What A Trucking Nightmare
New Jersey's proposed independent-contractor rule poses a real threat to operations at the Port of NY&NJ. A Q&A with Lisa Yakomin.
There was a ton of testimony in support of independent contractors at this week’s public hearing about the New Jersey Department of Labor’s proposed freelance-busting rule. Some of the most compelling arguments against the state’s proposal came from people associated with the Port of NY&NJ, which is the largest container port on the East Coast and the third largest in the nation.
So much important stuff comes in and out of that port, it’s mind-bending:
And independent contractors move a lot of that stuff. Lisa Yakomin, president of the Association of Bi-State Motor Carriers, testified that up to 77% of the driver workforce moving freight through the port is self-employed owner-operators.
“Regulations like these that eliminate independent contractors would spell disaster for our port,” she testified.
And she would know. The Bi-State is a nonprofit membership group of close to 200 member firms from trucking and trucking-industry related companies doing business at the port. Its members represent a majority share of port and container traffic—which means they have insights deeper than just about anybody else into how all the important stuff actually gets moved around.
I have known Yakomin since 2019, when the State of New Jersey tried this kind of freelance busting via legislation. She and I were part of a loose coalition that helped to kill that bill, just as we are working together as part of a loose coalition that’s now fighting to stop the proposed Labor Department rule.
Don’t let her lovely smile fool you. Lisa is smart, she’s tough, and she knows how to fight to win.
Her testimony on Monday was particularly detailed, about precisely why this kind of freelance busting is so detrimental not only to port operations, but also to the regional supply chain and statewide economy. She didn’t urge the Department of Labor to tweak its proposed rule; she urged the state to full-on rescind it.
Here’s why, as she explained it to me in this conversation based on the testimony she gave Monday in Trenton.
Q&A with Lisa Yakomin
Your opposition to what New Jersey’s Department of Labor is attempting to do could not have been clearer. Why do you feel so strongly that the state’s proposed independent-contractor rule should be rescinded?
There’s so much wrong with it, it’s hard to know where to start. Several aspects of the proposal are unreasonable and even dangerous, especially the determination that expecting a worker to comply with any law indicates an employer-employee relationship. Merely expecting someone to be a law-abiding citizen isn’t control—it’s common sense.
The rules center on an archaic ABC classification test that has been proven to eliminate jobs, and they lack clarity, allowing an unlimited number of unspecified factors to determine employee status, making it impossible for anyone to navigate the labyrinth of subjectivity created by these rules.
We all agree that misclassification is wrong, and workers deserve to be protected, but unfortunately, this proposal is not the way to do it. The motor carriers I speak with are fully committed to being in compliance, but patchwork proposals that are cobbled together without any regard for the people who’ll be most impacted by them only create more uncertainty.
What’s amazing about that explanation is that it combines what I have heard in testimony before Congress, for years now, about two different approaches to freelance busting.
First is the California version of the ABC Test and all the jobs and income it killed after it went into effect. Second is the Biden administration’s U.S. Department of Labor rule, which a former head of the U.S. Wage and Hour Division testified wasn’t really a rule at all because it could be used to apply any criteria for determining independent-contractor status, including a Ouija board.
Now, I’m not a lawyer—and my lawyer tells me I have to say that, because I am a plaintiff in a federal lawsuit over that U.S. Labor Department rule—but based on your testimony Monday, and on the testimony and online breakdowns from attorneys, it seems as if the State of New Jersey is trying to combine all the worst elements of California’s ABC Test and the Biden independent-contractor rule.
Wouldn’t that be a toxic combination for owner-operator truckers at the port?
This proposal would cripple our trucking capacity at the port, resulting in major supply chain disruptions.
In a recent survey, New Jersey motor carriers reported that their owner-operator drivers would rather relocate or leave the industry altogether than give up the autonomy they enjoy from being self-employed. Companies that lease with them cannot absorb the cost of purchasing their trucks, even if they were willing to become company drivers. Motor carriers also said that they rarely find an owner-operator who is willing to transition to an employee.
To be clear, truck drivers can be employees if that’s what they choose, and there are plenty of opportunities out there for those who prefer that route. Some motor carrier companies at the port operate exclusively with full-time employee drivers, others work mostly with owner-operators, but the vast majority work with both.
That all lines up with what study after study shows, including U.S. Bureau of Labor Statistics data that routinely says 80% of independent contractors prefer self-employment. Yet another study just came out about a month ago, from Independent Women’s Forum. It found that 82% of women say government should not force them into 9-to-5 jobs.
But in the case of the truckers, eliminating all those owner-operators would affect a lot more than just them. It would also affect all the important stuff they move—stuff that would stop moving to the store shelves all around the region where everybody shops, every day.
That’s right. If approved, these rules will impede the delivery of popular consumer goods like electronics, cars, clothing, coffee, wine and spirits, and furniture.
But that’s not the worst of it. Slashing our driver workforce to a mere fraction of what it is now will slow the transport of perishable foods to the point of spoilage, and there will be shortages of critical, life-saving supplies and essential components sourced from overseas.
Not a good plan. What kind of things are you talking about that come into the port from overseas?
What most people don’t realize is that it’s not just finished products that get imported. Even things that are manufactured and labeled “Made in the USA” rely upon ingredients and components sourced from other countries.
For example: The active ingredients for over 90% of the generic medications sold in the United States come from India and China. We also import ingredients essential for manufacturing antibiotics, chemotherapy drugs, penicillin, blood pressure meds and anti-depressants for treating mental illness.
We transport personal protective equipment, needles and syringes, surgical instruments, and the diagnostic machines used in hospitals and doctor’s offices.
Many of the grains needed to produce gluten-free products for those with food-reactive allergies come from other countries.
And then there’s the packaging for U.S.-made goods, like infant formula, over-the-counter medication, personal care products, and thousands of other items we take for granted.
That list alone would hurt a ton of businesses and consumers.
And just based on the general rules of economics, having far fewer drivers would mean costs to move stuff would go up, right? And that cost would get passed on to consumers?
This would be a gut punch to consumers. Prices for everything will increase—crushing residents who are already crying out for relief from New Jersey’s high cost of living, soaring property taxes, and skyrocketing utility and insurance rates.
I really liked what you said at the end of your testimony, about how the state should be listening to independent contractors who overwhelmingly oppose this proposal. I also liked how you said the state should emulate the Modern Worker Empowerment Act, which I just testified in support of before Congress last month.
It’s insane to me that after we beat this kind of proposal back in New Jersey a half dozen years ago, and now that Congress is finally working to pass that federal bill specifically to prevent California-style freelance busting from spreading nationwide, the State of New Jersey is trying to go in the exact opposite direction, in a way that would inflict even worse pain on independent contractors and the economy here.
A lot of people who testified against this proposal on Monday felt that way.
Eric DeGesero, spokesperson for the New Jersey Motor Truck Association, nailed it when he said: “With the threat of harsh penalties, including criminal liability for misclassification, many trucking companies are hesitant to engage independent contractors altogether—a chilling effect that could reverberate across the entire supply chain. And anything that makes the distribution of goods less efficient ultimately costs the consumer."
I also liked the way John Holub of the New Jersey Retail Merchants Association put it: “We've already seen what kind of impact this will have on businesses. I just don’t understand why New Jersey, the Department of Labor, is determined to go down that road when it has been a profound failure in California.”