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Update on Independent Contractor Issue

We are anticipating that the classification of independent contractors is going to be a major issue in New York next year. This is because the issue is being looked at very closely due to the rise of the gig economy. The gig economy has three main components – an independent worker, paid per gig (ride, job, task or project); a consumer who needs a specific service; and a company that connects the worker and the consumer. The classic examples of a gig economy company are Uber, AirBNB or Etsy. Unlike the traditional work model, the worker is only temporarily employed and is paid only for the specific job, they do not receive salary, wages or benefits.

The rise of the gig economy has led to increased scrutiny of this employment model and questions as to whether the workers are really independent contractors or if they are in fact employees of the company connecting the worker to the consumer. Many states have started to examine this model and consider changes. California was the first State in the nation to pass new, restrictive laws in this area, and New York’s governor has already announced that New York will look at this issue next year.

The California law is already being reviewed because the broad nature of the bill passed there encompassed many workers that had been independent contractors under the traditional model and were not part of the gig economy. Under the new law in California, a worker would only be considered an independent contractor if the work they do is outside the usual course of a company’s business. This standard has already triggered a lot of questions and uncertainty as most independent contractors are not going to be doing work outside the usual course of a company’s business.

The gig economy companies do not want the worker status changed from the independent contractor model to the employee model. These companies don’t want employees because that would trigger federal and state tax withholding, anti-discrimination provisions, health care and pension benefits, worker’s compensation and unemployment insurance obligations.

New York has several bills on this issue. This fall, the legislature held a hearing to hear from stakeholders and gather information on this topic. It seems that the New York legislature is focused on the independent contractor issues as they relates to the gig economy companies. There does not seem to be a broader focus or push to change the standards for independent contractors in the more traditional business world.

However, this could change as the conversation continues. We are monitoring this situation very closely and will be reviewing all legislation as it proposed. We will be continuing conversations to express our concerns to the independent contractor rules that would impact the moving industry and working with other stakeholders who share our concerns.