N.Y. OKs Bill That Defines Contractors, With Trucking and Teamsters Support

This story appears in the July 1 print edition of Transport Topics.

The New York State Legislature has passed a bill to clearly define which truck drivers can be classified as independent contractors and crack down on employers who use the owner-operator model to avoid giving employees certain benefits.

Both the state’s trucking industry and the Teamsters union came out in support of the measure both chambers passed June 21 after industry and labor representatives negotiated the bill’s terms, the groups said.

The bill now goes to Gov. Andrew Cuomo (D) for his signature. Gareth Rhodes, a spokesman for Cuomo, said the governor was reviewing the legislation.

Kendra Hems, president of New York State Motor Truck Association, said the bill would allow the trucking industry to continue to use the owner-operator model, with few modifications, while cracking down on carriers that abuse the model.

“We felt that there was a need for a definition, but we wanted to make sure it allowed legitimate independent contractors to continue to operate in the way that they are today,” she told Transport Topics. “If we have cases out there where carriers are utilizing independents that truly are not and, in fact, really should be employees, then we feel that should be addressed as well.”

Assemblyman Keith Wright (D) introduced the bill in February. In its original form, it would have created a presumption that all truck drivers in the state are employees, meaning carriers would have to provide worker’s compensation, pay unemployment insurance and withhold taxes, among other actions.

Carriers would have to prove independent contractor status using a three-prong test to show that their drivers truly operate as independent businesses:

• The driver must be free from control of the performance of his or her work by the carrier.

• The driver’s work must be either outside the scope of the carrier’s usual business or physically outside the carrier’s place of business.

• The worker’s business must be a trade that is established independently of the carrier in which he or she can work for other carriers.

The trucking group opposed that bill, saying it would wipe out the independent contractor model. But Wright asked industry and labor representatives in June to negotiate a bill both could support.

As a result, the new bill allows truck drivers to skip the three-prong test in favor of one specific to the trucking industry. It allows owner-operators to lease their trucks from carriers on long-term contracts while listing a number of factors that must be considered to show that the trucker is acting as an independent business entity.

The measures would apply only to truck drivers who carry a New York state commercial driver license.

“The bill clearly defines what an independent contractor is within the commercial goods transportation industry,” said Jeanine Johnson, Wright’s chief of staff. The state did not previously have a definition for independent contractors in trucking, and instead, many state agencies had their own guidelines.

The Teamsters believe the new definition will benefit the state’s truck drivers.

“There’s going to be better pay, better benefits and better working conditions for thousands of truck drivers,” said Nell O’Connor, a spokeswoman for Teamsters Joint Council 16, which represents local unions in and around New York City. “That’s what we wanted all along.”

A 2012 report by the Drum Major Institute said that of the 160,000 truck drivers in New York, about 41,600 are classified as owner-operators. But 28,800 of those owner-operators are misclassified because their carriers exert control over them as if they were employees, the report said.

In May, the New Jersey Senate passed a bill that would apply the three-prong classification test to all port and drayage truck drivers, a move that the New Jersey Motor Truck Association said would eliminate owner-operators in the state. The General Assembly passed it earlier that month.

New Jersey Gov. Chris Christie (R) has not said whether he will sign the bill or veto it.