New Jersey Considers Bill S. 4204 Concerning Independent Contractors

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The New Jersey state legislature introduced Bill S. 4204, which could effectively stop work for independent contract for many residents in the state.  Steve Sweeney, the NJ Senate President, introduced the legislation, which proposes changes to the state employment code redefining many independent contractors as employees.

Bill Modifies Definition of “Employee”

The measure stipulates that “[f]or the purposes of all State employment laws, individuals who perform services for remuneration shall be deemed employees, not independent contractors, and shall be subject to the provisions of those laws, and shall be entitled to all rights and remedies provided by those law…”

There are three exceptions, and the new definition would not be applied if individuals could prove:

  1. The individual has been and will continue to be free from control or direction over the performance of the service, both under the individual’s contract of service and in fact; and
  2. The individual’s service is outside the usual course of the business for which that service is performed; and
  3. The individual is customarily engaged in an independently established trade, occupation, profession or business of the same nature as that involved in the work performed.

The Bill is aimed at protecting workers through other employment statutes, such as minimum wage and unemployment tax—to which independent contractors are not currently subject.

“This is a pro-worker bill for the new gig economy,” Senator Sweeney said. “It’s all about protecting the rights of workers.”

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Uber Litigation Ongoing

Bloomberg Law recently reported that the state Department of Labor has been asking for roughly $650 million from Uber. The primary issue in the case is the classification of Uber’s drivers. The state of New Jersey wants to recover assessed disability and unemployment insurance payments, and interest, because it considers to be Uber employees.

Uber and its subsidiary Rasier LLC were assessed more than $500 million in past-due taxes in the past four years, according to the state Department of Labor and Workforce Development.

However, the company is contesting the state’s assessment.

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“We are challenging this preliminary but incorrect determination, because drivers are independent contractors in New Jersey and elsewhere,” an Uber spokeswoman said.

Opposition to the New Jersey Bill

Opponents of the bill say that it would impose the limitations on those who work for themselves throughout the state, including construction contractors, photographers, freelance writers, along with drivers for ride-share companies such as Uber and Lyft.

The U.S. Chamber of Commerce is against the bill and had urged the state legislature’s opposition. In a letter, the Chamber contends that the bill that would amend New Jersey’s code “to severely restrict the ability of employers to utilize the legitimate services of independent contractors.”

The New Jersey State director for the National Federation of Independent Business says that the “legislation ties the hands of every aspiring entrepreneur in the state who owns their own company, including subcontractors with employees who sell their services to another business.”

The bill was referred to Senate Labor Committee in early November. The bill text can be found here.

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