On Thursday, May 30, 2013, the New Jersey Senate gave final legislative approval to a controversial bill to establish a presumption that port and parcel delivery truck drivers are employees of the companies for which they make deliveries.  If the bill is signed into law, such drivers will no longer be considered independent contractors – unless and until the companies with which they contract can prove otherwise.

The New Jersey Senate passed the Bill, entitled the Truck Operator Independent Contractor Act, by a vote of 21-17. The Bill cleared the State Assembly on May 20, by a 43-30 margin, with five abstentions.

The legislation specifically targets at drayage truck operators whose vehicles weigh more than 33,000 pounds and who carry cargo or goods through ports or intermodal rails, as well as parcel delivery truck operators.  To overcome the bill’s presumption of an employer-employee relationship, companies would have to show that drivers are free “from control or direction over the performance” of their services, that the services are outside the usual course of business, and the workers are “customarily engaged in an independently established trade, occupation, profession or business.”  Notably, the bill carves out an exception for delivery truck operators delivering newspapers.

The International Brotherhood of Teamsters has backed the legislation, and similar bills throughout in the country, in hopes of unionizing drivers that will be now be classified as employees. Opponents, however, such as the New Jersey Motor Truck Association, contend that the Bill is misguided and will cause businesses to leave the state.

The Legislation, if signed into law, will carry hefty penalties for employers. A first offense is considered a misdemeanor and can result in up to a $1,000 fine and a maximum of 90 days in jail.  Each week (or part of a week) in which an employee is misclassified constitutes a separate offense.  The Commissioner of Labor is also authorized to conduct investigations and access administrative penalties up to $2,500 for a first violation and up to $5,000 for each subsequent violation.  The Legislation also provides for a private right of action, allowing the drivers themselves to bring suit if they believe they are misclassified.   Additionally, labor organizations would also be permitted to bring class actions on behalf of workers over alleged violations

The bill continues a trend among the states to pass laws targeted at independent contractors working in specific industries.

Governor Christi has not yet acted on the legislation.  He has until the Assembly returns from its adjournment to do so.  It is expected that the Assembly will return at the end of August.  Employers affected by the legislation should monitor developments and be prepared to review their independent contractor relationships to ensure compliance should the bill become law.