Independent contractor status in question: What’s happening with ‘misclassification’ efforts nationwide

| March 11, 2014

Trucking and labor nationwide are engaged in a debate over what determines independent contractor status, as lawmakers and courts consider whether owner-operators should be classified as employees.

In recent years, unions increasingly have backed lawsuits and legislation to force owner-operators to be classified as employees. As budgets tighten, lawmakers have become more receptive to proposals while attempting to replenish tax revenue.

Additionally, environmental and labor groups have promoted banning owner-operators at ports. They argue employee status is necessary for truckers to afford upgrades that meet stricter emissions standards that now exist in many ports. 

Here’s a look at some key IC status legislation or litigation around the country:

New York, New Jersey: 

New York has a law with new criteria determining independent contractor status, and New Jersey is reconsidering a bill barring owner-operators from drayage and parcel delivery service.

Click here (or scroll down) to see other state actions or legislation concerning independent contractor status.

The compliance date for New York’s law is April 10, postponed slightly by some amendments made by the state’s legislature after Gov. Andrew Cuomo signed the bill and sent it back for some changes. 

The New York State commercial Goods Transportation Industry Fair Play Act has support from both the trucking industry and labor advocates, Cuomo says. 

“The major stakeholders representing both the trucking industry and labor have urged me to sign this bill in order to bring clarity to this area of law,” Cuomo said. “Nevertheless, I was concerned that certain technical issues with the legislation resulted in a test that did not address the independent contractor issue in the trucking industry in a fair and consistent manner.”

Both chambers cleared the amended bill before returning it to the assembly for reconsideration Feb. 26.

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The new law is expected to better determine whether truckers should be classified as company drivers or owner-operators and was supported by York Motor Truck Association and Teamsters

It also outlines contractors’ obligations to classify employees and inform subcontractors of classification obligations. The law includes penalties for willful violations and protections for drivers against employer retaliation.

In New Jersey, both legislative chambers are considering duplicate bills that would prohibit owner-operators from port and parcel delivery service. The Truck Operator Independent Contractor Act was introduced Jan. 27 and was referred to committee.

The same bill was vetoed last year by Gov. Chris Christie after it narrowly cleared the Legislature.

The Republican governor issued an absolute veto, which requires a two-third vote in each chamber to be overridden. Christie said he was “especially troubled” by the legislation’s criminal penalties for misclassification.

The Owner-Operator Independent Drivers Association and American Trucking Associations opposed the legislation. 

Additional opposition was voiced by the Gateway Regional Chamber of Commerce, which represents North-Central New Jersey and New York Metro businesses. The Teamsters wanted to limit FedEx to employee drivers, who, unlike owner-operators, can unionize, the chamber stated.

 

Georgia: Port truckers and Teamsters held a Feb. 26 press conference with lawmakers sponsoring misclassification bills targeting trucking and other industries. The first, SB 401, would implement stricter definitions of employee status, while SB 402 would hike penalties for misclassification. Both were referred to committee Feb. 21.

 

Ohio:  On Feb. 19, the Ohio Trucking Association provided support for model IC legislation at a House committee hearing. OTA President Tom Balzer said Substitute HB 338 incorporated input from FedEx and the Owner-Operator Independent Driver Association and other stakeholders.

 The legislation grants an exemption to classify owner-operators as ICs and also considers related state supreme court decisions. That includes a ruling where the court determined a truck owner receiving compensation per tonnage or mile and for fuel and other expenses qualifies as an IC.

 “A trucking-specific independent contractor exemption will spare motor carriers from having to confirm the legitimacy of their business model in arduous and costly legal challenge,” Balzer said.

 

Washington: In Washington, senators referred the Employee Fair Classification Act to committee Feb. 18 after House members passed it by a 51-45 vote. The bill, HB 2324, would define ICs and impose civil penalties and damages.  

The state’s trucking association and other opponents say it would classify most workers as employees, regardless of what the parties involved may want.

 

California: In the courts, a California judge has declined a ruling on an issue in a trucker class action suit over classification.

The California truckers have 30 days to file an amended complaint after a state superior court judge declined to rule on the legality of their signed waivers Feb. 18.

Last year, Los Angeles and Long Beach port truckers sued QTS and its related companies because they said they should have classified as employees. After filing the complaint, the companies forced the truckers to sign agreements waiving rights to legal claims.

Signing the waivers was a condition of employment and receiving repairs to company trucks, according the Asian Americans Advancing Justice and the Wage Justice Center, which is helping the the litigation. 

 

Idaho: The Idaho Supreme Court has concluded operating under the authority of a carrier’s DOT number is not considered sufficient to eliminate an owner-operator from IC status.

In Western Home Transport, Inc. v. State of Idaho, the state’s highest court overruled a previous decision that allowed the state’s labor department to use operating under a company’s authority as a stand-alone determination of employment status.

