Update on S4204 Independent Contractor Legislation:
Yesterday the Senate Labor Committee released Senate Bill 4204, legislation that effectively prohibits the use of independent contractors in New Jersey. The bill is sponsored by Senate President Steve Sweeney.
NJCJI testified against the legislation, arguing that the independent contractor model not only serves an important economic function, it also provides an avenue for those who need the flexibility the model provides to earn a living or find their way back into the work force.
NJCJI argued the highly restrictive “ABC” test that would be imposed on New Jersey businesses and workers would produce massive economic dislocation. Rather than merely reducing the active harm by limiting the application of a bad test by carving out some industries, the better solution is to establish a rule that is broadly fair and workable.
Read NJCJI testimony here.
Others testifying against the legislation included NJ Motor Truck Association, NY Shipping Association, Internet Association, as well as NJBIA, NJ Chamber, South Jersey Chamber, and CIANJ.
The committee did adopt amendments which appear to carve out accountants, realtors and insurance agents.
While accountants are expressly carved out of the application of wage and hour requirements, real estate agents and insurance agents are carved out only to the extent they are exempt from the requirements of unemployment insurance. While there is an exemption for real estate agents and insurance agents in the unemployment insurance statute, the exemption is contingent upon the services being exempt from the Federal Unemployment Tax Act. The NJDOLWD Employer Handbook requires proof that the entity claiming the FUTA exemption has proof they are exempt. Proof of a FUTA exemption is difficult to obtain, usually only obtained as result of an audit.
The legislation now goes to the full Senate for consideration. The Assembly version A5936 was introduced yesterday by Assembly Labor Committee Chairman Joe Egan and may be voted on as early as Monday November 18th in the Labor Committee.
Earlier this week NJCJI president and Chief Counsel Alida Kass wrote this op-ed that ran in NJBIZ on the topic and will appear on 101.5 FM on Monday morning, November 18th.
NJCJI will be hosting a lunch meeting at 1:00 on Monday, November 18th for the coalition opposing this legislation. Please email Tara if you would like to attend, or would like call-in information to call in to the meeting.