NJBIA is urging the Sherrill administration to not adopt a controversial rule proposal that would make it much more difficult to be an independent contractor in New Jersey, as the deadline to act on it expires next week.
“We are grateful to the Sherrill administration for allowing the recently expired 90-day freeze on the proposal and adoption of new state agency rules, which has thankfully kept this misguided proposal at bay,” said NJBIA President and CEO Michele Siekerka.
“With the May 5th deadline on the independent contractor rule fast approaching, we urge the governor to not act on this flawed policy from the previous administration and understand the full scope of damage it will do to thousands of gig workers and employers in New Jersey if adopted.
“As always, we would welcome the opportunity to work with the Sherrill administration on any and all future labor regulatory considerations,” Siekerka added.
While the Murphy administration had previously claimed that the proposal would only “codify the NJDOL’s interpretation of the ABC test for independent contractor status under law,” NJBIA, multiple business groups, multiple legislators from both sides of the political aisle and freelance worker advocates en masse have all insisted that it is something much more than that.
“It is literally 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, all while there are continued employment challenges in the state,” said NJBIA Policy Analyst Jack Kelly.
Over the past year, the overwhelming opposition to NJDOL’s independent contractor rule proposal has included:
- More than 9,500 public comments filed, with more than 99% of them in opposition to the rule
- 24 legislators from both sides of the aisle writing NJDOL to oppose the proposal
- Legislation proposed by Sen. Declan O’Scanlon, Asm. Gerry Scharfenberger, and Asw. Vicky Flynn (R-13) that would eventually declare the rule inconsistent with legislative intent should it be adopted.
Further, in data highlighted in Extremism and Entrepreneurism, a 98-page report from Freelance Busting founder Kim Kavin, there is already empirical research by the Mercatus Center at George Mason University showing that New Jersey’s ABC test applications have already resulted in the following from 1995-2024:
- a 3.81% decrease in W-2 employment
- a 10.08% decrease in self-employment
- a 3.95% decrease in overall employment
- a 7.40% decrease in women’s W-2 employment
Kavin’s report also found evidence suggesting the underlying claim by labor groups to restrict independent contracting in New Jersey was based “largely on mischaracterized data and research.”
New Jersey’s proposal mirrors California’s AB5 in 2019, which Director of the Center for Economic Opportunity at the Independent Women's Forum Patrice Onwuka said last year “destroyed the livelihoods of 10.5% of self-employed Californians and plunged overall employment by 4.4% across over 600 occupations, according to Freelancers Against AB5.”
Kelly said the state should avoid trying to modify the rule with exemptions, as California attempted to. Thus far, there have been more than 600 exemptions created in the Golden State, with continuing court battles.
“We respectfully urge the administration to not try to save this rule, given its massive impact on gig workers and businesses and putting itself in the situation of picking winners and losers,” Kelly said. “In that scenario, it is our deep concern that those on the losing end may very well be women, working mothers, caregivers, racial minorities and immigrants.
“We have stated this before, but we have not understated it: This proposal is legally flawed, economically unsound, procedurally deficient, and socially regressive. It upends settled law, contradicts federal standards, and undermines flexible work opportunities in a misguided attempt to expand employment classifications. It needs to go.”
