Lawmakers, businesses wrestle over independent contractor rules
Major changes designed to limit the number of people classified by New Jersey employers as independent contractors are moving through the Legislature though appear likely to be revised before they’re finalized.
Business groups have spoken out against the package of bills, which is headlined by S4204/A5936. Amendments to the legislation were made before Senate and Assembly committees advanced it, and its sponsors say they’re open to more alterations.
“This bill is a long time in coming,” said Assemblyman Joseph Egan, D-Middlesex.
“I think something good will come out of it,” Egan said. “I’m sure that not everybody is going to be happy in the end, but I hope the bill is fair. And I hope that it goes forward and gets signed eventually.”
Eric Richard, legislative affairs director for the New Jersey AFL-CIO, said true independent contractors don’t need to fear the proposed changes.
“This has been a problem for over 20 years in the state of New Jersey,” Richard said. “Long before we had any of the types of app-based companies that now would be covered.”
Alida Kass, president of the New Jersey Civil Justice Institute, said the bill would undermine efforts to develop an innovation economy in the state, as well as undercut established professions. She and others say that’s being seen in California, which passed a similar bill that takes effect in January.
“Whether it’s freelance writers, graphic design, reporters, PR consultants, there is a host of people who want to maintain their relationships in their industries, maintain their contacts, maintain their skill sets. This takes it off the table,” Kass said.
“We need at certain times to just stop and just to wait and see,” said Tony Perry, director of government affairs for the Commerce and Industry Association of New Jersey. “We don’t need to always be number two behind California in implementing things.”
The bill could change how business is done in the state’s entertainment industry. AAA is looking for an exemption, saying it could affect the 150 contractors it uses to provide roadside assistance. One of the biggest impacts could be on the trucking business.
Fred Potter, vice president at large for the International Brotherhood of Teamsters, said it is especially important to truck drivers at the Elizabeth and Newark ports, up to 85% of whom are believed to be misclassified as contractors.
“They don’t have health insurance. They don’t have pensions,” Potter said. “And they certainly don’t have the right to join or form a union.”
Tom Evans, senior vice president of finance for Toll Global Forwarding, said that by misclassifying workers as contractors, companies avoid paying taxes and sidestep labor laws and benefits.
“There are hundreds of logistics and trucking companies in New Jersey who illegally classify their employee drivers as independent contractors and consider it the normal way of doing business in the state,” Evans said.
James Cobb, director of governmental affairs for the New York Shipping Association, warns there is already a shortage of company-employed truck drivers that would be exacerbated if independent owner-operators are discouraged and chased out. Cargo will leave for ports in other states, too, he said.
“There will be serious economic consequences for the port industry, New Jersey’s economy, the Northeast regional economy as well as the United States economy,” Cobb said.