This afternoon, New Jersey’s Senate Budget and Appropriations Committee is scheduled to hear Senate Bill 2782. This is—or at least it was—a rollover bill that Labor Committee Chairman Gordon Johnson initially put forward during the lame-duck session over the winter.
The original version, as Senator Johnson previously discussed it with me, was expected to protect the independent-contractor status of some truckers at the Port of NY&NJ, along with financial advisers and insurance agents, which are among the professions that have cited problems with the state Department of Labor & Workforce Development’s overly restrictive ABC Test rule that is scheduled to go into effect October 1.
However, late yesterday, word started to spread here in New Jersey that the bill was being modified. Insiders from the trucking industry told me their drivers were being removed from the bill, a change that would have meant carveouts only for financial advisers and insurance brokers.
And then, an email started to circulate from the New Jersey AFL-CIO. It suggested that a new profession may be added: “This bill declares these types of workers—primarily tow truck drivers, although that is not defined in the bill, as independent contractors and exempt from the ABC test.” It’s unclear what that may turn out to mean, but the suspicion is an exemption based on the public comment that AAA wrote, saying the Labor Department rulemaking would jeopardize public safety by effectively decimating the state’s roadside assistance network.
My testimony opposing this bill, which I submitted to the committee this morning, is in the video above as well as in written form below.
I strongly urge the Senate Budget & Appropriations Committee to reject this bill, and to stop trying to carve out a handful of professions from our state’s overly restrictive independent-contractor policy.
We need to fix the freelance-busting policy that is the root of the problem—and we need to fix it for all of the estimated 1.7 million independent contractors in our state.
My Testimony: New Jersey Senate Bill 2782
Thank you, Chairman Sarlo and members of the committee, for the chance to offer this testimony in opposition to Senate Bill 2782.
I drove an hour each way from my home over the winter to discuss this bill with the primary sponsor, Senator Gordon Johnson, and his staff at his office. This bill, unfortunately, would move the State of New Jersey even farther down the same deeply misguided freelance-busting path that ended up being disastrous in the State of California.
Out there, the Legislature passed an ABC Test law that created chaos for independent contractors in more than 600 professions. To try and fix that mess, legislators carved out some professions from that law. But they eventually figured out that the ABC Test itself was so bad, they had to keep carving and carving. Then the voters used a ballot proposition to carve out some more.
California now has more than 100 carveouts that, to this day, remain problematic for the professions they’re ostensibly there to protect. People are still losing their businesses a half dozen years later. Economists have documented that on average for affected professions, this policy approach led self-employment to decrease by 10.5% and overall employment to decrease by 4.4%.
We’re talking about destroying people’s livelihoods, about killing jobs. Our state should see California as a cautionary tale and never let anything like that happen here.
But instead, with Senate Bill 2782, this committee is poised to turn California’s nightmare into New Jersey’s roadmap.
Our Legislature needs to fix the underlying ABC Test problem that our state’s Labor Department just exacerbated with its recent rulemaking, a problem that we all have been asking our government to correct at standing-room-only public hearings since 2019.
This legislation does the opposite, keeping the bad policy in place and starting the California-style carveout chaos on top of it.
And make no mistake: Chaos is the correct word to describe this carveout process. Senate Bill 2782—in its original form this winter—was an attempt to protect three professions from the Labor Department’s ABC Test rule: certain types of truckers, financial advisers and insurance brokers.
Now, based on what I heard heading into this hearing from folks in the trucking industry, it’s down to only two professions that this bill would protect. The truckers who thought they were getting an exemption were booted out of the bill. But then, the New Jersey AFL-CIO sent out an email that suggested the bill would somehow now exempt motor clubs, primarily tow truck drivers, whatever that will turn out to mean.
No matter what actually happens at the hearing today, we’re witnessing a textbook case of playing favorites. And when you add what’s happening to the fact that this ABC Test rule faced 99% opposition during the public-comment process, the cronyism involved with picking winners and losers is indefensible.
Opposition to the Labor Department’s rule came from people in all kinds of professions seeking help. There were musicians. Bakers. People involved with running the youth leagues at our parks. The public comments detailed how this rulemaking threatens the work of therapists who help disabled toddlers as part of our Early Intervention System. How it threatens the ability of poor people to get legal help from our state’s Office of the Public Defender. And so many, many more.
What this committee is telling us all today, with Senate Bill 2782, is that none of the rest of us matter. That not even all three of the professions from the original version of the bill matter.
And what’s worse is that this bill follows numerous injuries that the administrations of Governors Phil Murphy and Mikie Sherrill have already heaped upon us.
The public comments explained in great detail how, for years, the Murphy administration used mischaracterized data and research to push the very freelance-busting policy that makes these carveouts necessary. But the Sherrill administration wrote, in the newly adopted rule, that this use of mischaracterized data and research is irrelevant.
That’s right—fundamental facts about independent contracting are being considered irrelevant in making independent-contractor policy.
The public comments also explained in great detail how the ABC Test at the root of this rule is already causing economic harm in our state, the same as in California. Economists submitted research in New Jersey that documented a 3.81% decrease in W-2 employment, a 10.08% decrease in self-employment and a 3.95% decrease in overall employment compared to states that do things differently—and with disproportionate harm to women, who are far more likely to be independent contractors than we are to own businesses that have employees.
These results in New Jersey are eerily similar to what members of the California Advisory Committee to the U.S. Commission on Civil Rights documented happening in that state. They, too, wrote about disproportionate, negative impacts on women, as well as immigrants, people of color and the politically powerless.
Notably, two of the professions that Senate Bill 2782 would apparently still protect are historically male-dominated and white. I understand the logic behind these professions being in the bill—that certain existing federal law should shield these financial advisers and insurance brokers from the State of New Jersey’s freelance busting—but that philosophy is being selectively applied. The original version of this bill made the case that the same philosophy also should protect truckers. Now, I guess, it doesn’t.
And frankly, one could just as easily argue that because language and communications access is required under the Voting Rights Act and the Americans with Disabilities Act, the translators and interpreters should receive a carveout. Or that with copyright law dating back to the very first U.S. Congress and being described in the U.S. Constitution, writers and artists should receive a carveout.
Unfortunately for our right to earn a living, none of us have the kinds of powerful lobbyists that the financial advisers and insurance agents have here in New Jersey.
And unfortunately for the State of New Jersey, all of us taxpayers are now going to be on the path to California Crazytown that included lawsuits with plaintiffs complaining that there were exemptions for delivery drivers hauling milk, but not for delivery drivers hauling juice.
New Jersey Senate Bill 2782 is quite simply unfair. It layers bad legislation on top of awful rulemaking, all to support policy built on mischaracterized data and research.
I strongly urge the committee to reject this bill and instead to advance Senate Concurrent Resolution 62, which would protect everyone from the Labor Department’s deeply misguided independent-contractor rule.
I also urge the Legislature to consider the additional recommendations that I make in my report, “Extremism vs. Entrepreneurism,” which I submitted with my written testimony today. These recommendations include reinstating the much more reasonable IRS Test regulatory language to determine independent-contractor status in our state.
Truth, economic consequences and the clearly stated will of the people should matter. Our government needs to do better.
Thank you, and I remain at your disposal if there is any way I can be of assistance.
