptions for couriers in the IC law or some less punitive measure as far as these shifting provisions. Give us a little something in return rather than just being glad-handed. And politicians, especially right now in the fall of an election year, are looking for a way to say, ‘Hey! We did something to help you all get through this.’ Give them a way.
David: Give them a way to show that. And say look, help us out. And you can put my company on your sign in the front yard of my company, and we’ll support you if you will support us. And you can go out there and say I helped the industry that got everybody through coronavirus. I think there’s a real opportunity there to sell yourselves to that essential nature.
Natasha: Yeah, that’s a good point.
David: …market to the public, sure. But market yourself to politicians that way, too. Say, “Look, I need help to survive. If you put me out of business with Independent Contractor claims, or you put your regulation on me, I’m not going to be there the next time this happens.” How are we going to get through it? And I think that it’s essential that we do that and use our essential title. But even more generally pertaining to the business, I think it’s interesting to see that I don’t know anyone that’s really slowed down.
David: A lot of people have had had to pivot from one area to another. I know here particularly in South Florida, a lot of our couriers who work for the cruise liners, [inaudible] which are valuable [inaudible] before they leave and they go, “Oh, we don’t have as many of whatever that we sell in the commissary.” A lot of times, even the high-end watches, jewelry and liquor, and tobacco products, they don’t have those kinds of things, we don’t have the kind of volume that we want on the ship right now, or we need more, or we need something delivered, but that’s all dried up. Anything to do with the cruise industry is gone…
David: And so anybody who’s done that work and pounded on that line of revenue has had to pivot. Things like that have changed a lot. And also for anybody connected to the sports world, at least, who isn’t in Orlando, is probably unhappy right now. The Orlando folks I know have gotten a bit of a boost from the building of the NBA Bubble there in Orlando for the NBA playoffs that are going on now. But really, watching healthcare in particular…I mentioned the home delivery of medications and the kind of changing of the way healthcare has been. Well, there’s been a 25-35% increase in the volume of healthcare business for the courier industry right now, since this started. That’s a huge area of growth, and obviously it [has to get everywhere], other medication for people who are risk and can’t afford to leave the house. Different ways of home treatment for people that are at risk. Things like home treatment for dialysis, breathing machines, things like that. That has all really increased a lot. So not just the pharmaceutical side but the healthcare equipment side, which has been really interesting to watch. As well as e-commerce. We know…
Natasha: Oh, yeah.
David: …shop therapy has hit the fall…
David: …and sometimes you need to get a little happier with a new widget.
Natasha: I have indulged, I will admit.
David: So that’s grown as well. And financial and legal, this is an interesting one because a lot of couriers that I represent will say to me, ‘Hey Dave, we’ve seen a lot of your legal work.’ Yes, he’s a courier I would love to get business back from, but everything is online now, especially with my practice being primarily federal. Everything’s done online and [inaudible] all the filing, a lot of the appearance is telephonic with video. But what’s happened now, as they’ve opened legal back up more and more, is with everyone working remotely. And attorneys need to get things to other attorneys within their own firms. And sometimes its things like a bank [inaudible] stocked full of documents. There’s a lot of partners, especially partners that are of a certain age, who don’t want to read everything online. They like a hardcopy of things. They’re editing, they like to go through the hard copies of things. Or if you’re organizing an exhibit for a trial, having hardcopies is really helpful. There’s been more and more movement of legal goods inside of firms between different attorneys and as well between councils [for moving things]. So that area has popped back up. And as well in the financial sector, you’re seeing more and more of that. Again because of people who can’t go to financial institutions or the fact that financial institutions aren’t really accepting in-house customers. A lot of things you have to courier back and forth. And of course, real estate is still booming despite all of this. Real estate hasn’t seen a downturn and they’re a good source because of their need for paper documents involved in it, and getting to the clerks and to the parties, etc. and recorded deeds. There’s a lot of need there as well, and that has to [thrive]. So it’s interesting to see those areas come back a little bit. I think it’s important for any business where we weren’t remotely working that might need to share documents. You go to any corporate entity as you would a law firm and just say ‘Hey, you’ve got documents you’ve just written [inaudible documents down for you].’ When people prefer to get things carried that way, you need documents to get to the store, you need multiple ink signatures on something rather than a photostatted signature. If you need one good copy or a handful of good copies of the original ink signatures, that comes up. So it’s another sector to look at to kind of pivot, and this is the time to do it.
