The Senate Labor Committee approved a controversial bill aimed at cracking down on worker misclassification, a practice the measure’s proponents argue infringes on workers’ rights and costs the state hundreds of millions of dollars in employment taxes.
The measure, Senate Bill 4204, passed in a 3-1 vote after four hours of testimony, and left many opponents confused about sudden changes released earlier in the day.
In its initial form, the measure would have reclassified tens or hundreds of thousands of independent contractors as regular employees. The measure drew criticism from industries that use freelance workers — such as transportation, media, trucking and food and hospitality — and from freelancers worried that the bill would force them into lower-paying employment and destroy the flexibility afforded by so-called gig economy.
The revised measure instead codifies the existing “ABC test” the state uses to determine whether someone is an employee or independent contractor.
“There is a lot of emotion attached to testimony like this, but frankly there’s a lot of hurt. People are misclassified” said Sen. Fred Madden, D-4th District, who chairs the committee.
‘Michael Egenton, of the state Chamber of Commerce, decried the complications created by the misclassification bill. – AARON HOUSTON
Some opponents who came to protest the original proposals said they were uncertain about the impact of the new changes.
“I have not experienced … in a long time so many industry sectors, so many walks of life in the business community, coming out of the woodwork because of the complications of this bill,” said Mike Egenton, executive vice president of government relations at the New Jersey Chamber of Commerce.
Under the ABC Test, workers can be classified as independent contractors if they are A) free from company control; B) performing services that are not part of the employer’s usual business or working outside the employer’s premises and C) involved in an independent “trade, occupation, profession or business.”
“The test and the way it’s being applied is precisely what is broken,” said Lisa Yakomin, president of the Association of Bi-State Motor Carriers. “The ABC classification is outdated, over-simplified, vague and it’s being interpreted in a dangerously subjective way.”
Lawmakers on Dec. 5 approved a version that does not include proposed changes to the B prong that would have required that a person could not be freelance solely by doing work outside of the employer’s place of business, which could have affected ridesharing services like Uber and Lyft.
“Our goal is to prevent misclassification by employers trying to evade basic worker’s rights,” the bill’s sponsor, Senate President Stephen Sweeney, D-3rd District, said at the hearing, “It does nothing new or different than” the current ABC test.
The amendments were made on Nov. 25, a week after the labor department ruled that Uber owed the state more than $640 million of employment taxes because the company improperly classified drivers as freelancers rather than employees.
The Senate president said that the bill would not go as far as a California law, under which Uber and Lyft drivers are considered regular employees.
A Lyft driver and passenger. -LYFT
California’s bill also had an unintended consequence which effectively eliminated the freelance writing market. Under that law, A5, freelancers whose independent ventures are similar to the usual course of business where they work are considered employees.
Sweeney’s bill would allow freelancers to maintain that status even if the work they perform for a business is of similar nature to their own independent venture.
But the change was cold comfort for freelance journalists present at the Thursday hearing.
“If you step foot in an office, that could violate the bill,” said one freelance writer, Deborah Abrams Kaplan. “If you go in for a meeting, let’s say you have a meeting with your editor and you go in on a one-time basis, or you go in for a day to do some fact-checking with them or meet with their staff, that would violate the bill.”
Eric Richard, legislative affairs director at the New Jersey chapter of the AFL-CIO, disputed that contention.
“Some folks have said ‘well if I go to a meeting at my employer’s headquarters and discuss work … is that a violation.’ The answer is no,” he told lawmakers. “As it is currently written they are not in violation of regulation on the bill pending before you.”
Many freelance writers have reported that business for them in New Jersey has been drying up, with publications wary about freelance labor laws in the state as a result of S4204.
“The introduction of this bill is causing companies to pull back from hiring New Jersey workers,” Kaplan added in her testimony. “One writer mentioned this week that a client will no longer her on an independent contractor basis, because of this legislation.”
