Following passage by New Jersey’s General Assembly and its State Senate, an “employee misclassification” bill that would reclassify both drayage-truck operators [port truckers] and parcel-delivery truckers as employees-- not independent contractors-- is headed to the Governor’s desk.
Dubbed the “Truck Operator Independent Contractor Act” (A1578/S1450), the bill was backed by the International Brotherhood of Teamsters and other pro-labor groups and passed along party lines, with most Democrats supporting it and most Republicans opposing.
Gov. Chris Christie (R), who is notably pro-business, has not publicly indicated that he will veto the measure.
As pointed out by the Owner Operator Independent Driver Assn. (OOIDA), which opposed the bill early on, “Assemblyman John Wisniewski (D-Middlesex) wrote in a statement attached to the bill that the proposed rule ‘creates a presumption that a work arrangement in the drayage trucking or parcel delivery trucking industry is an employer-employee relationship unless the party receiving the services can overcome the legal presumption of employment.’” OOIDA also noted that the measure includes “stiff penalties for employers who misclassify employees as independent contractors” and that “offenders would face criminal penalties.”
“We generally oppose these efforts and think the State would be better served to look at federal rules to address any problems with misclassification,” OOIDA executive vp Todd Spencer told FleetOwner. “Shutting out owner-operators would be a mistake as the reliance on owner-operators is not limited to the ports of New York and New Jersey. The changes sought would run off trucks and discourage them from doing business in the state.”
"The New Jersey legislation is another bald attempt by union supporters to increase the pool of workers eligible to be organized at the expense of independent business entrepreneurs who have freely chosen to pursue their business objectives and exercise their business judgment outside of the control that defines a traditional employer-employee relationship and as such we urge Gov. Christie to veto the bill," Sean McNally, spokesman for the American Trucking Assns. told FleetOwner.
“The New Jersey Motor Truck Assn.[NJMTA] is absolutely against this bill,” NJMTA executive director Gail E. Toth told FleetOwner. “It will destroy the independent trucking business model.”
As for what chances the bill has going forward, Toth said NJMTA is “very hopeful that the Governor will veto [it]. The Republican leadership and the entire party have voted against this job-killing, American-dream killing bill.”
And were the bill to be re-introduced after being vetoed, Toth said it would not pass a second time with a veto-proof majority as “there wouldn't be enough votes if the Republicans hold firm against it.”
Per a statement on the bill released by the New Jersey Senate Labor Committee, “trucking services performed in the drayage trucking industry or parcel delivery industry by an individual for remuneration are deemed to be employment unless and until it is shown to the satisfaction of the Dept. of Labor and Workforce Development that:
- The individual has been and will continue to be free from control or direction over the performance of that service, both under his contract of service and in fact;
- The service is either outside the usual course of the business for which the service is performed, or the service is performed outside of all the places of business of the employer for which the service is performed; and
- The individual is customarily engaged in an independently established trade, occupation, profession or business.
It should be noted that the Garden State is only the latest battleground in the nationwide effort by the U.S. Dept. of Labor as well as more than two dozen States to combat the so-called practice of employers “misclassifying” employees as independent contractors to reduce amounts paid such workers in both wages and benefits.
“Business models that attempt to change or obscure the employment relationship through the use of independent contractors are not inherently illegal, but they may not be used to evade compliance with federal labor law,” said the U.S. Dept of Labor (DOL) in a January news release.
“Although legitimate independent contractors are an important part of our economy,” the DOL statement continued, “the misclassification of employees presents a serious problem, as these employees often are denied access to critical benefits and protections — such as family and medical leave, overtime compensation, minimum wage pay and Unemployment Insurance — to which they are entitled.
“In addition,” added DOL, “misclassification can create economic pressure for law-abiding business owners, who often find it difficult to compete with those who are skirting the law. Employee misclassification also generates substantial losses for state Unemployment Insurance and workers' compensation funds.”