The New Jersey Department of Labor and Workforce Development (NJDOL) is facing criticism from the New Jersey Business & Industry Association (NJBIA) over a proposed rule that would reclassify more gig workers as regular employees. This proposal was discussed during a public hearing at the New Jersey Division of Taxation.
Elissa Frank, NJBIA Vice President of Government Affairs, argued that the NJDOL's proposal, which aims to offer protections to independent contractors, would instead limit their freedoms and flexibility while significantly increasing labor costs for businesses. "This proposal targets specific industries like rideshare, trucking, and construction, unfairly presuming that workers in these sectors are employees, regardless of context," Frank stated. She added that this approach contradicts both state and federal law.
Frank emphasized that worker classification should be based on individual relationships rather than blanket assumptions. She warned that these rules could pose a threat to New Jersey's economy by impacting the state's independent workforce, which includes contractors, freelancers, and gig workers who rely on flexibility for various personal reasons.
Under current New Jersey law, businesses must use an "ABC test" to determine whether a worker is an independent contractor or an employee. The test requires contractors to be free from business control and direction, perform work outside the firm's usual course of business or places of business, and engage in an independent trade or profession.
According to the NJDOLWD rule proposal, services performed by drivers for transportation network companies may not meet Requirement B of the ABC test. This change would classify such drivers as employees rather than freelance workers.
Frank noted that under Prong B of the ABC rules, other gig workers like drywall installers or golf caddies might also be reclassified as employees. Additionally, Prong C suggests that having multiple employers does not establish someone as having an independent trade or profession.
Frank criticized the proposed regulations for altering existing laws rather than codifying them as claimed by the Department. She argued they introduce new forms of control under Prong A and restrict flexibility under Prong B while narrowing independence interpretation under Prong C.
In her testimony, Frank expressed concern about the financial impact on businesses forced to convert contractors into employees. She warned this could lead to fewer job opportunities and hinder participation in flexible work arrangements.
Frank also highlighted potential ripple effects such as disruptions in supply chains due to changes in the trucking industry and increased consumer prices. Furthermore, she cautioned against regulatory uncertainty driving businesses away from New Jersey at a critical time for its economy.
