Your rights as an independent contractor can seem a bit murky. You may be entitled to some employment protections, but not others. This is particularly true if you drive a truck as an independent contractor. Employment protections have been at times hard to come by for drivers.
But drivers do have legal protection. A recent post on the blog highlighted a U.S. Supreme Court decision allowing arbitration in wage-and-hour disputes in transportation. In what appears to be another win for truckers, a recent appeals case in New Jersey has helped make your employment rights easier to define.
Employee vs. independent contractor
The litigation began when three truck drivers filed a class-action lawsuit against American Eagle Express (AEX), an Illinois-based trucking company. AEX classified the plaintiffs as independent contractors. However, according to the criteria outlined in New Jersey labor laws, the truck drivers should have been considered employees.
Basically, New Jersey’s “ABC” law states that if drivers:
A. Are not consistently under the direction of the company (i.e., the company isn’t telling the drivers what to wear, what route to take, or otherwise how to do their job)
B. Have duties that are outside the usual course of the business
C. Are involved in an independently-established trade
They are not considered employees.
State or federal law?
The case didn’t rest on what employment duties the truckers did or did not have, however. Instead, AEX contended that the Federal Aviation Authorization Administration Act of 1994 overrides New Jersey law. The FAAAA prohibits states from passing laws related to prices and fixed routes for motor carrier services. According to AEX, the New Jersey statute might prevent the company from hiring independent contractors. Having to classify contractors as employees would likely create considerable hardship, forcing the company to hire additional human resources personnel and provide employees with benefits that aren’t required for independent contractors.
In handing down its verdict, the US Circuit Court of Appeals for the Third Circuit concluded that New Jersey can follow its own law. The Court noted that New Jersey doesn’t bar companies from hiring independent contractors. It only distinguishes between contractors and employees. The Court also observed that when Congress enacted the FAAAA, the federal statute wasn’t supposed to be applied to wage and labor laws. The appellate court’s decision upheld an earlier ruling by the US District Court in New Jersey.
The recent verdict is a victory for workers in transportation, ensuring that they can hold companies accountable if they are being paid as independent contractors when they should be entitled to full employee benefits.