New York Tightens Standards for Use of Independent Contractors as Commercial Delivery Drivers
Author: Michael Cardman, XpertHR Legal Editor
UPDATE: On March 17, 2014, Gov. Andrew M. Cuomo signed technical amendments extending the effective date of the New York State Commercial Goods Transportation Industry Fair Play Act from March 11, 2014, to April 10, 2014. The amendments also establish a presumption that a driver will be an employee unless payment for services is reported on a federal Form-1099 and expand the scope of covered vehicles. 2013 Bill Text NY A.B. 8451.
January 15, 2014
New York employers will soon find it more difficult to classify commercial delivery drivers as independent contractors.
Gov. Andrew M. Cuomo on January 10 signed a new law that the New York City Teamsters called "the strongest worker misclassification legislation in the country."
Known as the New York State Commercial Goods Transportation Industry Fair Play Act, it takes effect 60 days after passage.
It will require employers contracting to transport commercial goods to treat drivers as employees rather than independent contractors unless they meet stringent new criteria. 2013 Bill Text NY S.B. 5867.
Drivers classified as independent contractors will need to satisfy either a variation of the ABC Test, which 22 states use for state unemployment insurance purposes, or an 11-factor test for determining whether they constitute a separate business entity.
If past history is any indication, New York employers can expect enforcement actions based on the new standards. The 11-factor test is similar to a test established for the construction industry in 2010. In the following year, a joint task force conducted 11 sweeps of construction sites, which resulted in the imposition of fraud penalties and the identification more than 150 misclassified workers.
Employers that violate the law face civil penalties of up to $1,500 for a first violation and up to $5,000 for a subsequent violation within a five-year period. Employers that willfully violate the law, meaning they knew or should have known their conduct was prohibited, face civil penalties (up to $2,500 per misclassified employee for the first violation and up to $5,000 per misclassified employee for subsequent violations within a five-year period) and criminal penalties (imprisonment for up to 30 days or a fine of up to $25,000 for a first violation, or imprisonment for up to 60 days or a fine of up to $50,000 for a subsequent violations).
The law also establishes posting requirements for commercial goods transportation contractors.