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St. Charles, IL Chicago, IL Office Davenport, IA Office Minneapolis, MN Office Milwaukee, WI Office
St. Charles, IL Chicago, IL Office Davenport, IA Office Minneapolis, MN Office Milwaukee, WI Office

Motor Carriers Continue to be a Hot Bed for Litigation!

Class action litigation against motor carriers continues to increase throughout the country. Whether it is owner operators challenging their "employee" status or whether new state laws interfere with their "prices, routes, or services" trucking companies have been in overdrive to figure out their next steps. Now comes another challenge -- making sure leases with owner operators are legal.

Motor Carriers ("lessee") continue to be an economic force across the United States, so it's imperative that they analyze their current lease agreements with owner operators ("lessor") to assure that they are in compliance with the federal truth-in-leasing regulations. Even though the federal truth-in-leasing regulations provide protection to motor carriers, often, motor carriers overlook the requirements or use pre-made forms to assume they are in compliance. However, the stiff penalties should give motor carriers second thoughts on using lease agreements that have not been reviewed by a qualified attorney. In addition, motor carriers risk being named in a class action lawsuit, which could cost tens of thousands of dollars to defend.

One of the most basic steps is to make sure any lease agreement is in writing. This writing can be the roadmap that each party follows and can provide guidance on how to handle certain situations. For example, the lease agreement can set out who is responsible for permits, licenses, fuel costs, tickets, overweight fines, and liability insurance to name a few issues that arise. In addition, how will the motor carrier pay for the owner operator's services? This is a crucial step and where motor carriers can save themselves headaches by clearly setting out the payment structure, so neither the lessee nor the lessor are confused by the payment terms.

Further, the federal truth-in-leasing regulations provide specific requirements that motor carriers must have in the lease relating to any escrow account it uses. These requirements include what repairs can be paid for with the funds, the interest required to be paid, any accounting, and other often missed requirements that could place the motor carrier in a high risk situation.

With more and more owner operators enforcing the truth-in-leasing regulations, motor carriers should have their lease agreements and procedures reviewed, in order to avoid costly mistakes down the road.

Sean Darke, Esq. is a shareholder at Wessels Sherman Joerg Liszka Laverty Seneczko, P.C. a management-side labor and employment law firm in Chicago, Illinois. Mr. Darke successfully defends Businesses in all areas of Employment and Labor laws under both State and Federal laws. Mr. Darke can be contacted at 312-629-9300 or at sedarke@wesselssherman.com

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