In an effort to strengthen the rules relating to independent contractors in the trucking industry, Governor Cuomo signed the New York State Commercial Goods Transportation Industry Fair Play Act (“The Act”) on January 10, 2014. This law creates a default presumption that a worker in the commercial transportation industry is an employee, and reflects the continuing trend toward tough standards in classifying workers as independent contractors.
The Fair Play Act applies to those who employ persons carrying commercial driver’s licenses, transporting goods in the state of New York. The Act also provides tests for determining worker status.
The Act includes the classic test for distinguishing between independent contractors and employers. That test emphasizes control over the worker. Any employer who has faced difficulty with categorization is likely familiar with this test. A discussion of the relevant factors as well as tips on drafting an independent contractor agreement can be found in a previous newsletter.
The novel aspect of the Act is the addition of a second test: the Separate Business Entity Test. That test includes 11 factors, and is aimed at determining whether two parties to an agreement are in fact independent organizations.
The Act designates a worker in the commercial transportation industry as an employee, unless that worker is determined to be an independent contractor or a separate business entity. A worker need not satisfy both tests. However, employers should be aware that courts will begin their analysis with a presumption that the worker in question is an employee.
This Act continues the trend of regulating those industries where there is persistent misclassification of workers. For example, in 2010 New York legislated construction industry standards for independent contractor classification. Employers should take note of the State’s continuing efforts to closely regulate the use of independent contractors.