Knowing whether you are an independent contractor or an employee in New Jersey is an important distinction, and one that can have a large effect on the benefits to which you are entitled. Here is a look at why it matters significantly whether you are driving as a contractor or as an employee in New Jersey:
Your Employer Does Not Have to Offer You Benefits If You Are an Independent Contractor
If you are classified as an independent contractor, then the company for which you work has no legal obligation to offer you benefits, such as a 401(k) or health insurance. On the other hand, employees usually do have a right to these benefit types.
You Are Not Entitled to Overtime Pay or Minimum Wage
Another major difference between independent contractors and employees is that the latter is entitled to overtime pay per the Fair Labor Standards Act, whereas the former is not. Additionally, employees are also entitled to at least the minimum wage. Independent contractors do not have be paid overtime or the minimum wage, which can be financially disastrous for these worker types. Independent contractors are also not entitled to paid time off.
Your Employer Will Not Pay Your Payroll Taxes
There is a big difference between the way that taxes must be paid by employees vs. independent contractors. When a person is classified as an employee, his or her employer is responsible for paying a percentage of his or her Social Security and Medicare taxes by withholding the taxes from the individual’s pay. For independent contractors, on the other hand, Social Security and Medicare must be paid by the individual in full, as well as income taxes that were not withheld. An employer may wrongfully classify an employee as an independent contractor in order to soften the employer’s tax burden.
Contact an Independent Contractor Attorney in New Jersey
If you are really an employee who has been wrongfully classified as an independent contractor, you need to remedy the mistake as soon as possible. At The Sattiraju & Tharney, LLP our New Jersey independent contractor attorneys can represent you during the process. Call us today or request a free case consultation online.
FAQs About Why Does It Matter If I Am Driving as a Contractor or as an Employee
If I drive a delivery truck and my company calls me an independent contractor, can they force me to pay for my own fuel and tolls?
No, not if you are actually an employee under the law. Transportation companies frequently label drivers as “independent contractors” or “owner-operators” as a trick to force them to pay for business expenses out of their own pockets. In New Jersey, if the company fails the state’s strict classification test, you are legally an employee. This means the company cannot legally deduct the cost of gas, tolls, truck leases, uniforms, or insurance from your paycheck.
Can my shipping company deny me overtime pay just because I drive a regular route across state lines?
Absolutely not. Driving long, grueling hours across state lines does not strip you of your wage rights. In fact, under New Jersey law, if you are misclassified as a contractor but act as an employee, you are legally entitled to time-and-a-half overtime pay for every hour worked over 40 in a week. Furthermore, the U.S. Supreme Court has clarified that transportation drivers are exempt from forced arbitration clauses, meaning you can take your wage theft claims straight to a public court.
I set up my own LLC to contract with a delivery company, so does that mean I’m definitely an independent contractor?
No. New Jersey courts look entirely at the daily reality of your work, not the paperwork. Even if the delivery company forced you to form your own LLC or corporation before giving you routes, the state will still apply the “ABC Test.” If the company controls your schedule, tracks your route, dictates your uniform, or if your driving is essential to their core business, they cannot use your LLC status as a loophole to deny you employee benefits and legal protections.