Owner Operator Status Legislation Being Pushed in Two States
March 05, 2013
The question of whether owner-operator truckers are truly independent contractors or misclassified as employee drivers is at the heart of legislation in two states and the subject on a court ruling in another.
In New Jersey, the state Senate Labor Committee has approved legislation by a 3-2 vote that would establish penalties for trucking operations in the drayage or parcel delivery business that knowingly misclassify drivers as independent contractors. If passed and signed into law, S. 1450 would create a presumption that a work arrangement is an employer-employee relationship rather than a contractor one, unless the company can prove otherwise based upon certain conditions.
Supporters say such a law is needed because companies misclassify truckers to avoid paying taxes and providing employee benefits.
Opposing the measure is the New Jersey Motor Truck Association. In a letter to the Senate committee, it said, “The intent of S. 1450 is to eliminate the owner-operator model…[and]…doing so would kill small business throughout New Jersey.” The group also claimed that many owner-operators do not wish to be employees of trucking companies, and if they did they would already be working for them. The group also pointed out the bill would have a devastating effect on the state’s port facilities.
Testifying at the hearing was John Monahan, director of operations for Bridge Terminal Transport, who indicated the legislation “would require anyone who contracts with a trucking carrier and performs services, to be an employee of the carrier,” but indicated the measure is preempted by federal law.
A committee in the General Assembly signed off on identical legislation last year. It now awaits consideration by the full House.
There are a pair of bills in Washington state’s House of Representatives. HB 1440, which has been approved by the House Finance Committee, is similar to the bill in New Jersey. It also presumes an employer-employee relationship exits when using truckers, even if they are independent contractors.
However, the Employee Fair Classification Act is wider in scope than the New Jersey legislation because it would affect people in many different occupations. The intent of it is the same, say supporters, who say it needs to be passed and signed into law so companies can no longer avoid paying taxes and benefits for people who perform work for them.
Opposing it is the Owner Operator Independent Drivers Association and the Washington Trucking Association, who say such a move is against federal law.
Meantime, separate legislation, HB 1719, has been approved by the House Labor and Workforce Development Committee. It would automatically classify drayage truckers who work out of the ports of Seattle and Tacoma as employees.
Both measures now await consideration by the full House. If approved they would then move to the state Senate.
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