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BusinessEconomicsLegal issuesNewsSupply ChainsTrucking

New Jersey next to debate limits on trucking’s use of owner-operators

New Jersey is the newest battleground for motor carriers that use owner-operators, as the state Senate takes up legislation aimed at limiting what workers can be considered independent contractors.

On Thursday, the labor committee is scheduled to debate S4204, a bill introduced by New Jersey Sen. Stephen Sweeney just seven days ago. Sen. Sweeney’s office was unable to comment by press time.

The bill would write into law that New Jersey employers use the “ABC” test to determine whether a driver should be classified as an employee or an independent contractor.

The bill mirrors California’s AB5, a new law that goes into effect next year. AB5 likewise codified ABC as the test for worker status. The test’s three prongs, especially the second one — that a worker perform work that is outside the usual course of the hiring entity’s business — are seen as effectively preventing motor carriers from using independent contractors.

The legislation, which has the potential to raise trucking costs in New Jersey, comes as trucking demand in the state grows thanks to the rise of its port to the No. 2 gateway for container shipments into the U.S.

Upwards of 80% of the containers that move through the New York-New Jersey marine terminals are carried on a truck, with almost two-thirds of those shipments destined for warehousing in New Jersey, as well as other regional markets. The Outbound Tender Market Share for Elizabeth, the state’s largest port complex, has risen 70 basis points over the past six months. (SONAR: OTMS.EWR).

Outbound tender demand from Elizabeth has been rising through 2019 (SONAR: OTMS.EWR)

An estimated 6,500 independent owner-operators serve the ports of New York and New Jersey, according to one estimate, accounting for over three-quarters of drayage drivers.

Lisa Yakomin, president of the Association of Bi-State Motor Carriers, said the legislation has consequences for drivers serving the ports. Her group submitted a letter to the Senate’s labor committee saying shippers can easily divert their cargo to other East Coast ports should costs through the Northeast’s biggest gateway rise.

“Shippers on the East Coast have more choices than those out West, and New Jersey must stay competitive to retain our market share,” the letter said.

In addition, limits on independent contractors will weigh on New Jersey’s minority workers more heavily, as close to 40% of the state’s transportation and logistics jobs are occupied by that demographic, according to the Department of Labor. That compares to 30% across all industries.

Likewise, the state faces litigation risk from owner-operators who took part in the Port Authority of New York and New Jersey’s truck replacement program. The program offered to subsidize part of the cost of a 2013 model year or newer truck in return for buyers committing to five years as a port drayage driver.

“We want Senator Sweeney to sit down with various port stakeholders, not just the motor carrier companies, but with these independent drivers who have a lot to say on this issue and find out what the potential hazards of doing this are, and there are quite a few,” Yakomin said.

New York-New Jersey has seen an 8% increase in import market share from August. (SONAR: PIMS.USNYC)

California’s new law is already forcing many of the state’s 70,000 independent contractors to consider their next move, as motor carriers such as Landstar System and New Prime warn drivers to take steps such as move out of the state or get their own operating authority.  

On top of the independent contractor legislation, New Jersey trucking is facing legislation that could mean criminal penalties for employers in wage disputes and the additional costs of providing a portable benefits plan for independent contractors.

“I don’t have a lot of good news on the Trenton front,” said Gail Toth, executive director of the New Jersey Motor Truck Association, at the group’s annual meeting. “They are doing nothing that helps our industry at all,”

She said the totality of the legislation is the result of Gov. Phil Murphy’s agenda to make it more difficult for state businesses to use independent contractors, even if it is their choice.

Murphy “has continued his attack on the independent contractor business model,” Toth said. “All independent contractors, whether they be truckers, retailers, real estate agents, janitors or whomever, it applies to all sectors because New Jersey’s legislature believes we are an ABC test state.”

The opening salvo in this attack was the release of a report from New Jersey’s Department of Labor that advocated that the agency get more regulatory and punitive power over businesses that use independent contractors.

