States addressing contractor misclassification problems

| March 25, 2013
Owner-operator Jimmy Lessley

Owner-operator Jimmy Lessley

New Jersey’s legislature is one of at least five state assemblies considering changes in employee and contractor classification.

On March 14, the state assembly transportation committee reported favorably on the Truck Operator Independent Contractor Act.  The bill, A1578, is opposed by the Owner-Operator Independent Driver Association. An identical bill, S1450, also was introduced in the state’s senate.

The bills stipulate the state’s labor department consider port drayage and parcel delivery drivers employees instead of contractors, unless the service receiver can overcome legal presumption of employment. Non-employee status would include requiring that service provided is outside the usual course of the business for which the service is performed or the service is performed outside of all of the payor’s business locations.

The committee amended the bill to apply this reclassification to the state workers’ compensation law. However, the provisions regarding misclassification would not be applicable to the prevailing wage law.

Civil penalties would apply and if misclassification is committed knowingly, criminal penalties as well. If the violator underpaid employees because of misclassification, then criminal fines and restitution to victims could apply.  Administrative penalties may also be assessed to $2,500 for a first violation and up to $5,000 for each subsequent violation.

Conversely, Connecticut is considering an exception in the workers’ compensation status. It would apply to owner-operators of trucks weighing 10,000 pounds or more and who transport property, even in part, in interstate commerce. On March 19, HB6151 was filed the Legislative Commissioner’s Office after its introduction Jan. 25.

.Other states considering bills addressing employee misclassification:

  • The Washington Trucking Association opposes HB 1440, a bill to prohibit misclassification and creating a new test to determine if someone is an independent contractor. It was referred to the rules committee March for a second reading.
  • Kentucky’s House labor committee received SB 89 Feb. 25, following passage by the Senate. It creates definitions of contractor and subcontractor, would require the state revenue department write criteria to establish contractor status and sets penalties for violators.
  • Nevada’s SB95 establishes an employee misclassification task force. SB96 allows fining employers up to $25,000 per offense for misclassifying workers as contractors and suspension of their business license for up to 3 years. Both were referred to committee last month.
  • ilovdieselsmoke

    I can see why the ATA membership is now in panic mode. If the independent contractor status of an owner/operator falls into question by the state the driver-lessee will have the right to form a union or ask a union for representation and will no longer face prosecution under federal anti trust laws for organizing as a group of independent truckers. There are grey areas of this I don’t particularly care for but I do however like the idea of truckers having the legal right to collective bargain their services as a group while organizing together during a job action without fear of violating the anti-trust laws. As of now the only legal protection we do have as an O/O is a watered down version of federal “truth-n-leasing” laws which at present we have the full burden to bring charges against the motor carriers on our own without any assistance from the federal government. The FMCSA or DOT has no enforcement body in this matter unlike when in the past the ICC gave this law teeth. The legislation would make a big difference in the way carriers deal with truckers who could prove an employee relationship but at same time enjoy none of the current employee protections. Ninety percent of us fall into this massive black hole while leased to the motor carriers whom we sport their placard on our door..

  • Mind Games


  • Mike Donohue

    Creating basic rules would be very easy. #1 Does the contractor have full control over what loads they can choose from that are in the companies system or limited to what load given or given a very limited choice? #2 Contractor have total control of when they want to go home and how much time they choose to take off? #3 Can the contractor buy required insurance’s outside from someone other than the company contracted to. strives to maintain an open forum for reader opinions. Click here to read our comment policy.