The New Jersey Motor Truck Association and the Association of Bi-State Motor Carriers urged Gov. Mikie Sherrill and the Legislature on May 14 to immediately reinstate the multi-factor economic realities test, also known as the IRS test, to determine whether workers are classified as freelance contractors or employees.
The groups said that bringing back this test would provide clearer criteria for compliance by businesses and support New Jersey’s 1.7 million self-employed independent contractors. They argue that a more precise standard is needed after recent changes increased uncertainty about worker classification rules.
Before 2018, both the ABC test and the multifactor economic realities test were used in New Jersey to decide employee status. Shortly after taking office, former Gov. Phil Murphy directed state labor officials to eliminate use of the IRS test in favor of only using the stricter ABC test for wage determinations. Last May, Murphy instructed regulators to introduce a new rule codifying an even more challenging interpretation of the ABC standard without legislative input or regard for public opposition.
Despite what they describe as “99% public opposition” and bipartisan concerns from lawmakers, trucking organizations say that Gov. Sherrill adopted this policy last week. “The cloud of uncertainty for businesses seeking to comply with classification laws has only gotten worse,” said Lisa Yakomin, president of the Association of Bi-State Motor Carriers.
Yakomin continued: “We must work quickly to ensure this new rule does not harm New Jersey’s 1.7 million independent contractors, and the most efficient way to accomplish that is to reinstate the multi-factor economic realities test.” Chris Lutick, executive director of the New Jersey Motor Truck Association, said: “New Jersey is one of the busiest and most vital transportation hubs in the U.S… And truck drivers play an indispensable role in keeping essential goods moving throughout the region… Owner-operator drivers are independent contractors by choice, and their autonomy is at risk under this new rule.” In written testimony earlier this week before a Senate committee, Jack Kelly from NJBIA also recommended returning to use of this federal standard.
Of particular concern among these groups is how supply chains across New Jersey could be affected if no action is taken on worker classification rules. The organizations involved include some represented by the New Jersey Business and Industry Association, which serves as one of nation’s largest statewide employer associations facilitating partnerships among businesses while offering advocacy services.
