Adding Owner-Operators to Employee Health Plans Risky, Lawyer Says

SAN FRANCISCO — Trucking companies that provide owner-operators with health insurance through plans for employees will be placing their businesses and employees in financial danger, according to an industry attorney.

Gregory M. Feary told an insurance committee of the National Accounting and Finance Council of American Trucking Associations meeting here June 18 that offering such coverage to owner-operators would violate the federal ERISA exemption. This is the rule in the Employee Retirement Income Security Act that allows companies to offer their employees health benefits without being regulated by state governments.

A lawyer who specializes in trucking and insurance law, Feary said the problem stems from the legal notion that owner-operators must be considered independent contractors and may not be treated as employees. If trucking companies do this, they are creating Multiple Employer Welfare Arrangements.

Such entities are legal, but as of July 1, they must register with the Department of Labor. Failure to do so carries a $1,000-a-day fine with no cap. Furthermore, a MEWA is subject to state insurance regulation.

For the full story, see the June 26 print edition of Transport Topics. Subscribe today.