New York State Passes Legislation to Have Commercial Delivery Drivers Classified as Employees

On January 10, 2014, Governor Andrew M. Cuomo signed into law the New York State Commercial Goods Transportation Industry Fair Play Act (the “Act“), which will take effect sixty days after passage. The purpose of the Act is to prevent misclassification of commercial goods transportation services employees. The Act will amend New York State’s labor law and the workers’ compensation law in relation to the definition of an employee.

The Act contains different provisions and it: (1) defines presumption of employment in the commercial goods transportation industry; (2) outlines commercial goods transportation contractors’ obligation to correctly classify employees and to inform subcontractors, of their obligations regarding employee classification; (3) defines penalties for contractors and sub-contractors who violate and willfully violate the provisions of the law; and (6) protects against-employer retaliation.

Misclassification of employees in commercial goods transportation services is not a new issue and has always been a challenge for employees. The New York State Senate justified its incentive for legislating on the issue of misclassified employees in the transportation services by citing a study conducted by Cornell University’s School of Industrial and Labor Relations, which “found that in New York State between 2002 and 2005, nearly 40,000 employers misclassified more than 700,000 workers – more than 100 of the state’s private sector workforce.” The study also found that misclassification of employees as independent contractors is much higher in the trucking industry than any other industry. However, unlike real independent contractors, these workers are subject to stringent behavioral controls and are financially dependent on the company. The misclassification of these employees as independent contractors deprives them from many social benefits such as healthcare, workers’ compensation, unemployment benefits, minimum wage protections rights to join a union, and the right to a safe and healthful workplace. Another problems for misclassified truck drivers is that they are often required to use their own vehicles and there is an increased pressure for them to have environment friendly trucks. However, those trucks are more expensive and if they were not misclassified as independent contractors, it would be their employer’s duty to purchase new trucks fort heir drivers.

Employers who violate the Act will face “civil penalty of up to one thousand five hundred ($1,500) dollars for a first violation, and up to five thousand dollars ($5,000) for a subsequent violation within a five year period.” Besides, employers who willfully violate the law are subject to a higher civil penalty “of up to twenty-five hundred dollars ($2,500) for the first violation per misclassified employee and to a civil penalty of up to five thousand dollars ($5,000) for each subsequent violation per misclassified employee within a five year period.” In addition to civil penalties, employers may also face criminal penalties: an employer who willfully violates the provisions of the Act this article may misdemeanor charge and upon conviction may be punished for a first offense by imprisonment for not more than thirty days or a fine not to exceed twenty-five thousand dollars ($25,000) and for a subsequent offense by imprisonment for not more than sixty days or a fine not to exceed fifty thousand dollars ($50,000).

If you are a worker and you believe you have been misclassified as an independent contractor, please contact the Harman Firm, LLP.