Natasha: Mhm. Now you mentioned that when you deal with ICs, you want to have less control. And staying on the topic of COVID, now everybody…when you’re walking into…when I go to my doctor’s office, they’re taking my temperature, and they’re asking me questions. When I go to the grocery store, obviously they’re not doing that. So for businesses who are interacting with these drivers who are picking up and delivering, is it advisable to be asking them these questions? Or does that fall into a control situation where they’re aware of information which causes more liability? Or because they’re not their employers, are they allowed to do that? Should they do that?
David: Sure. I think this is one area where exceptions become the rule. The limits on control and the limits on what training you can do with or require from drivers have always had safety first. And that’s because you have drivers on the road. Alright? So you’re allowed to make sure that they’re licensed and require licensing and require personal insurance. You’re allowed to do background checks and make sure they are good drivers, and they’re not getting tickets. You’re allowed to monitor those things and demand that they disclose those things and run those background checks. And that’s accepted legally; excepted from the control because it’s for public safety and the public good. In the same manner, testing and coronavirus showed us policies are absolutely essential. Again, there are two ways to look at this. First off, you have to protect the public, and the legal system wants that.
I don’t think any court is going to fault you for having proper COVID policies in place because it’s affecting the public. Second of all, you need to protect your business. You can’t have drivers…
David: … congregating in a manner that will cause spread amongst them. Because once you have this in your building, it’s going to spread. We know that. So I would say mask policies are great. I think requiring…obviously most customers immediately require any delivery person to have masks on, as they should. They should be wearing masks any time they enter any enclosed indoor space. They don’t need to have them on when they’re driving. I see this while I’m driving a lot. If you’re driving alone in your car, you’re already contained in that space. The purpose of the mask is to stop you from spreading germs to other people. It doesn’t protect you…
David: …it stops you from spreading. So by wearing a mask, you’re simply saying, ‘I care enough about you, whoever I’m coming into contact with, that I don’t want to potentially give you whatever I might have. I could have it.’
Natasha: Mhm. Right.
David: But we’ve got to have these masks on. You can require your drivers to wear masks. Anyone that wants a medical exemption should be given one, and that medical exception carrier should not carry until their condition improves enough so that they can wear a mask. This whole thing of the medical exemption to the mask…less than 1/10,000 of people would actually have a situation that would provide that for them. But again, I don’t want to get into the HIPAA issues with you asking too much about it if someone says I refuse one. Or I can’t wear one. Say, ‘Okay. Then you can’t deliver. Come back to me when you can.’
Natasha: Right, right.
David: As well as temperatures. Again, if you have a facility where they’re coming into a warehouse to pick up, to load their trucks out or their vans out or their cars out, is it ok to take their temperatures coming in? Certainly fine to scan temperatures. Certainly fine to ask your drivers to check their temperatures on a regular basis, to check them before they come in. And if they have a temperature over 101 F… Which again, CDC guidelines I believe say 100.1 F is a minimum you should go to…101 is a sign that there’s definitely some kind of fever activity in the body. But 100.1 F is usually the guidepost and the lowest. If you’ve got 99, is it a fever? That’s debatable. But again…
David: …anyone that has a fever, the CDC guidelines are what you should advise if you should give something to say we’re not making an arbitrary policy, I’m not creating a policy. The government has created this policy. And the current CDC guidelines say that if you think you have or have had coronavirus, then you must stay away until your symptoms stop, and then ten more days. Ten days AFTER your last symptom. Ok? Which includes fever. Ten days after you’re clear of fever, ten days after you’re clear of a cough. Those things, those policies should be in place. I think ten days is a minimum. It was two weeks not long ago.
David: The ten days of symptom-free time…and that seems to be in the data as showing that that should be enough. Again, I’m not a scientist, I’m just doing my best to keep abreast of this and advise to…
David: …follow the guidelines. The CDC is a good one. WHO you can follow as well. I know there are a lot of questions and concerns about what’s happening at the CDC these days, and they’re changing positions. But they are providing reasonable guides, and you can hide behind their guides. It’ll protect you from liabilities. Saying ‘Hey, you followed what CDC said. We’ll protect you from claims of too much control from drivers because you’re just doing what they CDC says.’
Natasha: Right, right. For sure.
