Some lawmakers and regulators believe America was a better place in the 1950s, when many people had traditional jobs at large companies, and when many of those companies were unionized. These lawmakers and regulators say those of us who choose self-employment in modern-day America would be better off if we had old-school bosses and union bosses, as opposed to being our own bosses.
These deeply misguided lawmakers and regulators are trying to reclassify us as employees, because as long as we remain classified as independent contractors, federal law makes it illegal for us to be unionized.
Such reclassification means that overnight, it would become illegal for many of us independent contractors to continue earning a living the way we do today — upending the entire idea of what has been a legal way to earn income since the very founding of the United States. Our best-case scenario from this reclassification is that if we have, say, 30 clients of our business today, then overnight, we would have 30 part-time bosses. (Who on earth would want that?) The more likely scenario, as you’ll see below, is that we’ll simply lose our income and careers entirely.
The lawmakers and regulators trying to reclassify us say they want to protect against the misclassification of people who should rightfully be labeled employees. What they’re actually doing is misclassifying legitimate independent contractors like us, in a way that wipes us out of the workforce.
The New Jersey Problem Started in California
In 2019, California passed a law called Assembly Bill 5 that uses a strict version of regulatory language called the ABC Test. This test is different from the version used in New Jersey right now. California’s governor said the stricter ABC Test would “help reduce worker misclassification — workers being wrongly classified as ‘independent contractors’ rather than employees, which erodes basic worker protections like the minimum wage, paid sick days and health insurance benefits.”
As of 2022, that claim has proved patently false. California has seen no reported increase of misclassification prosecutions; no reports of companies reclassifying all their independent contractors as employees; and zero new unions formed as a result of the ABC Test law.
Instead, the primary outcome of the ABC Test law has been the widespread misclassification of legitimate independent contractors. So many self-employed Californians lost income and careers that the state had to pass an emergency measure in 2020, exempting more than 100 professions from the law. A second bill is in the works to exempt even more industries and professions in 2022, because so many legitimate independent contractors are still having problems earning a living. And, voters exempted yet more professions with a ballot initiative by a 59-41% vote.
Meanwhile, Here in the Garden State…
Gov. Phil Murphy’s administration has been trying to copy California’s career-killing ABC Test law since 2019.
The first attempt was N.J. Senate bill 4204, which was introduced shortly after the California bill passed, and which died in Trenton early 2020 after widespread outcry from independent contractors here. Then-Senate President Steve Sweeney reintroduced the California copycat bill in 2020 as N.J. Senate bill 863, but it languished heading into the 2021 election season, with gubernatorial challenger Jack Ciattarelli making the protection of independent contractors part of his campaign platform.
Today, the Murphy administration continues to seek other avenues to inflict this restrictive ABC Test on New Jersey residents. In February 2022, then-acting Attorney General Bruck led a multistate effort urging the National Labor Relations Board to consider the test as a regulatory workaround, in the absence of congressional legislation to impose it nationwide. In March 2022, Labor Commissioner Robert Asaro-Angelo told the N.J. Senate Labor Committee that he “absolutely” did not believe a more reasonable test should be used to determine independent contractor status, because he wants as many people as possible made eligible for unemployment.
What We, as Independent Contractors, Want
We want the attacks on our chosen livelihoods and smallest of small businesses to stop.
And, we want New Jersey lawmakers to put legislative guardrails in place to prevent similar attacks on our careers from this or future administrations.
The best way to add these guardrails is for New Jersey lawmakers to co-sponsor and pass Senate Bill 599 and its Assembly companion, A899. This legislation would align New Jersey’s independent contractor test with the one long been used by the Internal Revenue Service, and would require state regulators to consider the IRS Test when determining who is an independent contractor vs. who is an employee.
In other words, S599/A899 would force New Jersey regulators to treat us fairly, even if they personally believe we’d be better off in a 1950s version of America.
How to Help Us
Call your lawmakers and tell them to co-sponsor S599 and A899. We want #IRSnotABC in the Garden State.
Vote YES on S599/A899 in New Jersey
Vote YES for the modern IRS test to determine independent contractor status