Collision with the DOL A national trucking company operating in NJ had to deliver more than $1 million to the NJ Dept.of Labor after allegedly misclassifying employee drivers as independent contractors for more than a decade.
The Package Deal Eagle Intermodal Inc. agreed to pay $1.25 million in back unemployment and disability contributions, and pledged to come into compliance with the law, the NJ DOL announced on September 12, 2019.
The Dispute began in 2006 when an audit flagged the alleged misclassification, which meant the company had not paid employer payroll contributions, including NJ Unemployment and Temporary Disability Insurance. A special exemption does exist for services performed by certain operators of large trucks. The DOL concluded that Eagle’s operations didn’t qualify for it; and that the company also failed to establish that the drivers were independent contractors, rather than employees, per NJ’s ABC Test:
- The worker’s performance is not under the control or direction of the firm, and
- The services performed are outside of the usual course of the business, and
- The worker is customarily engaged in an independently established trade, occupation, profession or business.
Gov. Phil Murphy has declared a crackdown on employee misclassification, with the NJDOL required to audit 1% of active NJ businesses. Murphy’s Task Force on Employee Misclassification says these audits have uncovered “tens of millions of dollars in employee-related taxes not paid to the state.” The task force report identified trucking, transportation, delivery services, construction, janitorial services, home care, and other labor-intensive, low-wage sectors as “industries where misclassification is widespread.”
The Safer Road Firms who want to avoid fines and penalties should consult with their legal and accounting advisors. Companies should consider issues like employee classification and overtime, and work with their advisors to keep up with the latest developments in state and federal wage and hour regulations. At Urbach & Avraham we work with many qualified employment attorneys who handle these issues. We also represent many companies at US and NJ DOL audits.