Wednesday, April 18, 2012

N.J. Truck Owner- Operators Now Required to Prove Employment Status

According to the New Jersey Motor Truck Association, the NJ Department of Labor now requires truck owner operators to prove that the IRS has classified them as independent contractors (by getting an IRS Determination) in order to use the state "employee" exemption.  The trucking community was unaware of this new policy, which has led to owner operators being reclassified by the Department of Labor as employees for unemployment tax purposes.

The NJMTA is working to get the new procedure changed, but until they are successful, recommends owner operators respond to the IRS's 20 factor test to determine if an employer-employee relationship exists, and keep their answers as part of their files.  Owner operators are not required to send their answers to the IRS, but should have them available in case of an audit.

The IRS 20 factor test can be found here.

More detailed information from the IRS on employee/ contractor status can be found here.

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