Less than a month after that report’s release, New Jersey enacted a law that will “increase an employer’s risk for misclassification,” according to law firm Genova Burns. It mirrors the SB 1402 legislation that California enacted last year to hold shippers liable for wage disputes arising between drivers and motor carriers.

In New Jersey’s version, though, the penalties are more extreme. Employers found liable for not paying wages due to misclassification would be liable for additional penalties of 200% of damages and other costs. Determinations of ongoing misclassification will be punishable by jail time and other fines.

Another bill that would require employers to pay into a portable benefits plan for independent contractors remains stuck in committee. But Toth said the “ideological bent” of the Murphy administration and the current legislature makes its passage likely.

“I don’t think we have a prayer with this administration because they do not want anyone to be an independent contractor,” Toth said.

Reporter Clarissa Hawes contributed to this report.

Michael Angell, Bulk and Intermodal Editor

Michael Angell covers maritime, intermodal and related topics for FreightWaves. His interest in transportation stretches back several generations. One great-grandfather was a dray horseman along the New York waterfront and another was a railway engineer in Texas. More recently, Michael has written about the shipping industry for TradeWinds, energy markets for Oil Price Information Service, and general business topics for FactSet Mergerstat and Investor's Business Daily. When he is not stuck in the office, he enjoys tours of ports, terminals, and railyards.

28 Comments

  1. I see somebody’s not gonna be satisfied until all these containers are sitting on the ground and on the ships and trains because nobody is hauling them! Watch out Savannah and Charleston, y’all may be next!

    1. Many truck drivers have left after being cheated after accident. California has this one right. The cost to government of looking after the truck drivers is too high.

  2. SB 1402 legislation that California enacted last year is one of the best legislations yet ! CA isn’t fooling around . In fact every state should enact such legislation, as well as AB-5 . EVERYONE ONE OF THEM !

    That way there would be no “loophole” to move out of state to bypass the law in another .

    Quote:
    S4204
    “In New Jersey’s version, though, the penalties are more extreme. Employers found liable for not paying wages due to misclassification would be liable for additional penalties of 200% of damages and other costs. Determinations of ongoing misclassification will be punishable by jail time and other fines.”

    Now that’s the way to get “employers” to think twice before they attempt to abuse misclassifying drivers for profit at the driver’s/laborer’s expense !

    In my humble opinion …………..

    1. You do not need the government to make laws and run your live you can simply say no and not work as 1099. You people should blame yourselves for low wages and stop asking the government to save you. Stop hauling the cheap freight.

      1. That’s NOT a solution . Walking “away” will NOT stop the “abuse” !

        The way to stop abuse is to acknowledge it , take a stand , and rectify it . You don’t run away from abusers !

        The fact that “laws” are being created to rectify the abuse is due to the widespread of the abuse !
        The abuse has become an epidemic that effects the whole industry and many people’s lives in and out of the industry . It won’t go away on it’s own . Competition and greed in the industry is fierce and often comes at the cost of the “laborer” .

        From what planet do you come from ? On “earth” it’s a well known fact . Laborers are generally abused and deceived by those who employ them due to competition and greed .

        Even CONNED-sumers are deceived ! So according to your logic or lack thereof , CONNED-summers should stop consuming rather than rectify the abuse ???

        In my humble opinion ………….

      2. That’s not a solution in Canada the government ends up with the cost of these truck drivers when they are unable to drive. I stayed at shelter in Windsor last night 7 former truck drivers and a passenger from a Uber accident all slept at the shelter going for free breakfast in a few minutes. The church’s run the shelter with the help of other nonprofit groups. N j has the right idea on this bill.

      3. The cost comes back on the taxpayer when people are getting cheated. Large trucking companies like Celadon owe the Quebec government large amounts of money. that they not likely get. I noticed that the same people who think government should be less involved do not like when they get sued for providing services for their parents. My sister and husband almost got my father killed after refused to pay his bill after pushing for government cuts while I live in a homeless shelter after a accident when a Ryder truck hit at 60 m p h.

