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3/15/2013
Independent contractor status under attack
By Keith Goble, Land Line state legislative editor

A major topic of consideration this year at statehouses around the country covers the employment status of independent contractors, including owner-operators.

New Jersey lawmakers are discussing legislation that would deem port truckers, including owner-operators going onto a port, to be employees.

Citing concerns that drayage and parcel truckers in the state are being misclassified, Sen. Loretta Weinberg, D-Bergen, is pushing a bill to include stiff penalties for employers who misclassify employees as independent contractors.

Shortly after the bill was introduced a year ago, OOIDA and more than 20 other truck and business groups joined together to oppose the bill. They say the changes sought would discourage any involvement with independent contractors.

Gail Toth, executive director of the New Jersey Motor Truck Association, spoke at a recent hearing in opposition to the bill. She told lawmakers that bill supporters “are trying to create a perception that owner-operators, independent contractors, want to be employees.”

Owner-operator and OOIDA Member Ted Millard of Hillsborough, NJ, testified at the hearing. The longtime drayage operator refuted claims that port truckers want the security of being employees.

“I’ve been a self-employed contractor since 1977. I was able to raise a son and a daughter and put them through college,” Millard said. “Everything is good. Ninety-nine percent of my work is drayage. I’ve never run into a problem.”

On the opposite coast, Washington state lawmakers are considering two bills to overhaul the state’s definition of independent contractors and reclassify certain port truckers as employees.

The first bill would rewrite the definition of an independent contractor. Specifically, an employer-employee relationship would be presumed when services are performed for pay.

Rep. Ed Orcutt, R-Kalama, recently testified that the bill simply doesn’t work.

“There are way too many problems with this bill. It doesn’t solve the problem people are talking about, and it ultimately would create more problems.”

Effectively prohibiting owner-operators from the ports, another bill would deem drayage truckers going onto the ports of Seattle and Tacoma to be employees of the facilities, with the exception of agricultural haulers.

Across the state line in Oregon, a House bill would set up a full-time position for investigating claims of misclassification of employees as independent contractors. It also spells out what actions could result in fines for employers but it doesn’t specify the amounts.

Bob Russell of the Oregon Trucking Associations told lawmakers that he’s concerned about the lack of information on possible penalties. The group’s director of government affairs said that he’s extremely concerned that penalties assessed would fund the position.

Lawmakers in other states, including Connecticut, are attempting to avoid challenges to independent contractor status.

Two bills in the Constitution State address truck drivers who work for one motor carrier.

The Motor Transport Association of Connecticut’s Michael Riley said the legislative push is intended to ensure that independent contractors leased exclusively to one motor carrier aren’t lumped into the state’s definition of an employee.

“It lays out the circumstances in which an owner-operator could be an independent contractor in Connecticut when working for only one motor carrier,” Riley told Land Line. “It’s our highest priority bill of the year.”

An effort in Arkansas seeks to clarify independent contractor status. Motor carriers would be required to offer workers’ compensation to independent contractors. If owner-operators choose to accept the insurance coverage it would not terminate the individual’s independent contractor status.

Two bills in Illinois also cover employment status. Mid-West Truckers Association Executive Vice President Don Schaefer said that he understands the concern in the industry about efforts by lawmakers to tweak rules that could harm owner-operators.

Talking to Land Line, Schaefer said “any time anyone challenges the definition of independent contractors it is going to raise a red flag.”

In neighboring Kentucky, owner-operators are exempted from a bill halfway through the statehouse that addresses employee classification.

Jamie Fiepke with the Kentucky Motor Transport Association said it’s an issue they are monitoring.

“It will continue to pop up. It’s important to keep the owner-operator language in the bill,” he told Land Line.

Opponents say the changes sought in statehouses around the country to modify the employment status of independent contractors meddle with interstate commerce, which is a violation of federal pre-emption.

The American Trucking Associations sued the city of Los Angeles in the U.S. Court of Appeals for the 9th Circuit several years ago over portions of its clean truck program, including an expensive concession requirement that all trucks entering the port would have to comply with.

The subsequent ruling confirmed that states cannot regulate the routes, rates or services of trucks engaged in interstate commerce.

The U.S. Supreme Court is reviewing the case.

Editor’s Note: You are welcome to share your thoughts with us about this story. Comments may be sent to state_legislative_editor@ooida.com.

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