Independent contractor models in the transportation industry continue to come under attack from both states and federal government. While attending the April Meeting of the Machine Haulers Association, they discussed at length just how important it is to protect this business model from unfairly being targeted. Some examples are as follows:
The NJ Department of Labor now requires IC’s to prove that the IRS has already deemed them independent contractors and authorities are now requiring evidence of FUTA exemption.
According to the New Jersey Motor Truck Association, the New Jersey Dept. of Labor decided that in order for an owner-operator to use the state "employee" exemption they had to first prove that the IRS had also deemed them not an employee by getting an IRS Determination.
The business community was unaware of the change in policy, which has resulted in the NJDOL re-classifying owner-operators as employees for unemployment tax purposes. To their knowledge companies not adhering to this law have been fined over $800,000. The NJMTA is working with state officials to try and get this procedure changed.
The New York State Motor Truck Association (NYSMTA) has been battling the Commercial Goods Transportation Industry Fair Play Act since it was introduced in January. This legislation, if passed into law, would essentially eliminate the owner-operator business model in the state according to the NYSMTA.
Per the organization's president, this is a “Jobs Killer” and would likely push trucking jobs to other states. Currently the bill is sitting in the Assembly and Senate labor committees and will likely see some attention now that the state budget is complete.
A new report published by a group that has a history with the Teamsters Union claims that as many as 18% of all truck drivers in the state of New York are considered misclassified. These 29,500 plus drivers endure the worst of both worlds: They lack the protections afforded to payroll employees and do not enjoy the benefits of being truly independent according to the report.
California trucking companies will be required to give drivers a 30-minute meal period within the first five hours of driving, according to the California Supreme Court's decision in the case of Brinker v. Superior Court. The ruling obligates employers to ensure employees take the breaks, but it does not penalize employees for voluntarily working instead of taking the break.
The decision, which covers non-exempt employees in all industries who perform work in California, requires employers to provide an opportunity for a 30-minute meal period within the first 5 hours of work each day and, if the employee works another 5 hours that day, a second such break within the second 5 hours. The decision also held that the employer must provide 10-minute rest breaks generally every four hours, but don't need to ensure rest breaks precede meal breaks. Not sure how the Independent Contractor fits into the mix but it is California, so this is worth keeping an eye on.
Two court cases that the industry is watching are Green vs. PDX, Dealer Tires and Contractor Management Services (CMS) & Mass. Delivery Assoc’n vs. Coakley. The first one is interesting since CMS is a third party provider and recently the court denied a motion to dismiss them from the lawsuit. The second lawsuit seeks federal preemption of the state Independent Contractor laws.
These are just a few of the recent activities affecting the Independent Contractor business model. We’re keeping on these activities and others, and we’ll keep you informed of any further developments on this topic.