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Transportation Brief: Dynamex Weeds are Growing in the Garden State

by Kelli M. Block, Gregory M. Feary

August 8, 2019

Dynamex Weeds are Growing in the Garden State

Last year, the California Supreme Court expressed its belief that California public policy favors the classification of most workers as employees when it deemed the so-called ABC Test applicable to employment status determinations under various California laws in Dynamex Operations West, Inc. v. Superior Court. Because the “B” prong of the ABC Test considers whether the alleged employee performs work that is outside the normal course of the hiring entity’s business, and owner-operators’ normal course of business is often summarily (and erroneously) perceived as within the normal course of a motor carrier’s business, the Dynamex decision hit the trucking industry particularly hard. 

As an outgrowth of Dynamex, transportation companies that rely on independent contractors for capacity have modified their operations to reduce the likelihood of worker classification claims and bolster their defense in the event such claims take root in California and elsewhere.  In whack-a-mole-like fashion, supposed public policy concerns akin to those expressed by the Dynamex court have recently popped-up in New Jersey (another ABC Test state), thereby increasing the Garden State’s allure to adversaries as fertile ground for a misclassification battlefront. 

In July 2019, the New Jersey Department of Labor and Workforce Development released the Report of Governor Phil Murphy’s Task Force on Employee Misclassification. The Report specifically enunciates the “prevalence” of worker misclassification in the transportation and delivery service industry. It further encourages New Jersey lawmakers to adopt legislation modeled after California Labor Code provisions targeting misclassification in the transportation industry. Just days after the Report was published, a New Jersey appellate court issued a decision deeming owner-operators to be employees for purposes of New Jersey’s wage deduction law in Morales v. V.M. Trucking, LLC.

Transportation companies that utilize independent contractors in New Jersey continue to scrutinize their independent contractor model and implement operational changes to clarify their status as non-employers of owner-operators.  Implementing a modified compensation structure, doing business with small motor carriers, or adopting a gig economy platform are a few options being explored to address what may appear to be a dynamic political shift in the law.   

 

Scopelitis’ Transportation Brief® is intended as a report to our clients and friends on developments affecting the transportation industry. The published material does not constitute an exhaustive legal study and should not be regarded or relied upon as individual legal advice or opinion.


 

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