David: I like the idea, as a final button on that telling drivers…
David: …‘Look, take your own temperature yourself beforehand. You’re an Independent Contractor. Your charge is independently verifying that you’re safe. Or if you have a cough or if have a temperature, take [the round].
David: I wouldn’t worry about scanning them. If you’re having a lot of issues, if you’ve had outbreaks, if you’ve lost a lot of employees to this, a lot of drivers to this? Then maybe institute something. And I’ve seen this take down regional and full-sized trucking companies, and by that, I mean, you know, power units and 63-ft trailers. And it was mostly taken down by an outbreak within their offices. The office staff all got it, drivers got it, and they found it very difficult to keep the business afloat during that. So again, you’ve got to protect yourself. So if everything’s going well, require self-reporting. If you start to get issues, then maybe monitor people who are coming into the offices. For your front of the office staff, have them work remotely if you can. Especially in South Florida, it’s still [a great idea.]
Natasha: Yeah. Good advice. One of the other things that we talked about that you noticed that small businesses or the businesses that you work with sometimes get caught up in is, they’re quick to be nimble and make great deals…but then what happens is they don’t create a mini contract for once-off interactions. And things can happen fast, you can just agree on things verbally, and you don’t put things in writing or at least amend something to your existing contract. And they get into a little hot water. Talk to me a little bit about that.
David: Right. So again, for this industry, the most common work that I do is putting together the IC agreement and putting together a standard terms and conditions. And I’m shocked by how many couriers don’t have terms and conditions. They just don’t have it and operate without a net. Or they might have a couple of words on the back of their bill of lading that they probably copied 20 years ago from somebody else’s back of their bill of lading and have never really read, looked at, or updated it. The other thing is you need to have a set of terms and conditions in place. You need to have standard ‘Okay, our liability is a maximum of this.’ You don’t know what anybody’s giving, right? If you don’t have a standard term or a limitation of liability of some kind in your terms and conditions, anybody can send you a parcel, not tell you what it is, it’s in a box, and it goes up, and they go, ‘Oh, there’s a hole punched in that. It happened while in transit. We need $9.7 million to [balance the cost].’
David: Well, if you don’t have terms and conditions that say don’t send us art or coin collections or those [priority] or high-end valuable items, or it says, our maximum liability is $2 per pound unless you disclose a greater value in writing [inaudible] higher rate, then you’re stuck.
David: And the best lawyer in the world is not going to get you out of a contractual situation where you didn’t protect yourself. You need to have terms and conditions. These should look like a simplified version of what used to be known as motor carrier tariffs. And yes, they’re still in existence. I still write them for long-haul interstate areas, but they’re not published like they used to be with the ICC since the mid-90s. But you should have a short version of that which spells out all these areas of liability provides…Fills in all the gaps that the law leaves. And there are a lot of them. So you need to have what constitutes a claim, what happens if there’s concealed damage. Concealed damage is any damage not noted on the delivery receipt at the time of the delivery. That’s a big issue, and one of my most common cargo claims issues I litigate. Unless you have that covered in your contract, you can deliver it, package and send it, and get courier delivery receipts, [follow those steps all day] you’ll still get sued if you don’t have terms and conditions. You’ll still lose. Because you usually, as a carrier, you don’t have a way to prove when the damage happened because you only had control of it for a short time. You, as the courier business never saw it, you’re just trusting your driver’s claim that ‘Hey, I’ve got a courier delivery receipt’ and that’s it; the totality of your information. Meanwhile, the plaintiff is going to say, ‘Here’s a picture of what your couriers put in the box. Here’s a picture of it in the box. Here’s a picture before it shipped. Here’s a picture of the box after my guy signed the receipt. Turn the box over and look, there’s a hole punched in the bottom. [Look at that.]’ Now they’ve got evidence, you’ve got none. You’ve got nothing to protect yourself; you’ve just lost that case. So you have to have issues like limitation, concealed damages, those kinds of things covered in your terms and conditions. And then your terms and conditions could be put on your website [inaudible]. And then you can put on every invoice you send, every rate confirmation to a customer, or on any online orders if you do online [inaudible], they tick a box that says ‘I agree to those terms and conditions.’ Every bill of lading saying, ‘This hereby incorporates the terms and conditions on our website’ and have the URL. That way, every shipper every time has a [inaudible].
