TRENTON – The Assembly Labor Committee heard testimony on the “Truck Operator Independent Contractor Act,” which presumes an employer-employee relationship exists between parcel delivery trucking/drayage operators and the person/company for which he or she is providing services, instead of an independent contractor relationship.
Under bill A1578, individuals who perform trucking services are considered employees unless and until it is shown otherwise to the satisfaction of the Department of Labor and Workforce Development.
Assemblyman John Wisniewski (D-19) of Sayreville, the bill’s prime sponsor, described deliberate misclassification as “a growing trend.” He said the federal government estimates that misclassification by employers could cost it $7 billion over the next 10 years, largely because they avoid having to pay employment taxes, such as Social Security and Medicare.
New Jersey has also been a victim, he said. In 2005, the state missed out on $625 million in tax revenue because of misclassification.
Wisniewski said the bill is about protecting businesses that “play by the rules.”
“It is not an attack on the trucking industry,” he said. “This is about fiscal responsibility.”
But several groups disagreed. Several trucking and shipping companies, including Maersk Inc. and NYSA, said the legislation will result in negative economic consequences, in the form of higher trucking fees that could cause an interruption in service.
However, Assemblyman Craig Coughlin seemed peeved when he wasn’t provided with specifics.
“You can’t tell me any specifics why or how,” he said, adding that the opponents are expecting him to just rely on general information before casting his vote.
Doug Morgante of Maersk Inc., based in Madison, simply said about the higher costs and service disruptions, “It’s reality.” He added he will provide Coughlin the information soon. But Coughlin responded, “I have to vote on this in a few minutes.”
Fred Potter, vice president of the International Brotherhood of Teamsters, said misclassification is a big problem. He said A1578 will help the state track down “unscrupulous employers.”
“This classification is rampant by the trucking industry to cut costs” he said, saying it amounts to “modern day sharecroppers.”
“The only people against this bill are ones who misuse or abuse their workers.”
Under the bill, an employer violates the provisions of the bill if it classifies or treats a worker who does not meet all three prongs of the three pronged test as an independent contractor. Those conditions include:
1. The individual has been and will continue to be free from control or direction over the performance of that service, both under his contract of service and in fact;
2. The service is either outside the usual course of the business for which the service is performed, or the service is performed outside of all the places of business of the employer for which the service is performed; and
3. The individual is customarily engaged in an independently established trade, occupation, profession or business.
The deliberate misclassification is considered a third-degree crime, with a maximum $15,000 fine, or imprisonment for not more than one year for a first offense. Subsequent offenses carry a $30,000 fine and a two-year imprisonment.
Finally, the bill makes it unlawful for an employer to take adverse action against any person who files a complaint or informs any person about an employer’s noncompliance with this act.
Assemblyman Jay Webber (R-26) of Morris Plains, said he would vote against the bill, saying, among other things, it could lead to expensive lawsuits against employers from various union groups.