Start the New Year Right with a Quick Checkup

Kevin Anderson Transportation

Every business should periodically check its legal status and make sure that all information listed by various governmental agencies is up to date and correct. The checkup is not difficult and, unless you find something that needs to be updated or corrected, it should not be time consuming. Below is a list of what you should check on:

1. Secretary of State Registrations. Check the status of your business on the Secretaries of State websites in those states where your business is incorporated, organized or formed, in which it is registered as a foreign corporation authorized to do business, or where you have trade name(s) registered. You need to confirm that all of the information listed is current and correct and, most importantly, that your business is in good standing. If it is not, you need to update the information.

Particular care needs to be taken in naming your registered agent. A registered agent is the person you have designated to receive legal notices on behalf of the business. Whoever is named as registered agent needs to understand the importance of the role and that adverse legal consequences likely will result if an appropriate response is not made in a timely manner. That person should be an officer, director, member or owner of the company. Oftentimes the business’s lawyer will be the registered agent. (See below regarding the FMCSA’s BOC-3 process agent requirement.)

2. FMCSA. Check the FMCSA Registration and Insurance website to confirm that the information listed is current and correct and, most importantly, that all of the authority you thought you had remains active. We recently were contacted by a carrier located in the Midwest who was totally unaware that its authority had been revoked because a cargo insurance certificate was not on file (HHG carriers must still file proof of cargo insurance).

Be aware that on December 12, 2015 the FMCSA began to phase in the Unified Registration System (URS) starting with new applicants being forced to use the URS online registration application. So far, registrations using that system have not gone smoothly.

The FMCSA requires carriers and brokers to designate agents by filing a form BOC-3. Carriers must designate agents in each state they are authorized to operate in or though, which means every state since there is no geographical limitation. Brokers are required to designate agents in any state where they have an office or write a contract, which is not necessarily every state. Nevertheless, most carriers and brokers use companies to make “blanket filings” on their behalf, which means the company designates an agent for the carrier or broker in every state.

Who you use to make a blanket BOC-3 process agent filing can have serious consequences. You need to know how and how quickly you will be informed of anything served on the BOC-3 process agent. You should not simply hire the lowest cost blanket company since you may pay dearly for saving a buck now.

The carrier mentioned above also ran into problems when it received a copy of a notice of a lawsuit on three weeks after the documents were served on the carrier’s BOC-3 process agent. The carrier stated that it had no recollection of ever hiring the blanket company. I suspect they hired the blanket company because they received a fax solicitation from it and the price was cheap. However, the consequences will be expensive. The problem now is that the lawsuit was filed in small claims court where the carrier’s response was due within 14 days after the service date. Thus, the 14 day deadline had expired a week before the carrier even found about the lawsuit. It is very likely that a default judgment for thousands of dollars will be entered against the carrier even though it may have had valid defenses to the claim.

3. SMS & MCS-150. Check the SMS website and determine your safety scores in each of the basics and figure out what violations you might be able to challenge through DataQs. If you haven’t already, spend some time looking at your scores and the information provided and learn about the system. Having alerts in certain BASICs can be a significant detriment to your business. Of course, if any of the information concerning your company is incorrect, correct it.

You also need to update your carrier profile by filing an updated MCS-150 form at least once every two years. Failure to update that information can result in monetary fines and the revocation of your operating authority.