NJMTA Discusses NJDOL’s Misapplication of ABC Test with Governor’s Chief Council

On September 10, 2025, the leadership of the New Jersey Motor Truck Association met virtually with Governor Murphy’s Chief Counsel regarding the New Jersey Department of Labor and Workforce Development’s (“NJDOL”) improper use of the ABC Test in its State employment tax audits of motor carriers. In the meeting, NJMTA was represented by Eric DeGesaro, of EDGE Consulting, and Steven R. Rowland, Esq. of the Stevens & Lee law firm.

Under the state statute applicable to motor carriers, an exemption from the state ABC Test, if federal employment taxes aren’t owed, neither are state employment taxes. Under the narrow federal test of employment, NJDOL cannot find that motor carriers that lease trucks from owner-operators are their employers and subject to State employment taxation.

Notwithstanding the exemption, NJDOL applies the ABC Test -- which broadly defines employment -- in its audits of carriers notwithstanding that, by state statute, it is required to apply the same narrow test that IRS uses for federal employment tax purposes. By applying the broader state ABC Test instead of the narrow common law test, NJDOL can deem that relation to be employment and impose state employment taxation even though, by statute, the relationship between motor carriers and owner-operators is supposed to be exempt from such taxes.

In the meeting with the Governor’s Counsel, Mr. Rowland briefed and informed Counsel that NJDOL is failing to apply the statutorily mandated federal test in its audits, and that under the federal test, the carrier and owner-operators are in a relationship that is not subject to state employment taxes. Prior to the meeting, Mr. Rowland prepared a memo to Counsel collecting the legal authorities showing that NJDOL is, through its regulations and practices, failing to apply the proper legal test.

CLICK HERE for a copy of the memo that Mr. Rowland prepared on behalf of the NJMTA.

Mr. Rowland has represented several carriers in NJDOL audits, including the Big Daddy Drayage and Farruggio’s Express cases in both of which NJDOL’s assessments against the carriers were completely reversed. He may be reached at steven.rowland@stevenslee.com or (973) 467‑7374.