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N.Y. Commercial Goods Transportation Act Effective April 10

Mar 18, 2014

 

SCOPELITIS, GARVIN, LIGHT, HANSON & FEARY

New York State Commercial Goods Transportation Act Effective April 10

On March 17, New York Governor Andrew Cuomo signed amendments to the New York State Commercial Goods Transportation Act (the "Act"). Primarily, the changes move the effective date of the Act from March 11 to April 10. The effective date of the legislation has been retroactively amended to reflect the April 10 date, therefore eliminating any potential confusion regarding the status of operations between March 10 and March 17, during which period the prior version of the Act was technically in effect. Additionally, the amendments clarify that the Act applies to owner-operators operating commercial motor vehicles (defined to be over 10,000 lbs under New York Transportation law) regardless of whether the owner-operator possesses a commercial driver’s license.

The original Scopelitis Transportation Alert was sent on January 13, 2014:

New York State Commercial Goods Transportation Industry Fair Play Act Signed by New York Governor Andrew Cuomo

On Friday, January 10, 2014, New York Governor Andrew Cuomo enacted the New York State Commercial Goods Transportation industry Fair Play Act. The Act, enacted as the result of a compromise of various industry representatives and political stakeholders, seeks to clarify the independent contractor status of owner-operators operating commercial motor vehicles (which are vehicles in excess of 10,000 lbs under New York Transportation Law) (a "Commercial Goods Transportation Contractor" or "CGTC").

Independent contractor status under this new statute requires a separate business entity (such as a corporation, partnership, LLC, or even a sole proprietorship) and also requires compliance with all factors of an 11-factor test. Of particular note, the test requires a party to prove the CGTC’s business entity (1) is not subject to cancellation or destruction upon severance of the relationship with the motor carrier; (2) owns or leases the capital goods and gains the profit or bears the loss; (3) has the option to make its services available to the general public or the business community on a continuing basis; (4) has a written contract with the motor carrier, under the CGTC's name, specifying the relationship to be that of an independent contractor; (5) pays for any necessary licenses or permits in the business entity's name, or pays for the reasonable use of the license or permit where permitted by law; and (6) hires and pays its employees.

Absent proof under the 11-factor test, a party seeking to establish independent contractor status would need to show that the CGTC is (A) free from control and direction in performing its services; (B) the service is performed outside the usual course of business for which the service is performed; and (C) the CGTC is customarily engaged in an independently established trade, occupation, profession, or business that is similar to the service at issue. This alternate test is often referred to as the ABC Test. The Act also requires motor carriers to post a Know Your Rights Notice (which will be published by the Labor Commissioner) where it is prominent and accessible to CGTCs. The Act is effective on Tuesday, March 11, 2014, and will apply to all employment determinations under labor and workers’ compensation laws as of that date.

An owner-operator of a commercial motor vehicle that does not meet the 11-factor or ABC Test will be considered an employee for purposes of New York's labor, workers compensation and unemployment insurance laws and will subject a motor carrier utilizing such drivers to civil and criminal fines and penalties under the Act. Motor carriers with New York operations should review their operations and agreements with owner-operators of commercial motor vehicles to ensure these operations and documentation comply with the new requirements contained within the Act.

If you have any questions, need additional information, or would like assistance addressing this issues, please contact Greg Feary at gfeary@scopelitis.com or Shannon Cohen scohen@scopelitis.com or by calling (317) 637-1777.