Shooting Blanks
These unions urging the State of New Jersey to restrict independent contractors offer little or no evidence to support their claims.
Written public comments that support New Jersey’s proposed independent-contractor rule are few and far between. There’s about two dozen of them, comprising not even 1% of the estimated 9,500 comments the Department of Labor & Workforce Development received in overwhelming opposition to the proposal.
Most of the support comments are from unions or organizations that have strong union ties. It’s easy to read through most of these comments because they’re just a couple or a few pages long.
And they have something else in common, too: They make broad, sweeping claims about employee misclassification, but present little or no evidence to support them.
Take, for instance, the public comment from the Amalgamated Transit Union. It’s three pages long, and it states this:
“As transit agencies increasingly experiment with microtransit, which is a type of app-based, on-demand public transit service, ATU has seen the rise of illegal misclassification in the public transportation industry. Microtransit companies often misclassify their workforce as independent contractors to avoid paying minimum wages, dodge basic employment benefits, pass on operating costs to the workers or local governments, increase profits, and prevent workers from exercising their right to join a union.”
That’s a pretty significant accusation: Microtransit companies often misclassify their workforce.
But the public comment presents no evidence to support it. There’s not a single specific example given of misclassification at any microtransit company in New Jersey or anywhere else.
The comment does cite, as general research, the questionable 2019 Report of Gov. Murphy’s Task Force on Employee Misclassification, as well as research by the questionable National Employment Law Project, but that’s it.
Read the full Amalgamated Transit Union comment and see for yourself:
The same lack of evidence exists in the public comment from the International Union of Painters & Allied Trades.
This two-page comment states:
“Every day, our organizers speak with workers in our industry to understand the nature of their work. These efforts shine a light on the common use of misclassification in construction and provide a personal perspective of its effects on the worker. It is no secret that the practice deprives workers of wage protections, legal protections, and access to safety net programs. More importantly, however, we have found that employers who misclassify workers too often hold and use vicious levels of control over their workers.”
Every day they’re speaking with workers. Vicious levels of control.
Again, some serious, bold claims. But the evidence provided to back it up is questionable at best.
There are two cited sources. One is this 2020 report by a retired executive secretary-treasurer of the New England Regional Council of Carpenters who is now a fellow at Harvard University. If you read this report, you will see its author state:
“How severe is the problem? It is difficult to measure accurately the prevalence and severity of misclassification and payroll fraud in construction.”
This report’s author also makes the purpose of his report quite clear, and it has nothing to do with reasonable suggestions that would address problems while protecting legitimate independent contractors:
“It is difficult to imagine a viable long-term union growth strategy in the absence of a successful regulatory assault on misclassification…”
The only other documentation the International Union of Painters & Allied Trades public comment provides for its claims is testimony given 15 years ago before Congress. This testimony cites research as old as 1984 and was given in support of legislation that Congress ultimately rejected.
Here is the full International Union of Painters & Allied Trades public comment if you would like to read it:
Another example of making a broad claim without supporting it is the public comment from the Engineers Labor-Employer Cooperative, which represents Operating Engineers Local 825.
This two-page comment states:
“Misclassification is a serious issue facing the construction industry. When these deceitful contractors skirt around payroll taxes, workers compensation and unemployment insurance, and pay unfair wages to workers, these bad actors undercut the industry and impact taxpayers, workers, and law-abiding contractors.”
Deceitful contractors. Bad actors.
But again, that’s it. There’s no actual case with specifics included in this comment, as you can read here:
In all my years of doing advocacy work on the independent-contractor policy issue, I’ve never heard anyone say that employee misclassification never happens. Of course it happens, and of course the bad-actor companies doing it need to be held accountable, no matter what industry they’re in.
But what we’re talking about with this proposed rule-making at New Jersey’s Labor Department, attorneys say, “almost entirely eviscerates” any chance of establishing independent-contractor status; is “fundamentally flawed from a legal perspective”; is “an existential threat to flexible, independent work”; and “warp[s] the explicit statutory language and court precedent.”
If a union is going to urge the New Jersey Labor Department to do something so extreme to the state’s estimated 1.7 million independent contractors across hundreds of professions, then the union should at least be required to present evidence to back up its claims.
The UFCW Union
The two-page comment that the United Food & Commercial Workers International Union filed does actually go into some detail about why the union wants the use of independent contractors to stop.
This comment claims that app-based companies like DoorDash and Instacart misclassify personal shoppers—but, again, offers no evidence of that misclassification actually happening.
