NJBIA testified Monday that legislation before an Assembly committee exempting certain amateur sports officials from the state's independent contractor rule points to a fundamental problem with the overreaching rule itself.
The New Jersey Department of Labor & Workforce Development (NJDOLWD) has adopted regulations intended to prevent worker misclassification but instead make it much more difficult to be an independent contractor in New Jersey.
The rule, strongly opposed by NJBIA, New Jersey's business community, New Jersey freelancers and legislators from both sides of the aisle, has been paused until Oct. 1 to give NJDOL and lawmakers time to work out any needed statutory changes.
But as there are only 16 days left until the rule takes effect and no statutory changes have been made, NJBIA has launched a grassroots campaign to urge Gov. Mikie Sherrill to delay the implementation of the rule until July 1, 2027.
Further, Senate President Nicholas Scutari (D-22) has also formally requested the Sherrill administration to pause the rule.
Dozens of New Jersey residents, including many who officiate at youth athletic games, also told the Assembly Labor Committee on Monday they strongly objected to the state's efforts to remove their status as independent contractors. The hearing on A-4735 to carve out an exemption for amateur sports officials was for discussion only, so no vote was taken on the bill.
“NJBIA respectfully urges the Legislature to shift their thinking away from one-off solutions like this bill and consider delaying the implementation of the ABC test until July 2027 to truly and permanently fix it for all independent contractors,” NJBIA Policy Analyst Jack Kelly said in written testimony.
Kelly explained that in 2019, the ABC test’s expansion was considered by the New Jersey Senate and Assembly but ultimately failed to be enacted into law.
The new ABC test adopted by the Sherrill administration – and introduced by the Murphy administration - presumes a worker is an employee, and the business must prove all three prongs of the test to establish independent contractor status.
If the business fails one prong, it fails the test – making ABC considerably more restrictive than classification standards that weigh multiple factors.
In his written testimony, Kelly explained that New Jersey must avoid the economic and financial pitfalls of California’s AB5 Rule – which the Sherrill administration’s rule now mirrors.
“While California’s ABC test was signed into law, it quickly realized that a blanket classification framework that originated in 1936 could not fit the gig economy of today,” Kelly wrote.
“Thus, California went through the painstaking process of hundreds of individual carveouts, developing alternative frameworks for certain professions, and when that was not enough, the people passed a voter-approved ballot measure to deal with the Rideshare industry. And, years later, litigation continues.”
Last year’s proposal by the Murphy administration yielded 9,500 comments in opposition to it, many by freelance workers themselves who are rightfully concerned about their ability to maintain work flexibility and their means of earning a living.
Two dozen lawmakers from both sides of the political aisle also publicly urged NJDOL to abandon the proposal.
To see Kelly's full testimony, go here.
NJBIA is urging both freelancer workers, businesses that use them and consumers who benefit from them to urge the Sherrill administration to delay the rule at njbia.org/ABCDelay.
