legislative

Independent Contractors Issue Page

Independent Contractors

Chemical distributors rely on a mix of employed and contracted labor that reflects the dynamic nature of the industry. Whether it is for warehousing, sanitization, or transportation work, many companies choose to contract rather than hire labor because contracting enables companies to adjust their labor force based on demand. In the case of independent drivers, contracting enables them to maximize the amount of time they spend working and control the circumstances of their work.

Background

Independent contractors have been a cornerstone of American business for decades – long before the advent of the gig economy. Among the most prominent independent contractor roles, and one that is greatly utilized by chemical distributors is that of the independent owner-operator truck driver. The benefits of a contracted driver are twofold in that a company only pays for the one-way delivery and the driver is free to optimize his routes with differing loads to prevent empty drives and increase earnings.

In 2018, the California Supreme Court decided a case titled Dynamex Operations West v. Superior Court of Los Angeles County, which held that workers are presumptively employees and that hiring entities in the state must satisfy the “ABC Test” in order to consider a worker an independent contractor. Following this decision, the California State Legislature passed the infamous AB5, which codified the decision made in the Dynamex case. Following an outcry from members of both the business and contractor communities alike, various court decisions and legislative carveouts have exempted key contractor examples such as independent trucking.

NACD Supports:

  • Use of long-established test methods for determining a contractor relationship that reflects the widely varying applications of independent contractors;
  • Harmonization of definitions used by the various federal agencies to determine a contractor relationship; and
  • Permanent legislative definitions of a contractual relationship that are less subject to the changing political dynamics of presidential administrations.

Latest Action

The Department of Labor (DOL) Wage & Hour Division (WHD) issued a notice of proposed rulemaking (NPRM) addressing independent contractors under the Fair Labor Standards Act (FLSA) that NACD commented in support of. The NPRM proposes common law tests to clarify what it means for an employer to “suffer or permit” someone to work by evaluating the worker’s economic dependence on the employer.

NACD supports any legislation that would adopt the common law test, already in use by the IRS and other agencies, under the FLSA . On the state level, several state legislatures including those of New Jersey and New York have introduced bills similar to California’s AB5 using a modified version of the already-problematic “ABC Test.” As of now, it is unknown if the same exceptions for truckers would apply. NACD strongly opposes the implementation of these bills.

 

NACD Resources

 

For further questions about NACD’s Independent Contractors Issue Page, please contact Nicholas Breslin, Coordinator of Government Affairs at nbreslin@nacd.com.