A pair of new bills was introduced in Trenton this week to either wholly or partially thwart a controversial Department of Labor proposal that drastically reduces the number of independent contractors in the state.
SJR-138 (O’Scanlon/Scharfenberger/Flynn, R-13) declares that NJDOL’s proposal is inconsistent with legislative intent, while bill S-4839 (Johnson, D-37) exempts certain licensed or regulated professionals in the finance, insurance and trucking industries from the rule.
“While we would prefer to see the entire rule thrown out or nullified based on it being legally flawed, economically unsound, procedurally deficient, and socially regressive, we are glad to see this continued commitment from lawmakers on both sides of the aisle to stop in its tracks,” said NJBIA Chief Government Affairs Officer Christopher Emigholz.
“With 99% of more than 9,300 comments opposing this rule, we continue to respectfully ask NJDOL and Gov. Phil Murphy do the right thing and pull the proposal altogether for the sake of freelance workers and New Jersey businesses.”
Under New Jersey state law, businesses must use an “ABC test” to determine a gig worker versus an employee.
That means independent contractors are required to:
- Be free from control and direction by the business
- Do work outside of a firm’s “usual course of business” and “places of business."
- Be engaged in an independent and established “trade, occupation, profession or business.”
NJDOL is directly following a similar proposal that was passed into law in California in 2019.
Since then, the California law has been rolled back through numerous exemptions and lawsuits that continue today. It also has resulted in fewer employees and gig workers in the Golden State.
“The failed process of exempting everyone who should legally be exempted proved to be laborious and costly in California, and we shouldn’t try it here,” Emigholz said.
“As we have stated since May, NJDOL’s proposal is not merely a codification of current ABC rules – it’s a complete overhaul of the regulations that will drastically reduce the flexibility and economy of independent contractors and greatly add to the costs and efficiencies of New Jersey businesses,” Emigholz said.
In an interview in the October issue of New Jersey Business Magazine, Governor-elect Mikie Sherrill did not appear to embrace the NJDOL proposal.
“Businesses are worried that they are going to go under because of this,” Sherrill said. “I've heard from truckers who are saying, ‘I'm afraid I'm going to lose my job.’
“That's not what we want to see under this proposal. I'm going to review this when I get into office and have both businesses and workers at the table as we make sure regulations can help grow business and keep people employed.”
District 13 legislators said in August they would present a resolution stating that the NJDOL proposal is not consistent with legislative intent.
If passed by the Legislature, it would not require the governor’s signature. Many Democrats have already opposed the proposed rule.
“These proposed rules by the DOL directly contradict the Legislature’s intent and would wreak havoc on independent contractors who rely on flexibility and autonomy to make a living,” O’Scanlon said at the time.
“That’s why I’ll be introducing legislation to declare these rules inconsistent with legislative intent and stop them before they do serious harm. It is imperative that both chambers act swiftly and decisively to reject this rule before it takes effect. The livelihoods of countless New Jerseyans are on the line.”
