Legislation has been introduced in both the New York State Senate and the Assembly to address the "misclassification" of truck drivers as independent contractors. However, the legislation would be so far-reaching, it would "effectively eliminate the owner-operator business model the trucking industry has been using for over 70 years," according to the New York State Motor Truck Association.
The New York State Commercial Goods Transportation Industry Fair Play Act was introduced in the Senate as bill number S6267 by Republican Martin J. Golden of the 22nd Senate District, and in the Assembly as bill number 8997 by Keith L.T. Wright, a Democrat from District 70.
The bill contains many of the same definitions of "independent contractor" that have been used for years, such as a business entity furnishing its own tools and equipment, the ability to hire its own employees and the right to offer its services to others. However, there's one area that is a particular problem for the trucking industry, explains Kendra Adams, president of New York Motor Truck: That you can't be considered an independent contractor if you are performing the same services the company engaging the contractor normally would do itself.
This comes from a "Fair Play Act" the state passed two years ago for the construction industry. Adams says the trucking bill is essentially the same language, with "goods movement" terms substituted for the original construction ones.
"In the construction industry, you have a general contractor, and they may hire electricians, HVAC guys, etc., to do this work they wouldn't do themselves," she explains. "But in our industry, truckers hire truckers. That's what we do."
For example, she says, a small business trucking company finds itself with more business than it has trucks to handle, and contracts with owner-operators to handle the excess. "The way this is worded, they wouldn't be able to do that."
Adams also questions whether misclassification is truly a problem in the state's trucking industry. The justification for the legislation refers to a study conducted by Cornell University's School of Industrial and Labor Relations, "The Cost of Worker Misclassification in New York State." That study found that in New York State between 2002 and 2005, nearly 40,000 employers misclassified more than 700,000 workers.
Immediately after this statement, the bill's summary claims that "misclassification of employees in the trucking industry is disproportionately high."
The implication is that the Cornell study shows a disproportionately high rate of employee misclassification in the trucking industry, Adams says. However, she says, the study does not draw this conclusion about the trucking industry.
"In fact, the only direct reference to the trucking industry in the entire 16-page study is found in a footnote," she says. "There is nothing in the report to support the sponsors' memo allegation that the trucking industry has a higher than average employee misclassification rate."
Adams believes the Teamsters Union is behind the push for the bill, as part of their nationwide campaign to organize truckers at the nation's ports. In fact, the bill notes that "Port truck drivers and delivery truck drivers (e.g. Fed Ex and UPS drivers) are often improperly classified as independent contractors."
This is not the first time such an effort has been made. In the last session, Assemblyman Rory Lancman, chair of the State Assembly Subcommittee on Workplace Safety, introduced the "New York State Commercial Goods Transportation Fair Play Act." Lancman is shown in a Summer 2011 monthly update meeting with the International Brotherhood of Teamsters on the issue.
Adams says the bill is currently sitting in the labor committees and probably won't see any action until the Legislature finishes the state budget, likely around the first of April. The association has met with both Gulden and Rice about their concerns.
"I think if we can show Sen. Gulden this is ultimately a small-business killer, we may have a chance of getting him to work with us on the bill." In the meeting with Rice, she said, there was no indication one way or the other.
The association put out an action alert last week to its members. "The point of that is to start getting legislators familiar with this bill. Our next step will be reaching out to members of the labor committees to help them understand why this bill should not go forward."
Eventually, Adams said, the association would like to try to work to get a bill passed that would clarify the definition of independent contractors for the trucking industry, where the amount of control required by federal safety regulations sometimes conflicts with the definitions of "control" for independent contractors. "This legislation isn't it."