Again, this is a well-worn model, and now we can use the precedent after more than a century of inter-state carrier case law, even though we’re regional, you can look at this direct, comparable thing. We follow that model, and I follow that model both in my litigation and outside drafts. The other thing though is, and I think you’re getting at this, is with the pivots and the trying to get new business, I know so many couriers are out there fighting to get new business from [inaudible], and then they get a big broker. They find C.H. Robinson, one of these larger brokers, Green Worldwide, Expeditors… and they say, ‘Oh, we’d love to hire you to handle our local courier services in this area. Here’s our contract.’ And what everybody does is signs it. They want that business. They don’t see a contract; they see dollars. Except that broker-carrier agreement you just signed? A) Probably is the same one that they used for interstate motor carriers that have a ton of provisions that don’t match your standard operating model. Even if they do have a courier version, which more and more do, some of which I have put together myself, those contracts are aimed at protecting them. They’re not made to protect you. So you need to look those over, don’t just sign them. Have your lawyer look that contract over. And say, ‘Woah, woah, woah. This is going to waive all of our terms and conditions. This is going to waive our limitations. This is going to make us have too much control over our drivers.’ That’s the other thing to look out for. In those contracts, you have to make sure that they know you’re using an Independent Contractors model, and that they’re not requiring you to own your vehicle and provide these things directly and that you don’t use sub-contractors. You don’t see language like that in a lot of these broker agreements. And if you just sign it, thinking I’m going to make so much money from this broker! I just doubled our revenue; you may have for today. But not for the long-haul. And eventually, when issues come up, and your terms and conditions don’t have control anymore, you don’t have the ability to predict what the outcome is going to be…Predictable outcomes are the goal. That’s every contract signed into being.
So again, you need to revise those broker-carrier agreements. Make sure that they take into account an Independent Contractor model, make sure they give you a [inaudible] if possible, and make sure your rates meet. And let them know that my rate is dependent on how much risk I’m taking on. So I can give you a better rate with less risk. You know the value of the product they’re going to give me. I don’t have any way to know that. So you give me a limitation of liability of X, I can give you a rate of Y. If you protect me in this way, I can give you this. But if they’re asking you for the sun, moon and stars and a bargain-basement rate, what are they actually giving you? And keep in mind these companies need to have local courier services. They need YOU in order to build their model just as much as you need them. And again, that’s a prediction that I see from representing the long-haul guys and a lot of big brokers. They talk about the need for…and a lot of them have expanded into having a local division. A local delivery division where they’re trying to see your model and follow it. And have that as well [as an output].
Natasha: Yeah. It’s really surprising to me that in this day and age, really in any day and age that people are still operating businesses without contracts. I mean, not just when you’re pivoting, and you’re not reading other people, what people are committing, or you’re committing to somebody else. But just regular standard contracts. It’s an insurance policy, right? It exists so that the unpredictable can become predictable.
David: [It’s evolved.] By not having proper contract in place, you might actually be in violation of your insurance policy. Which needs you to have contracts…
David: …in place. I’ve seen issues come up with reservation of rights from insurers and even declaration of claims because a carrier doesn’t have the protections in place or the rules in place that it should have so that the policy provides. So again, it helps you to minimize the gap. Your insurance policy and your terms and conditions should marry each other and create a watertight deal. Because anything…
David: …between your insurance company and your insurance policy terms and your own terms? That’s on you. That’s part of your revenue for your business. You know? You ought to make that as small as possible, watertight. That’s my [opnion].
Natasha: Wow. This has been very informative. I have a feeling we could talk for days, not just hours about all the things. Is there anything that, before we close, that we’ve not touched on? I’m sure there’s lots of things but is there anything else that has come to mind that we should mention before we sign off?
David: No. Anybody listening out there, again, thank you for your effort through this in helping to keep our economy afloat through these difficult times. And stay safe out there. I’m here if you need me.
Natasha: Yes, absolutely. Well thank you, David. This was awesome. Hopefully we can see each other again soon once things are safer at live events. It’s been great catching up with you, and thank you for your time.
David: It was really great to chat with you. Thank you so much or having me, Natasha.
Natasha: Thank you so much for listening to the Over the Threshold Podcast. If you liked what you heard on this episode, I’d love it if you’d subscribe, leave a review or share with a friend you know who would like to hear it, too. To learn more about CODE certifications, visit our website codetrained.com