On June 24, 2013, Connecticut Governor Dan Malloy signed into law the “Act Concerning Certain Motor Vehicles and Eligibility for Unemployment Benefits” after lawmakers unanimously approved the measure. The law, which takes effect on October 1, will make it easier for independent truck operators in the state to be deemed independent contractors for purposes of Connecticut’s unemployment insurance law. Such a determination will exempt such workers from the state law’s requirements.
The state utilizes an “ABC Test” to determine employment classification for purposes of unemployment insurance coverage. The test presumes that workers are employees unless they meet three requirements: 1) are free from the employer’s control and direction; 2) perform a service outside the employer’s usual course of business or outside of all the employer’s places of businesses; and 3) are customarily engaged in an independently established trade, occupation, profession, or business or the same nature as the service being performed for the employer. Under this test, if truckers (or any other worker) provided services for only one employer they could be deemed to be employees.
The new law changes the analysis for truck drivers. Truck drivers will still have to meet all three requirements of standard “ABC Test” to qualify for the exemption; however, provided they meet certain conditions, they will not be found to be employees “of the contracting party solely because such operator chooses to perform services only for such contracting party.” The other conditions that must be met in order for this provision to apply are:
- The owner-operator operates a vehicle that has a gross weight of over 10,000 pounds;
- The owner-operator owns the vehicle or leases it from an entity other than the contracting party (or any related entity);
- The owner-operator is paid based on factors that include mileage-based rates, a percentage of any rate schedules, or flat fee; and
- The driver is free to reject work without consequence and has a non-exclusive relationship with the contracting party.
This Connecticut law represents a rare instance where a state has made it easier for a subset of workers to be deemed to be independent contractors. States across the country have recently passed laws aiming to make it harder to classify workers as independent contractors. For example, in recent weeks New Jersey passed a law making it more difficult for certain truck drivers to be classified as independent contractors. It has yet to be acted upon by Governor Christie.
It will be interesting to see if Connecticut’s law represents a new trend, or is an isolated event.