National trucking company Eagle Intermodal Inc. settled its 13-year-old case with the New Jersey Department of Labor and Workforce Development Tuesday, agreeing to drop its federal lawsuit against the Department and agreeing to pay $1.25 million in back unemployment and disability contributions after misclassifying drivers for more than a decade.
A 2006 audit revealed Chicago-based Eagle Intermodal was misclassifying drivers, and therefore not contributing on their behalf to New Jersey’s Unemployment Insurance and Temporary Disability Insurance funds.
“Too many employers misclassify their workers as independent contractors when, in fact, they are employees legally entitled to Unemployment and Family Leave Insurance, earned sick days, and minimum wage, overtime and equal pay protections, among other New Jersey benefits,” Labor Commissioner Robert Asaro-Angelo said in a statement. “Unless employers can meet our strict criteria for exemption, commonly referred to as the ‘ABC test,’ workers in every industry are presumed employees – not independent contractors – under New Jersey law.”
The ABC test requires that workers meet the following criteria to be classified as independent contractors: (A) Such individual has been and will continue to be free from control or direction over the performance of such service, both under his contract of service and in fact; (B) Such service is either outside the usual course of the business for which such service is performed, or that such service is performed outside of all the places of business of the enterprise for which such service is performed; and (C) Such individual is customarily engaged in an independently established trade, occupation, profession or business.
The NJDOL concluded that Eagle had failed to meet the requirements that establish drivers as independent contractors.
Eagle agreed to pay its contested contribution liability throughout the next year, with the first payment due in 30 days. Additionally, it agreed to future NJDOL audits.
Every year, the NJDOL audits one percent of all active businesses. According to Gov. Murphy’s Task Force on Employee Misclassification established by Executive Order No. 25 last year, these audits have uncovered millions of dollars in taxes owed to New Jersey.
Trucking, transportation, delivery services, construction, janitorial services, home care, and other labor-intensive, low-wage sectors were identified by the task force as industries with widespread misclassification.