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Rather than solely relying upon either common law rules or a statutory “ABC” test to determine the employment status of independent contractors, the New Jersey Department of Labor is now requiring evidence of a Federal Unemployment Tax Act exemption through an Internal Revenue Service (IRS) determination to prove independent contractor status before the state will allow an employee exemption. Under New Jersey law, owner operators with motor vehicles weighing 18,000 pounds or more, licensed for commercial use, and used for the highway movement of motor freight are exempt from being classified as “employees.”
Typically, an employment determination by the IRS is not mandatory and is used only in the case of a random audit or if it is requested by the worker or firm involved. However, with increasing scrutiny over the misclassification of employees as independent contractors, businesses are now coming under harsher penalties as state regulatory agencies and the IRS crack down on enforcing correct classification of workers through statutes similar to New Jersey’s. Prior to this developing trend, an IRS reclassification most often only resulted when owner operators were individually audited for failure to properly pay self-employment taxes.
The New Jersey Commercial Vehicle Association is currently working with the state to try to make changes to this process. It is critical that the entire trucking community help oppose these measures that pose an enormous threat to the future of the independent contractor model in the trucking industry.
Independent contractors are an integral part of the truckload industry workforce. The independent contractor business model is often under scrutiny by federal and state legislators and regulators. TCA is committed to maintaining the independent contractor business model.
Independent Contractor Survey
TCA has contracted the University of Arkansas to survey independent contractors in the truckload industry. For more information, contact Dave Heller, CDS, TCA's director of safety and policy.
This page was last reviewed Thursday, August 30, 2012