PA 17-181—sHB 6907

Labor and Public Employees Committee


SUMMARY: This act exempts certain professional drivers from coverage under the stateʼs unemployment law. As exempted workers, these drivers do not accrue unemployment benefits for their service, and businesses using them are not required to pay unemployment taxes or meet the unemployment lawʼs requirements, other than its recordkeeping requirements, for their service. The act specifies that it does not affect any state income tax requirements.

The exemption applies to drivers under a contract with another party if the driver:

1. drives a vehicle that (a) can transport at least eight passengers, including the driver, and (b) has a gross vehicle weight rating over 6,000 pounds;

2. owns the vehicle or holds it under a “commercially reasonable” bona fide lease that is not with the contracting party or a related entity;

3. is paid based on factors that can include mileage-based rates, a percentage of any rate schedules, time spent driving, or a flat fee;

4. can refuse to work without consequence and can accept work from many contractors without consequence; and

5. is not considered an employee under the unemployment lawʼs “ABC” test (see BACKGROUND).

When determining if a driver meets the ABC test, the act prohibits the labor commissioner from considering a driver an employee solely because the driver chooses to perform services only for the contracting party.

Under the act, commercially reasonable means the lease, loan, or loan guarantee for the driverʼs vehicle has terms equal to those typically available for a retail trucking equipment lease or purchase in the state.

EFFECTIVE DATE: October 1, 2017


ABC Test

The stateʼs unemployment law presumes a worker to be an employerʼs employee unless the worker meets the ABC testʼs three requirements. The worker must be free from the employerʼs control and direction (part A); perform a service outside the employerʼs usual course of business or outside of all the employerʼs places of business (part B); and be customarily engaged in an independently established trade, occupation, profession, or business of the same nature as the service being performed for the employer (part C). Workers who satisfy all three provisions of the ABC test are generally considered independent contractors exempt from the stateʼs unemployment law.