    2. Part two, that we must work in a non-trucking business to lease on with a carrier, that is the real contentious issue. The Fed DOL does not say this. Besides, this is based on the abuse of drayage drivers, who are misclassified. So why not reserve the independent misclassification to these workers. They are a distinct subset of owner operators. We are coast to coast owner/operators and have always exercised our option to be able to contract for a load…………….or not. That is part of the DOL requirements, that we have the freedom to choose. If the dock workers don’t have that option, they are employees without all the benefits. New Jersey and California must revisit this situation. They obviously don’t understand. As Einstein explained in his Second Law of the Universe, defining the problem exactly will always offer the right solution.

      1. The “problem” aka ABUSE is widespread , it goes beyond drayage .

        Ie: Owner operators/brokers also hire drivers and misclassify them . Then you have the carriers that offer lease to own programs etc etc etc . In this case AB-5 is the right solution . Just don’t lease on to a carrier . Be “independent” and deal through a freight broker ,load board , or go get your own contract by hooking up with a shipper directly and cutting out the middleman . Simple enough ?

        In my humble opinion ………….

      2. The abuse is wide open many companies including Celadon have been cheating leased ops and in Ontario and Quebec the cost has been dumped on to the taxpayer. Non-profit charities are tired of having to have campaigns to raise money to pay for the hydro bill and medical costs of these people.

    3. IF THIS LEGISLATION UNFAIRLY PENALIZES OWNER OPS WHO ARE LEASED ON TO ANOTHER OPERATORS AUTHORITY..THAT WILL HURT THESE..THEY ARE NOT PAID BUT GET 1099 AND WORK FOR A MNTHLY % FEE OR FLAT FEE TO USE ANOTHER OWNERS AUTHORITY TO RUN, I HAVENYT SEEN ANYTHING REGARDING IF AN INDEPENDANT RUNNING UNDER ANOTHER’S AUTH IS OR WILL BE PENALIZED..IM HOPING THIS APPLIES TO “CONTRACTORS” IN THE CLASSIC SENSE.NOT OWN-OPS WHO LEASE UNDER ANOTHER’S DOT AUTH.
      ANY THOUGHTS?

    4. Totally agree. Carriers, employers, brokers, shippers should all be held liable for this and stop undercutting. Some of us independent carriers are also being treated by brokers as if we were leased owner operators. Thats gotta come to an end!!

  3. Whats wrong with fair pay for employees?

    Freight rates suck because of abuse classifying employees as ICs.

    Level the playing field between legit employers and the 1099 abusers. Thank you

  4. Quote:

    “Lisa Yakomin, president of the Association of Bi-State Motor Carriers, said the legislation has consequences for drivers serving the ports. Her group submitted a letter to the Senate’s labor committee saying shippers can easily divert their cargo to other East Coast ports should costs through the Northeast’s biggest gateway rise.
    “Shippers on the East Coast have more choices than those out West, and New Jersey must stay competitive to retain our market share,” the letter said.”

    Re-quote:
    “shippers can easily divert their cargo to other East Coast ports”

    This confirms my statement in my prior comment to PREVENT such cargo diverting attempts to bypass laws in certain states !

    Re-quote myself from prior comment :

    “SB 1402 legislation that California enacted last year is one of the best legislations yet ! CA isn’t fooling around . In fact every state should enact such legislation, as well as AB-5 . EVERYONE OF THEM !

    >>>>>> That way there would be no “loophole” to move out of state to bypass the law in another . “<<<<<<<<

    Thank YOU Lisa Yakomin, president of the Association of Bi-State Motor Carriers, for indirectly stating that ALL STATES need to apply such a law as AB-5 in order to protect ALL Ports and Port truck drivers in the Unites States from potential shipping diverting shenanigans !

    In my humble opinion …………….

    1. All states and provinces need to follow suit Quebec in Canada has been a lot money to protect truck drivers. A T A members with sub office in Canada will not bring foreign truck drivers into Quebec because the truck driver must make 26.62 CD per hour or about 20.00us per hour plus time and a half after 44 hours per week. In the C T A members have making donations to the right places to stop similar laws to Quebec in other provinces.

