Employer of Record (EOR) and What Carriers Need to Prove About Driver Compliance
The Supreme Court changed the liability math for every freight broker in the country on May 14, 2026. In a unanimous ruling in Montgomery v. Caribe Transport II, LLC, the court opened the door to suits against brokers under state law for negligent carrier selection. And that liability trickles down to the carriers. If brokers are at legal risk for hiring a carrier with compliance gaps, they will take their due diligence much more seriously. And the carriers that can’t prove their drivers are qualified, tested, and properly documented will likely struggle. This is why EOR is now more important than ever.
In this article, we discuss the implications of the ruling for carrier vetting, the documentation brokers will now need, and how Employer of Records (EOR) services provide carriers with the compliance infrastructure to meet that standard without requiring them to set up an internal HR department.
What the Montgomery Ruling Actually Changed
The Supreme Court decided freight brokers are not immune from state tort suits for hiring unsafe carriers. Before Montgomery, brokers claimed state negligence claims were preempted by the Federal Aviation Administration Authorization Act (FAAAA). However, the Court dismissed that claim in a 9-0 ruling.
The case involved C.H. Robinson, the largest freight broker in the nation, and a carrier named Caribe Transport. Caribe’s FMCSA files showed documented safety concerns. But C.H. Robinson hired them anyway. The plaintiff was struck by a Caribe driver and lost her leg in a crash on Interstate 70 in Illinois. The plaintiff sued the broker, alleging that C.H. Robinson should have known the carrier was unsafe. The claim was initially dismissed by the lower courts on the basis of preemption. But the Supreme Court did not agree.
Justice Barrett wrote that the FAAAA’s safety exception preserved Montgomery’s claim of negligent hiring from preemption. Going forward, brokers will not be able to hide behind federal preemption when picking a carrier with a bad safety record. If a broker hires a motor carrier with compliance gaps and that carrier is involved in a crash, the broker is now subject to state tort liability. That legal reality will change the way brokers assess every carrier on their approved list.
What Brokers Are Going to Ask Carriers to Prove
Brokers aren't just checking insurance certificates and operating authority anymore. They’re doing it to make a paper trail so they’re protected in court. And for that to happen, the documentation will have to be more specific.
1. Driver Qualification File
This includes commercial driver’s license verification, employment history (3 years), medical examiner’s certificate, road test certification, and an annual review of motor vehicle records. Federal law requires every motor carrier to keep these files on each driver. Brokers have a legal basis for asking for them after Montgomery. If a carrier can’t provide a full DQF when needed, then the broker can’t afford to use that carrier.
2. DOT - Drug and Alcohol Test Records
DOT mandates that carriers maintain a drug and alcohol testing program that includes pre-employment screening, random testing, post-accident testing, reasonable suspicion testing, and return-to-duty protocols. Gaps in testing records are precisely the sort of red flag that triggers broker liability post-Montgomery. To fix that, carriers will have to provide documentation of every test, a record of every result, and the availability of every record. Missing even one entry is now a liability trail back to the broker who chose that carrier.
3. Work History and Background Checks
The Montgomery ruling should prompt brokers to look beyond surface credentials. They want to know whether the carrier bothered to check to see who they were putting behind the wheel of a commercial vehicle. This includes verification of past employers, background checks, requests for safety performance history, and paperwork demonstrating that the carrier followed up on any negative finding.
Why Most Mid-Size Carriers Are Not Ready for This Level of Scrutiny
The difference between what brokers in a post-Montgomery world are asking for and what most mid-size carriers can actually deliver comes down to a few specific weaknesses.
1. Compliance Is Managed Through Patchwork Systems
Driver qualification files are maintained in filing cabinets, drug test results are stored in a spreadsheet, and medical certificates are followed up by whoever remembers to look. That system is fine until a broker requests records on short notice. If these records are not readily available, the broker will move on to one that can provide them.
2. The Cost of Non-Compliance Goes Beyond Fines
FMCSA has the authority to impose fines ranging from $1,000 to $16,000 for each violation. That alone is painful for a mid-sized company. Carriers can also face exposure under federal laws when compliance failures affect audit readiness and broker trust. A string of violations can result in a full compliance audit, so regularly reviewing records is a best practice for staying audit-ready and keeping the carrier’s operational team from getting bogged down for weeks. Unfortunately, it takes so much longer to rebuild that trust with brokers than it would have taken to maintain it. The lost loads during that time are revenue that the carrier does not recover.
3. Every New State Brings Another Level of Exposure
Maybe a carrier in three states can keep up with the paperwork if they really try, since there are different types of expansion and hiring setups a carrier may use as it grows into more states. A carrier in eight states, each with its own local labor laws, tax regulations, and employment requirements, is a whole different ballgame. An EOR can help establish compliant employment operations in a new region without requiring the carrier to establish its own legal entity there. With each new region comes another set of legal requirements to comply with. What worked when the carrier had 30 drivers in two states doesn’t scale to 80 drivers across seven jurisdictions without a system built for that sort of coverage, especially as it manages a larger workforce across jurisdictions.