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  • Tom T

    They might as well finish the job that started with
    deregulation in 79. The J.B. Hunts and Schneider’s
    and now after many buyouts and merges, large
    holding companies along with the ATA have been
    working hard to put the competition ( the small guy)
    to bed and this would certainly do it. How about
    a national contract with hourly pay and time and a half
    after eight hours or mileage of say .48 cents a mile and
    all other time on the clock. Wait, the Teamsters already
    have that, don`t they? Sooner or later it is going to happen
    either through environmental regulation laws or IRS
    laws. If you have to work for a living, you might as
    well get paid for it. Lets face it, the American dream
    was hijacked along time ago, between greedy and
    corrupt politicians and greedy capitalists most of
    whom don`t even know the difference between a
    Kenworth and a Peterbuilt and don`t care as long
    as there is a return on their investment. Sad how
    corrupt and greedy this Country has become.

  • vrahnos

    Well Tom T i can agree with you for the most part.Most politains are but now all .an the mega banks are as you said.few other corps.are in line with what you said like G.E.and they are also mega sized.To put all corp.in that aera is nuts for yes they do need to make a profet and they provide a lot of the jobs out there but are folks like you and me.They are large but small compaired to G.E. or J.P.Morgan-Chase.As far as what you say as far as wages for truck drivers well that is why unions are not to popular among us.We all want to make a living but not by unions telling me what to do.That is for my employer or me to decided on not some fat cat teamster or afl.cio.telling me what to do.Screw them.So if you want to make money,have better labor laws then check out what is on the books and try to make the changes come about that way.Trucking is exempt from labor laws and that is what needs to be changed.Not getting unions involed in it.

  • Tom T

    You just made my case for me. I agree that they have to make a profit and the best way to do that is cheap labor, eliminate the competition and absolute control of every driver and please enlighten me the difference between a company that is owned by an investment group and wants to, as
    you say, “tell you what to do.” and a union that represents your interests.
    I am not saying unions are the only
    way, but I am here to tell you my friend after 45 yrs., 30 as a company driver both union and non union and 15 years as an O/O the only time I made real money for my family with a half decent life style was with the union. From another point of view consider this. When you are an O/O
    you have contacts with your customers or with the company your leased to with no recourse but civil
    court for violations or worse arbitration. With a union you have a contract that is voted on by all the members. Without either, what do have? Whatever they want to give you and whatever that might be, it
    is not going to be in your best interest
    and it is not going to last very long.
    To your last point, with powerful
    lobbyists and the ATA working Wash. D.C. I wouldn`t look for any labor laws in your favor anytime soon
    without representation and a good deal of money. In the end it is really your choice and always will be. Have a company tell you what to do and do it for cheap or join a union and hold your head up on payday. I am retired so whatever you chose I wish you all the best.

  • vrahnos

    I am retired now after years as an o.o under lease(we had a contract and both of us lived up to it.)and an independent and I also made contracts with the people I hauled for.I didn’t need some stinking union to do that for me.I did make some good money at it and so I was able to retire early(55 years old).I had also worked for a company driver for a while and made a fair living with them too.Understand I worked my ass dang near off doing it.No I worked was under union control except at some of the places my costomers and that was their affair not mine.Now my goal wasn’t to get rich,just to have a comfy life is enough for me.I own my home free and clear,cars are owned free and clear and my kids are grown and on their own now.So life is good .I sure didn’t need a union to do that for me.Best to you friend.Till later.

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  • David S. McQueen

    So the unions want O/Os to be classified as “employees” of the company they contract with, thus bringing them under the union umbrella and requiring them to pony up the union dues (unless the O/O is in a “right to work” state like Texas where mandatory union membership is prohibited by state law). That’s essentially what the issue is: union membership has been declining for years and the union bosses want state legislatures to pass laws that makes union membership mandatory. Politicians like that idea because they get massive campaign contributions from unions (more members = more dues and thus, more campaign contributions). It’s all about money, folks.

  • Tom T

    I absolutely agree. Follow the money. Of course that is a two edged sword. Corporations do the same thing on a state level to make sure they don`t have to face union votes and hence decent wages and protective work rules. On a federal level it is the ATA, and again large corporations that make sure the laws are written in such a way that favor companies who contract with O/Os. To the exclusion of having your own rights and competing with large companies for cheap freight, if the laws were as they should be you would be allowed to have flip up signs on your truck so you could run for whoever had the best paying rates that day from wherever you were at. As contracts,
    or to be more precise, leasing regulations are construed today, you become little more
    than a company driver who pays all the expenses. The only company I ever leased to with a valid contract with non forced dispatch that actually allowed you to trip
    lease was the railroad, CSX. I leased to some companies that made more money
    on fuel cards than they did moving freight.
    In the end, many corporations contribute to Republicans for their corporate interests while unions contribute to Democrats
    for their interests and both are pushing for
    illegal immigration reform one side for votes and the other for cheap labor. So, final analysis, your correct, follow the money whatever your political persuasion is there
    you will find the reasons behind it. Personally I don`t like either one of the parties which is why I am registered Independent either way, it is all about the money.

  • localnet

    I don’t want the pay cut… Sarc

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