      1. Perhaps you should tell that to brokers & carriers advertising truck driver jobs in that Canadian province because they are a far cry from offering the hourly salary of which you write/speak of . And most brokers in that province misclassify their drivers according to my research .

        Driver inc. averages .46 per mile as well as on payroll(approximately $24 per hour on average) . Not much of a difference between the two . That being said , the majority of truck drivers jobs being offered in that French province in Canada are between $20 & $22 per hour .

        I wrote a long comment once on the wages per category and it ranges between $18 & $28 per hour in that French province .
        Payroll and incorporated(driver inc)wage per mile in Canada ranges in between .38 & .80 per mile depending on the category . However, .80 per mile is quite an outlier and quite bleak . The norm is between .38 & .55 averaging .46 per mile .

        In Alberta & BC the wages are a little higher depending on the category/division such as in hauling logs and fuel due to being related to living in camps in the bush . Wages vary between $30 & $45 per hour . It also depends on economic circumstances affecting their sector of business .

        Owner operators hauling fuel in Alberta have been involved in strikes/protests due to low rates, as well as log haulers in British Columbia due to economic curtailments in their sectors and industries .

        Furthermore , the CTA is doing a pretty descent job by lobbying for driver inc crack downs and labour legislation in regards to employee misclassification . In fact the Canadian province of Ontario is pretty much setting the bar in that regard .

        Concerning “immigrants” :

        Most don’t understand and are unaware of what employee misclassification implies . The vast majority of brokers who do in fact hire drivers through the driver inc scheme are immigrants , not all but most .

        What is comical is when you see a broker offering a driver the choice of either being on payroll or incorporated . However, what they are clearly demonstrating is their ignorance because their is no difference between the two as far as an employee/employer relationship is concerned .

        In conclusion : The Canadian province of Quebec pays truck drivers no better than any other province in Canada , either it be by the mile or hourly .

        Western Canada tends to pay a higher rate/wage than Eastern Canada . Toronto is considered to be in the middle .

        In my humble opinion ………

        1. All my figures reported above are in Canadian currency .

          $20CAD at today’s exchange rate is approximately $15.09 US / $22CAD is approximately $16.59 US.

          Those figures are a far cry from enticing anyone to become a truck driver with all the risks and regulations it implies . However, it does manage to fool many in joining due to BS propaganda painting a rosey picture which leads to high turnover .

          A truck driver on payroll in Canada will generally average $1000 net per week at maximum HOS , averaging between approximately $36k to $48k net per year while burning themselves out . A driver on payroll who cheats a log book can reach up to approximately between $80k & $110k gross per year , net if driver inc cheats income tax reporting based on misclassification or simply not reporting revenue at all .

          Those are my stats .

          In my humble opinion ……….

        2. That is why they are not bringing foreign drivers into Quebec. Only a fool will work for the rates advertised. Quebec has fined several trucking companies for cheating leased ops. Quebec has very high taxes a friend of mine grossed over $1,600 per CD nets $1,100 CD per week or $840 us after c p p ,u I health insurance tax.

      2. Donations? sounds like palm grease AKA pay offs..
        since when has govt sought to protect the :little guy: drivers?
        they pass laws to enable large companies to push independents out of business with burdensome laws
        as well as push to make the whole industry more restrictive and costly and ..less profitable to push under the table ( off the radar) help to rail transport cos. that paid a lot of campaign contributions for such rulings and laws to pass to pump up their own rail freight biz..
        What ya think of that one?

  5. As California is setting the bar in the United States with AB-5 etc. , Ontario(as stated above) is setting the bar in Canada in regards to employee misclassifications and regulations in that concern .

    A news article has just been printed and titled : Ontario proposes plan to make trucking safer

    Quote:
    “The OTA has been at the forefront of a campaign against Driver Inc., a controversial business model that classifies fleet employees as independent contractors. The drivers are incorporated and receive their pay without any source deductions.
    OTA chairman David Carruth praised the initiative, saying all provinces and federal departments need to follow suit.”

