I have posted numerous times on the crackdown by numerous States of alleged misclassification of individuals as independent contractors. My State, New Jersey, has passed a special law pertaining to misclassification in the construction industry, although no new definition of independent contractor was established. Now, a move is afoot to do the same thing for/in the trucking industry.
The New Jersey Assembly has passed legislation that would establish a presumption that port and parcel delivery truck drivers are employees unless the putative employer can prove otherwise. The newly proposed law, which (naturally) enjoys strong union support, is entitled the Truck Operator Independent Contractor Act.
The proponents of the law claim that misclassification of these truckers is rampant and allows employers to avoid payment of numerous taxes (e.g. Social Security, Medicare, unemployment) and, most significantly, the payment of overtime. Assemblyman John Wisniewski, D-Middlesex, a main sponsor of the proposed statute, stated that “the misclassification of employees improperly deprives employees of protections provided under state and federal law and creates an uneven playing field for law-abiding companies that currently operate under a competitive disadvantage compared to their industry peers who misclassify.”
The bill, like its counterpart in the construction industry, contains harsh and expensive administrative penalties, as well as the potential for criminal prosecution, for employers that misclassify truck drivers and also allows drivers to sue for damages.
To show that an individual is an independent contractor, the putative employer would have to show that the individual is free from their control when it comes to the services they perform, that the services are outside the usual course of business, and the workers are “customarily engaged in an independently established trade, occupation, profession or business.” This is the exact same test already has been on the books for years in the unemployment and wage-hour statutes.
The only reason for pushing this legislation, it seems to me, is revenue generation for the State. This is highlighted by the potential for especially onerous penalties, which would all revert to the State Treasury. The legislation is not warranted nor needed. The lesson, however, for employers remains the same—-make sure that your independent contractors truly are so.