Trenton – A bill authored by Senate President Steve Sweeney that would help protect workers from being exploited through their misclassification as independent contractors gained the approval of the Senate Labor Committee today.
“This is a pro-worker bill for the new gig economy,” said Senator Sweeney. “It will codify into law existing regulations and close a loophole that has allowed for the misclassification and exploitation of some employees. It’s all about protecting the rights of workers.”
A misclassification is the improper designation of workers as “independent contractors” rather than “employees” in order to allow employers to evade basic workers’ rights. Employers are required to contribute to unemployment and temporary disability insurance, abide by labor protections such as the minimum wage and overtime, allow employees to take maternity, paternity, and family leave, and withhold New Jersey income taxes – but they are not required to do the same for independent contractors.
“Misclassification not only hurts workers, it hurts law-abiding businesses and the state,” said Senator Sweeney. “The businesses that don’t play by the rules aren’t paying into the unemployment fund or the disability fund, which raises costs for workers and all other businesses. It shortchanges everyone else.”
Currently, the “ABC test,” adopted by the New Jersey Department of Workforce Development and affirmed by the New Jersey Supreme Court, is used to determine whether a worker should be classified as an employee or independent contractor for the purpose of labor and tax laws.
The bill would strengthen the “B prong” of the three-part test so that workers could not be deemed exempt from employee status because they perform their work “outside of all the places of business of the enterprise for which the service is performed.” It would also strengthen the “C prong” of the test by requiring that work performed to meet this standard is in an independently established trade, occupation, profession, or business in which the individual providing the service is customarily engaged.
The bill, S-4204, was approved with a vote of 3 – 1.