    However, their “safety” propaganda is becoming a little long in the tooth and completely absurd in regards to certain points they’re pushing through the abusive use of that term and category . From my perspective , “safety” is a manipulative guise they keep on using to push their desires . Driver inc is not a “safety issue”, but they’re trying to make it appear as such . Driver inc. is an “unethical” issue which also renders it a “competitive” issue .

    In my humble opinion ………

  6. Yeah that’s exactly what we need to do is follow California as a struggling to stay of alive the worst thing we could do is follow California the other thing is don’t worry about the truckers worried about doing something about the delay in the electronic log books that’s where you’re hurting your driver’s you’re going to bring the country down if you keep fucking with the drivers one of these days you won’t have anybody driving for you just keep fucking with us and we will one day protest and we will shut the fuckingworld down

    1. I understand your frustration . However, if you want to “shut down the world” which is an exaggerated pipe dream , you’ll need one heck of an international structured organization to back you up with a “common” interest in doing such . Good luck trying to find such interest .

      And what sort of a well structured experienced organization may that be and or resemble in order to create the change that you seek ?

      A LABOUR UNION !

      Therefore , you should perhaps agree with what California is doing since AB5 gives you the right to join a labour union . However, I can guarantee that labour unions won’t be focusing on shutting down the world . In extreme circumstances when politicians are a little stubborn UNIONS may attempt a “coup” in a country , but certainly not attempt to “shut down the world” , LOL !

      Quote:
      “There’s a stark reason why America’s 1.8 million long-haul truck drivers can’t strike” .
      (google it, you might learn something)

      Sometimes non union truck drivers will associate and join a truck driver labour union truck driver cause and protest together due to Union expertise in the matter . However, most non union truck driver strikes simply lead to noise more than anything else rather than a pro truck driver sustainable change . And that’s due to a lack of experience and expertise .

      Learn from what has “worked” and what hasn’t , and why . And or be a “pioneer” .

      I myself am not “pro union” per se . I believe in structuring an international “Truck Driver Alliance Co-Op Conglomerate” . And it wouldn’t be to position it to “shut down the world” , LOL , but more so to generate power which would position it on a competitive level with the 1% .

      The ultimate Truck Driver Alliance’s goal would simply be to position itself to generate more capital gains for its members shared among them equally .

      It branches out in 3’s . Air(Air Cargo Shipping) , Water, (Maritime Shipping) , Earth , (Trucking & Rail) .

      Again in 3’s : Agriculture , Mining , Manufacturing .

      The Alliance would be in competition with “Labour Unions” .

      Rather than “strike” , BOYCOTT if absolutely necessary . You boycott an unreasonable business until they : either reason and or change management , or the Alliance positions itself wisely to buy them out and own the business outright .

      If you want to conquer the world , then you need to position yourself to control what it depends upon . And that’s not excluding Banking & Insurance .

      However , if you can align laborers in Agriculture , Finance, Mining ,Manufacturing ,and Transportation , you pretty much control what the 1% & 99% depend upon to make the world as we know it turn . (wink)

      No need to fight , cause grief , and chaos . Simply start small with a big vision and start wisely structuring to achieve it . You need to create rapport and include the “consumer” in your “vision” . The goal is to make the world turn a little more “fairly” and the “people” act a little more reasonably , rather than attempting to shut the world down .

      In my humble opinion ……….

  7. This law is being pushed only to force ICs into paying Social Security and other federally mandated crap. Much like the Obamacare penalty for not buying into health insurance. Get lost bloodsuckers.

  8. so basically the state wants us to stop feeding our children and paying our mortgages. Funny how these bills don’t affect their families. This bill is flat out a silent murder weapon to American families. The government should be ashamed of themselves. God will take care of all of the voters in the long run.

    1. The cost of the current leased ops model has left a huge cost to the government. California over 100 million dollars a year in Canada Quebec the cost is over 40 million dollars a year. I was in a shelter in new York City last week and seen several former truck drivers including one truck driver in a wheelchair who slept in the wheel chair all night and unable to make it to the bathroom.( He should have been in a extended Care home at a cost of over a $90 per day) A colalition of non-profit organizations has spent a lot of time and money helping former self employed that fell through the system.

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