Independent Contractor Operating Agreements (ICOA) aka Owner-Operator Lease Agreements are governed by specific laws within the Federal Leasing Regulations. Violate these provisions and you may find yourself in hot water in the form of a class action lawsuit.
According to transportation legal specialist Greg Feary of Scopelitis, Garvin, Light, Hanson, and Feary, the average cost to defend a class action lawsuit for violating truth in leasing laws is $25,000 per month. Cases normally drag on for several years and end with 6 to 7-figure settlements. Over 100 contractor v. motor carrier class action cases are active today.
What steps can you take?
Find out if your agreement meets the Federal Leasing Regulations. The Contractor Services Team at Cottingham & Butler can perform a checklist review of your agreement and advise if further action should be taken.
If your agreement needs work, we can put you in touch with attorneys to revise your agreement at a discounted rate. A quality lease agreement might cost anywhere from $3,000 to $20,000 depending upon your situation. Compared to the cost of defending a class action, this is money well spent.
Once you have a quality agreement in place, have an attorney review your lease at least every 18 months. Case outcomes and changes in state laws require regular tweaks to your agreement. We suggest budgeting $1,500 per year for these reviews.
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