Did you know that about 77 percent of truck drivers servicing the Port of New York and New Jersey are independent contractors? This is just one aspect of the economy that could be devastated if New Jersey passes the independent contract law. This bill mirrors California’s recently passed independent contractor bill by codifying the ABC test into law.
The ABC test has three prongs:
- The worker is free from the control and direction of the hiring entity in connection with the performance of the work, both under the contract for the performance of the work and in fact.
- The worker performs work that is outside the usual course of the hiring entity’s business.
- The worker is customarily engaged in an independently established trade, occupation, or business of the same nature as the work performed.
This would extend to various small businesses across the state, but the second prong specifically would make it virtually impossible for motor carriers to use owner-operators.
This proposed legislation comes as trucking demand is growing in the state. Almost 80 percent of the containers that move through New York-New Jersey marine terminals are carried via truck, with roughly two-thirds of those shipments going to warehousing in New Jersey, and other regional markets, highlighting how wide-ranging this impact would be.
The Association of Bi-State Motor Carriers has published a petition in opposition that has over 5,000 signatures. Their arguments include:
- Minority-Owned Businesses Will Be Hardest Hit. The transportation industry has a larger share of minority workers than any other industry in NJ. This legislation will hurt minority-owned businesses (about 40 percent of the owner-operators in question are minorities).
- Jobs Will Be Lost. There are 6500 Owner Operators at the port, and trucking companies cannot afford to hire all of them as employees.
- New Jersey Will Suffer Financially. These bills will cost the state billions of dollars in federal, state, and local tax revenues when there aren’t enough drivers to move freight. Shippers will send their freight to other nearby ports (Philadelphia, Baltimore, Norfolk).
- Consumers Will Pay More. New Jersey is already one of the most expensive places to live in the country and this bill will make it worse: the cost of everything that travels by truck will increase significantly, including food, medicine, fuel, clothing, electronics, and more, hitting low-income and middle-class residents the hardest.
As with California’s similar law, it is undeniably true that there are large companies that take advantage of workers by using independent contract designations to keep wages low and avoid providing benefits. Pols are in the right to go after bad actors. But a law like this will not punish those actors it will punish small business owners, minority communities, middle-class consumers, and many more.