A New Jersey Assembly panel recently advanced a bill that would prevent trucking companies from misclassifying their employees as contractors in order to avoid paying payroll taxes, according to a New Jersey Today report.

Under the bill, trucking services performed by an individual in drayage trucking or parcel delivery trucking industries for pay would be considered an employee, 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.

“By misclassifying workers, an employer can avoid paying certain taxes like Social Security, Medicare and unemployment. This is not the way to do business,” said Assembly Deputy Speaker John Wisniewski (D-Middlesex). “This bill spells out what constitutes an employee versus an independent contractor to prevent unscrupulous companies from denying employees the benefits and protections they are entitled to.”

“The number of misclassified employees and unreported wages in New Jersey is startling and demands better control of this growing trend,” said Assemblywoman Annette Quijano (D-Union). “Employee misclassification only benefits the employer, while saddling workers and the competition. It’s wrong and it must stop.”

Under the bill, an employer who purposely misclassifies an employee as an independent contractor would be subject to criminal penalties.