New Jersey Joins California in Targeting Owner-Operators

New Jersey Joins California in Targeting Owner-Operators

In recent months, news out of California has focused on new legislation around worker classification and how it’s poised to affect independent contractors, including owner-operators in the trucking industry — an industry that fuels the state’s economy.

Truck drivers and trucking companies are scrambling to propose an alternative solution to the new AB 5 bill, which will re-classify truck drivers as full-time employees instead of contactors, upending the way the industry has handled everything from benefits to hours worked to commercial truck insurance.

Now, one state on the other end of the country is following suit, adding to the battleground for motor carriers that use owner-operators.

Jersey Drivers

The state Senate of New Jersey, a state that sees plenty of freight of its own move along its highways and byways, will take up legislation aimed at limiting what workers can be considered contractors. The Senate’s labor committee recently debated a new bill introduced by Sen. Stephen Sweeney that would make employers use the ABC test to determine whether a driver should be classified as an employee or contractor, just like in California.

The bill takes after California AB 5, a new law that will take effect on January 1, 2020. In New Jersey, the legislation has the potential to raise trucking costs and comes at a time when the demand in the state for trucking operations is growing. Nearly four out of every five containers that moves through the Tri-State area are hauled via truck and two-thirds of them are warehoused in New Jersey.

Limits on independent contractors will add pressure to New Jersey’s minority workers, with two out of every five drivers coming from that demographic, compared to 30 percent across all industries. A move like this is causing many drivers to think about their next career step, like in California where 70,000 independent contractors are doing the same thing.

Cracking Down on Trucking Companies

Apart from the potential new legislation in New Jersey, trucking in the state is possibly facing yet another new piece of legislation that could hurt employers when it comes to wage disputes and the additional costs of providing benefits plans for independent contractors.

What’s more, New Jersey recently enacted a law similar to California that will increase the risk for employee misclassification, holding shippers liable for wage disputes between drivers and motor carriers. However, in New Jersey, the penalties are heavier as employers found liable for not paying wages due to misclassification could face up to a 200-percent increase in damages and other costs.

About Western Truck Insurance Services

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