What Is Negligent Hiring and How Does It Impact Freight Brokers?
It is estimated that there are more than 3.5 million truck drivers and 1.2 million trucking companies in the U.S. That’s billions of miles of roadway covered annually, which makes the safety of American roadways a significant concern.
Freight brokers, who operate as intermediaries between shippers and carriers, are frequently at the center of discussions around safety. Customers hire non-asset-based freight brokers, like Armstrong Transport Group, to match carriers to specific loads. But when roadway accidents occur, whether or not a freight broker shares any liability is hotly contested.
Freight brokers may find themselves amidst allegations of negligent hiring. If a freight broker is sued for negligent hiring the plaintiff is alleging that the freight broker should not have hired the carrier/driver because the freight broker knew or should have known that the carrier/driver was unsafe or incompetent at the time of hire.
Currently, the impact of the 2004 Schramm v. Foster case means that third-party providers are responsible for checking the safety records of carriers they use for freight transport or risk facing greater liability for accidents on the road. In Maryland, a federal district court ruled that brokers must exercise reasonable care (due diligence) when qualifying and hiring motor carriers.
At Armstrong, for example, we have an entire business unit dedicated to carrier relations, of which safety and vetting are a priority. There is no one-size-fits-all approach to carrier hiring, which means many brokers rely on their insurers (as well as case law) to drive their level of risk tolerance. Unfortunately, when truck capacity is tight, and there aren’t enough drivers to move all available loads, brokers are more apt to jump on opportunities and work with carriers with whom they may not have otherwise worked.
Technologies like Carrier411 and RMIS serve to protect companies from using unqualified, non-compliant, and unsafe carriers. By qualifying and monitoring trucking companies for changes in insurance, operating authority, carrier safety ratings, and BASIC scores, services like these help freight brokers mitigate risk and contribute to the overall safety of our roadways. However, a good carrier team will also cross-check the FMCSA website and make an evaluation based on all available data.
Another issue facing freight brokers (with respect to negligent hiring and entrustment) is state-by-state laws and regulations for negligence. In April 2021, C.H. Robinson petitioned the U.S. Supreme Court to hear a personal injury case involving a contracted carrier. C.H. Robinson is asking “whether a common-law negligence claim against a freight broker is preempted because it does not constitute an exercise of the ‘safety regulatory authority of a state with respect to motor vehicles’ within the meaning of the Federal Aviation Administration Authorization Act’s safety exception?” If you glazed over there, C.H. Robinson argues that federal law preempts state law and that each state cannot have different rules for negligence. If they did, it would be impossible to track or understand. C.H. argues that we need one federal rule, which would make it easier to engage in interstate commerce.
This petition also comes at a time when nuclear verdicts – generally defined as a jury award in which the penalty exceeds $10 million – are increasing. Rising insurance premiums tied to this trend are putting increasing financial pressure on carriers, despite the number of deaths and injuries from accidents involving large trucks declining. According to Freight Waves, the growing trend of juries awarding nuclear verdicts has forced some insurance providers to exit the trucking industry altogether.
The industry is undoubtedly watching. In the meantime, freight brokers’ protocol for hiring carriers will continue to be highly scrutinized. This paves the way for technology investment and sharing best practices as we all do our part to prioritize safety on our roadways.
Want to Learn More?
It can be difficult through the ordinary course of business – if not impossible – to maintain a perfect safety rating. Maintenance issues crop up, and drivers make mistakes, but prioritizing safety can significantly lower overall costs and minimize impact to your bottom line. Ultimately, no cost of business is worth a human life.
If you have any questions about upgrading an assigned safety rating, please contact Emily M. Chiarizia, Esq. at email@example.com. Be sure to subscribe to our blog: ATG Fuel for Thought, or visit our Learning Center to stay up-to-date with the latest information about Armstrong, logistics, and transportation.
About Emily M. Chiarizia, Esq.
Emily Chiarizia has been with Armstrong since 2018. As General Counsel, Emily is responsible for litigation management, internal policy development, compliance, risk management, contract negotiation, and the resolution of commercial cargo matters for Armstrong's 130+ agency offices.