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