New Jersey A1578
Status: Vetoed, September 9, 2013
The bill summarized below was vetoed by Governor Christie on September 9, 2013.
Summary
The Truck Operator Independent Contractor Act (“the Act”) creates a presumption of employment for purposes of the New Jersey Prevailing Wage Act, the unemployment compensation law, the Temporary Disability Benefits Law, the New Jersey Gross Income Tax Act, or other applicable State tax laws, the workers’ compensation law, and the New Jersey State Wage and Hour Law, for drayage truck operator and small package operator trucking services. The Act does, however, allow for independent contractor classification if an “ABC test” is passed.
Various penalties are provided for violations by an employer, or any officer, agent, superintendent, foreman, or employee of the employer who fails to properly classify an individual as an employee in violation of the Act, and the Act prohibits retaliation against any person for exercising rights protected under the Act. Finally, the Act amends the unemployment compensation law to include services performed by drayage truck operators and parcel delivery truck operators as “employment†for unemployment compensation purposes.
Definitions
For purposes of this bill:
“Employer” means a partnership, association, joint stock company, trust, corporation, or other legal business entity or successor thereof who is primarily engaged in the business of, or enters into a contract with a drayage truck operator or small package operator for trucking services.
“Drayage truck operator” means the driver of, or any person, party, or entity that controls the operation of any on-use in-road vehicle with a gross vehicle weight rating greater than 33,000 pounds operating on or transgressing through port or intermodal rail yard property for the purpose of loading, unloading, or transporting cargo, including containerized, bulk, or break-bulk goods.
“Parcel delivery truck operator” means the driver of, or any person or entity, that controls the operation of a vehicle used in the business of small package delivery, but does not an individual delivering newspapers.
Presumption of Employment
For purposes of the New Jersey Prevailing Wage Act, the unemployment compensation law, the Temporary Disability Benefits Law, the New Jersey Gross Income Tax Act, or other applicable State tax laws, the workers’ compensation law, and the New Jersey State Wage and Hour Law, services performed for a fee or other compensation paid by an employer shall be deemed to be employment unless and until it is shown to the satisfaction of the department that:
- 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.
Factors That Are Not Determinative
The failure to withhold federal or State income taxes or to pay unemployment compensation contributions or workers’ compensation premiums with respect to an individual’s wages shall not be considered in making a determination.
Penalties
An employer, or any officer, agent, superintendent, foreman, or employee of the employer who fails to properly classify an individual as an employee in accordance with this act, for purposes of New Jersey Prevailing Wage Act, the unemployment compensation law, the Temporary Disability Benefits Law, the New Jersey Gross Income Tax Act, or other applicable State tax laws, the workers’ compensation law, and the New Jersey State Wage and Hour Law and fails to pay wages, benefits, taxes, or other contributions required by any of those acts, shall:
- Be guilty of a disorderly persons offense and shall, upon conviction, be fined not less than $100 nor more than $1,000 or be imprisoned for not less than 10 nor more than 90 days, or both.
- Each week, in any day of which an employee is misclassified, and each employee so misclassified, shall constitute a separate offense.
If the failure to properly classify is done knowingly, shall:
- Be guilty of a crime of the second degree if the contract amount is for $75,000 or above;
- Be guilty of a crime of the third degree if the contract amount exceeds $2,500, but is less than $75,000; and
- Be guilty of a crime of the fourth degree if the contract amount is for $2,500 or less.
In addition, the violator shall be:
- Deemed to have caused loss to the employees in any amount by which the employees were underpaid in connection with the misclassification, and
- Subject to fines, restitution, and other pertinent provisions of the New Jersey Code of Criminal Justice.
As an alternative to or in addition to any other sanctions, when the Commissioner of Labor and Workforce Development (“commissioner”) finds that an employer has violated this act, the commissioner is authorized to assess and collect administrative penalties, up to a maximum of:
- $2,500 for a first violation; and
- $5,000 for each subsequent violation.
When determining the amount of the penalty imposed because of a violation, the commissioner shall consider factors which include:
- the history of previous violations by the employer,
- the seriousness of the violation, the good faith of the employer, and
- the size of the employer’s business.
Prosecution and Recovery
The commissioner must provide an alleged violator with notification of the violation, the amount of the penalty by certified mail, and an opportunity to request a hearing before the commissioner within 15 days following receipt of such notice. If no hearing is requested, the notice shall become a final order upon expiration of the 15-day period. Payment of the penalty is due when there is a final order.
Any penalty imposed may be recovered with costs in a summary proceeding commenced by the commissioner.
When the commissioner finds that the employer has violated provisions of this act, the commissioner may refer the matter to the Attorney General for investigation and prosecution. A complaint or indictment may be brought in Superior Court in accordance with the Rules of Court of the State of New Jersey.
In the case of a determination by the commissioner, if the person responsible denies that a failure to properly classify an employee has occurred, he shall have the right to apply to the commissioner for a hearing and the right to a decision within 48 hours of the request for a hearing. The commissioner may bring an action in Superior Court to enjoin or invalidate any contract award that the commissioner determines has failed to properly classify an employee.
No employer shall require or request that any individual enter into an agreement or sign a document which results in the misclassification of the individual as an independent contractor or otherwise does not accurately reflect the employment relationship with the employer.
An individual employed as a drayage truck operator or a parcel delivery truck operator who has not been properly classified as an employee may bring a civil action for damages against the employer or any other employer who was in contract with the employee, for failing to properly classify the employee if the employer had knowledge of the misclassification. An individual representative, including a labor organization, may bring the action on behalf of the individual or as a class action. The court may award attorney’s fees and other costs of the action in addition to damages to an individual or class of individuals who have not been properly classified as employees.
Retaliation Prohibited
It shall be unlawful for an employer or any other party to discriminate in any manner or take adverse action against any person in retaliation for exercising rights protected under this act. Rights protected under this act include, but are not limited to, the right to file a complaint or inform any person about an employer’s noncompliance with this act and the right to inform any person of his potential rights and to assist him in asserting those rights. Any person who in good faith alleges noncompliance with this act shall be afforded the rights provided by this act, notwithstanding his failure on the merits. Taking adverse action against a person within 90 days of the person’s exercise of rights protected under this act shall raise a rebuttable presumption of having done so in retaliation for the exercise of those rights.
Unemployment Compensation Law Amendment
The bill also amended the unemployment compensation law such that the term “employment” for unemployment compensation purposes includes services performed by drayage truck operators and parcel delivery truck operators.
