Read It and Weep

More attorneys weigh in on New Jersey's proposed independent-contractor rule. None of it is good for people who wish to be self-employed.

The New Jersey Department of Labor & Workforce, which is trying to establish a new rule for who can legally earn income as an independent contractor, has announced a June 23 public hearing about its proposed rule-making.

This hearing is likely to be a doozy. Back in 2019, frustrated independent contractors from all across my home state of New Jersey fought and helped to kill a similar attempt at freelance busting in the state Legislature. Our testimony against that bill went on for more than four hours at the New Jersey Statehouse—and that was back when this kind of policy-making, along with political advocacy in general, was brand-new to most of us.

Oh, how much we’ve learned since then. For the past six years, we’ve fought to stop freelance busting at the state and federal levels—including writing amicus briefs for the U.S. Supreme Court and National Labor Relations Board, filing a lawsuit against the U.S. Department of Labor, testifying before the California Advisory Board to the U.S. Commission on Civil Rights, testifying before legislatures in other states including Illinois, and testifying before Congress not once, but twice.

Most recently, we’ve been reading not only New Jersey’s proposed independent-contractor rule itself, but also about a month’s worth of attorney analysis.

The more attorneys weigh in, the more worried we get.

Photo by JESHOOTS.COM on Unsplash

Here’s a look at the most recent attorney analysis of New Jersey’s proposed independent-contractor rule, along with a recap of previously published attorney analysis—followed by what all of us can be doing right now to help stop this madness.

Legal Eagles Say…

About a month ago, I wrote about the first pieces of attorney analysis to hit the Internet about New Jersey’s proposed independent-contractor rule. The law firm Troutman Pepper Locke wrote, in its headline: “Garden State May Soon Become Even Less Hospitable to Independent Contractors ‎Than the Golden State.”

That’s saying a lot, given that a California assemblyman is now calling for the U.S. Department of Justice to investigate what happened with this kind of horrible independent-contractor policy-making out there.

With regard to New Jersey’s proposed rule, Troutman Pepper Locke partner Richard Reibstein went on to explain why Trenton’s ideas appear to be even worse than Sacramento’s. Reibstein started with this bit, about New Jersey’s interpretation of Prong A of the regulatory language that is at issue, known as the ABC Test:

“The proposed regulation pertaining to Prong A departs in a dramatic manner from virtually every other test for IC status under federal law and the laws in every state — and unless clarified in the final version of the regulation, would not merely tilt the balance in favor of employee status and against legitimate ICs but rather lead to the elimination of all ICs in New Jersey.”

That, of course, sounds bad enough.

Reibstein was just getting started. He adds:

“This view of the second part of the 'B prong’ almost entirely eviscerates any chance for most ICs and companies using their services from establishing the workers’ IC status.”

And then there’s this from Reibstein, about the fact that California’s ABC Test law was a disaster even after dozens of professions were ultimately exempted from it:

“Unlike California’s AB5 and successor bills enacted in that state with 65 or more exemptions from its strict ABC test, the proposed [New Jersey] regulation has none.”

Also offering expert opinion are attorneys at Fox Rothschild, which has 30 offices around the country. They weighed in with this analysis about roles that are likely to now be classified as employees in the state of New Jersey:

“These examples include: a transportation network company (e.g., Uber or Lyft) engaging a driver to transport customers, a drywall installation company engaging a drywall installer and a country club engaging a golf caddie to work on its golf course.”

One news report added truckers to that list, a reality that poses a significant risk to the supply chain. As we all heard during testimony against this kind of deeply misguided policy-making back in 2019 at the Statehouse in Trenton, owner-operator truckers comprise 77% of the driver workforce at the Port of NY&NJ.

Fox Rothschild also wrote that New Jersey’s interpretation of the ABC Test can target independent contractors working in all kinds of locations:

“The DOL proposed further provide examples of what will be considered a location where an ‘integral part’ of an employer’s business is conducted, and it could include a private residence where installation work or remote work of any kind is occurring, or a truck, airplane or vehicle for transportation companies.

“The examples given in the proposed regulation far exceed what employers would generally consider their place of business.”

All of the above is wretched on its own, but now comes analysis from two more law firms—both of which also suggest that this proposed independent-contractor rule is going to create all kinds of problems for self-employed New Jerseyans.

Attorneys at Ogletree Deakins posted this analysis, which states point-blank that the proposed rule:

“… could make it very difficult for businesses to demonstrate that workers are independent contractors and open the door to additional liability for misclassification.”

Attorneys at Littler titled their analysis, in part, “New Jersey’s Declaration of No Independence?”

They wrote:

“While the NJDOL advised that these proposed regulations were based on case law from the New Jersey courts interpreting the ABC test, the proposed regulations appear to expand the ABC test and common law on the issue.”

With regard to the C Prong of the ABC Test as New Jersey’s Labor Department describes it, Littler’s attorneys wrote:

“The proposed regulations further expand the scope of Prong C, making it difficult for any alleged employer to meet. The proposed regulations state that having multiple ‘employers’ does not equate to an individual having an ‘independently established trade, occupation or profession.’ Nor would licensure in a specific occupation weigh heavily on independent contractor status. The proposed regulations also indicate that proof of business registration and maintaining liability insurance and/or workers’ compensation insurance are not alone sufficient to meet Prong C.”

Overall, we now have at least four different law firms citing highly problematic examples from all three prongs of the ABC Test, as New Jersey’s Labor Department is proposing to interpret it.

If independent contractors can’t pass even one prong of this ABC Test, then we can no longer legally earn a living the way we do now.

About 1.7 million of us New Jerseyans have some or all of our income on the line. A whopping 80% of us say we prefer to be self-employed.

Make Your Voice Heard

There is still time to raise a ruckus about this latest attempt at freelance busting in the state of New Jersey. If you would like to speak at the June 23 public hearing in Trenton, you can email david.fish@dol.nj.gov to secure a slot. I have already confirmed a slot to speak, and I will see you there.

All of us can also raise our voices by filing written public comments that oppose NJDOL’s proposed rule. That 60-day period to send public comments has now been extended to August 6.

To file a public comment, send it to David Fish, executive director legal and regulatory services Department of Labor and Workforce Development, PO Box 110, 13th Floor Trenton, New Jersey 08625-0110; fax: (609) 292-8246; email: david.fish@dol.nj.gov.

We need to flood these freelance busters with opposition. They’re taxpayer-funded bureaucrats who are supposed to be working for us—not threatening to take our livelihoods away.