How an EOR Provides Carriers the Compliance Infrastructure Brokers Now Demand
An employer of record is a compliance infrastructure that goes beyond a mere HR solution. The EOR is the legal employer of a carrier’s drivers, meaning that the legal employment documentation, payroll, taxes, and regulatory compliance responsibilities are with the EOR, rather than the carrier’s internal team. Here is how that helps with the broker's demand:
1. Managing the Driver Qualification File
The EOR maintains a complete driver qualification file for each driver in the fleet. This includes verifying commercial driver’s licenses, medical examiner’s certificates, employment history, road test certifications, and annual MVR reviews. Everything is controlled by a central system. And if a broker asks for paperwork, the carrier can get it to them immediately.
2. DOT Drug and Alcohol Testing Programs
The EOR performs the full test schedule required by DOT regulations: pre-employment testing, random testing, post-accident testing, reasonable suspicion testing, and return-to-duty protocols. It connects with approved labs and medical review officers and offers documentation and access to every test result. For multi-jurisdictional carriers, the EOR also reports on any state-specific testing requirements in addition to the federal baseline.
3. Payroll, Taxes, and Employment Records Between States
A carrier with employees in Ohio, Georgia, and California, for example, will need to adhere to three different sets of tax laws, wage laws, and reporting deadlines. EOR's like Forsla have infrastructure in place that allows them to handle payroll processing, tax filings, and employment contracts for each state where the carrier has drivers. They can also administer pay in the applicable local currency where relevant and remit required social contributions. This way you do not need to set up your own legal entity in each state and hire local expertise to understand the rules in each jurisdiction.
4. Employment Verification & Background Checks
EOR conducts background checks for all new hires and completes prior-employer verification before the driver commences work. We check safety performance history, screen for criminal background, and follow up on any adverse findings before a driver is cleared. This way, verification is on file and documented from day one.
5. Benefits, Onboarding, and Offboarding Documentation
EORs typically manage by sourcing and administering localized employee packages, including health insurance and retirement plans, to match regional standards, along with new-hire onboarding paperwork. Competitive offerings also help carriers attract top talent. That full lifecycle coverage is critical because clean onboarding and offboarding records, plus EOR-managed contract terminations that cover final paychecks, severance where required, and exit interviews, indicate that the carrier has a disciplined operation. The type a broker can trust with their client’s freight, and their own legal security.
How Forsla Keeps Carriers Audit-Ready in a Post-Montgomery World
Forsla provides carriers the exact compliance infrastructure they require to survive broker scrutiny in a post-Montgomery marketplace. As an employer of record, Forsla legally hires workers for the carrier. The EOR takes full responsibility for employment compliance and the related administrative tasks, dealing with the paperwork, payroll, and regulatory issues that brokers are now legally incentivized to verify.
Forsla also tracks CDL renewals and medical examiner’s certificates, maintains driver qualification files, manages drug and alcohol testing schedules, runs background checks, and handles payroll and taxes in every state the carrier operates in. For carriers looking to hire in a new region or pick up contracts in markets they are not familiar with, Forsla has already mapped out local labor laws, tax requirements, and employment regulations. This service cuts red tape and can speed entry into new markets. It can also help carriers reach a broader talent pool and build a stronger global team as they expand. Request a quote today to get started.
Frequently Asked Questions
Q1. Does the Montgomery ruling apply to carriers that use staffing agencies for drivers?
The ruling targets the broker's carrier selection process, not the carrier's driver sourcing. But brokers may scrutinize staffing agency arrangements more closely now, since those firms mainly supply temporary or contract workers and typically do not manage long-term employment compliance, so gaps in driver documentation create the same liability exposure regardless of how the driver was hired. By contrast, EOR services remain responsible for ongoing employment documentation and compliance.
Q2. Can an EOR help carriers working on short-term projects stay compliant?
Yes. An EOR can onboard and manage drivers for short-term projects with the same compliance coverage as long-term employment. Background checks, drug testing, payroll, and driver qualification files are handled from day one, so the carrier stays compliant even on temporary contracts.
Q3. Does an EOR handle international fuel tax agreement reporting?
IFTA reporting covers fuel tax obligations tied to the vehicle, not the driver's employment. Most EOR providers do not handle IFTA directly. The EOR focuses on employment-related compliance: payroll, taxes, benefits, and driver documentation.
Q4. Can an EOR support carriers hiring in international markets or multiple countries?
Yes. Many EOR providers operate across many countries and international markets, supporting global hiring for distributed teams while handling labor rules, employment contracts, and tax compliance in each location. This lets businesses hire employees internationally without needing to establish a legal entity in each market, which matters for carriers or logistics businesses with support staff or operations outside the United States. Providers should also be checked for the specific services you need and for compliance with local laws.
Q5. What is the difference between an EOR and a third party organization that handles HR?
An EOR is the legal employer of the workers it manages. A third-party organization that provides HR services (such as a consultant or HR outsourcing firm) advises the carrier but does not assume legal responsibility for employment compliance. That distinction matters because the EOR carries the liability, not just the administrative work.