Here Come the Carveouts
New Jersey is signaling that it intends to follow California's lead on protecting only a handful of professions from freelance busting.
New Jersey’s Senate Budget and Appropriations Committee is meeting this Thursday and has just added Senate Bill 2782 to the agenda.
This is a rollover bill that Labor Committee Chairman Gordon Johnson initially put forward during the lame-duck session over the winter. Senate Bill 2782 (previously known as S4839) would carve out a handful of finance and trucking professions to protect them from the state Department of Labor & Workforce Development’s overly restrictive independent-contractor rule that is scheduled to go into effect October 1.
This bill is now co-sponsored by New Jersey Senate Budget Committee Chairman Paul Sarlo, a Democrat who serves as Deputy Majority Leader. Previously, Sarlo:
has made clear that he only cares about protecting independent contractors in the financial industry
was caught on camera laughing out loud while standing next to a flag-draped casket, talking about how New Jersey’s regulations kill women- and minority-owned small businesses that don’t have lobbyists
went out of his way to interject and try to protect acting Labor Commissioner Kevin Jarvis from recent questioning about what the administration of Governor Mikie Sherrill is doing with independent-contractor policy
Apparently, Johnson and Sarlo have now joined forces in taking New Jersey down the disastrous path that California already demonstrated to be an economic failure, of playing favorites with carveouts from bad independent-contractor policy instead of fixing the bad policy itself.
It’s a path that ultimately ended up with the Golden State carving out more than 100 professions in ways that don’t even work to this day, a path that, ultimately, members of the California Advisory Committee to the U.S. Commission on Civil Rights described as having a disproportionate and negative impact on women, people of color, immigrants and the politically powerless.
The 600+ Affected Professions
Carving out just a handful of professions from a freelance-busting rule is the literal definition of playing favorites. It’s textbook cronyism, and it’s morally wrong.
In California, more than 600 affected professions have already been identified. Karen Anderson, founder of the grassroots group Freelancers Against AB5, took the time to compile the list, which New Jersey lawmakers also have in hand. I included this list, with Karen’s blessing, in the “Extremism vs. Entrepreneurism” report that I published back in February and then submitted as written testimony here in New Jersey last month.
Congressman Kevin Kiley, R-California, read this list of affected professions into the public record a couple years ago while standing in the well of the U.S. House of Representatives, trying to stop the federal government from following California’s ill-fated lead during the Biden administration.
This is who New Jersey is choosing not to protect if lawmakers advance the Johnson-Sarlo bill this week, instead of stopping the bad independent-contractor rule and crafting more reasonable policy for everyone:
The Right Solution
The better choice that New Jersey’s lawmakers could make right now would be to champion Senator Declan O’Scanlon’s concurrent resolution, SCR62. It would invalidate the Labor Department rule before it can go into effect on October 1.
After that, New Jersey’s Legislature should put in place meaningful guardrails to protect the incomes and careers of all the state’s estimated 1.7 million independent contractors, including people in the hundreds of professions that don’t have lobbyists and have no chance of ever seeing a carveout.
As numerous people (including me) testified last month before the state Senate Labor Committee, the best path to achieving that fair and equitable goal is to reinstate the IRS Test regulatory language that is far more reasonable—and that has not been weaponized against legitimate business relationships the way ABC Test regulatory language keeps being weaponized in California and New Jersey alike.
The mere existence of this Johnson-Sarlo bill is an admission of utter policy failure. When financial professionals and owner-operator truckers who earn six figures a year are among those who need a carveout just to keep working, it’s clear that the regulatory language, and the way it’s being interpreted and applied, are already well beyond the bounds of reason.