Instead, the comment details a business-model shift that the union doesn’t like:
“Our members experience misclassification in a direct way—particularly in the food retail sector—where we have already seen grocery companies replace the work of store employees that fulfill online grocery orders—the W-2 ‘personal shoppers’ and ‘e-commerce clerks’—with workers from app-based platforms like DoorDash and Instacart. Over the past several years, employers at the bargaining table have repeatedly told the UFCW that they cannot increase wages and benefits because they have to compete against the gig companies which don’t have to pay the same employee costs. These executives complain that they already have lost money providing home delivery, but they would lose even more if they had to use employees to do it. One large UFCW employer laid off thousands of grocery delivery drivers and outsourced those jobs to DoorDash. DoorDash then classified the workers as independent contractors.”
Again, there’s no evidence presented that misclassification is occurring with the app-based companies. This comment instead describes business owners making decisions because of real-world technology changes and financial realities.
This comment also states:
“Grocery delivery does not have to be done by independent contractors. Grocer-owned delivery services, like Peapod (a service of grocer Ahold-Delhaize) or Safeway’s home delivery service, are examples of grocery employers properly classifying their employees. Workers in these services are employees of the company, drive refrigerated company delivery trucks, have all the benefits of employment, and in many cases have the benefit of a union-negotiated collective bargaining agreement. The technological advances made in the grocery industry are a benefit to both consumers and grocers, but there is no reason why technology should trump the rights of workers to fair wages and benefits.”
Again, a lot of that seems reasonable from the perspective of the union’s business model, but it does not include any evidence of misclassification taking place at any other companies using an independent-contractor business model.
This part of the United Food & Commercial Workers International Union comment is instead an acknowledgement that grocery delivery can be done in different ways, by different people. Which, funnily enough, is similar to the arguments that DoorDash and Instacart make in the public comments they filed opposing the state’s independent-contractor rule.
Here’s the DoorDash comment:
And here’s the comment Instacart filed:
Quite a lot of “Dashers” who log onto DoorDash and make deliveries also filed comments opposing the independent-contractor rule. They filed these comments in English and in Spanish, based on a form letter that appears to be part of a coordinated effort.
Almost all of those comments state: “I know that most Dashers, including me, want to remain independent contractors. We don’t want to be employees.”
The Teamsters
One last example of making a misclassification accusation with minimal evidence to support it comes from the Teamsters union, which filed this public comment with New Jersey’s Labor Department:
The Teamsters, writing in support of the proposed independent-contractor rule, make broad claims about employee misclassification being a problem:
“Misclassification is rampant in many industries where the Teamsters represent employees including construction, ride share and trucking. When employers use the 1099 loophole to misclassify their workers and cheat the system, they gain an unfair economic advantage against the law-abiding companies they compete against. Misclassified workers are prevented from organizing a union and fighting for better conditions. Companies that play by the rules, which are often Teamster companies are often driven out of business because of this unfair competition.”
Again, what should follow a statement like that are examples of employee misclassification taking place in various construction, rideshare and trucking companies.
But instead, the Teamsters comment continues with this:
“Take for example Toll Global Forwarding, a port trucking company formerly located in Carteret, NJ that hauled containers on and off the ports for years. They were a good Teamster company that provided workers with an hourly rate, healthcare and secure retirement. Toll paid payroll taxes including social security, unemployment and disability. Toll did the same kind of work that many port trucking companies who misclassify their workers do, and ultimately, they were driven out of business by the unfair competition these rule breaking companies engaged in. Toll simply could not compete with the lawbreakers who saved up to 30% on their employment costs and put all the cost for truck maintenance on the back of the employees by cheating through misclassification. Over 40 workers lost their jobs when Toll closed. A loss not only to Teamsters Local 469, but to the State of New Jersey.”
That’s an interesting anecdote, but it fails to provide any evidence of any competing New Jersey company that misclassified its employees. None of the alleged “cheating” companies or “lawbreakers” are named. This serious claim is just supposed to be taken on faith.
What the Teamsters comment does cite is general research about misclassification being a problem in New Jersey—research that is 20 years old. This comment also states that the practice of misclassification “has become more widely used over the last 25 years,” but without any citation or proof.
Evidence is Necessary
A key argument that union organizers have made for years now—at the state and federal levels alike—for why all of our nation’s independent-contractor laws and regulations need to change is that employee misclassification is rampant, and something significant needs to be done to stop it.
But as we have seen again and again, in everything from 2019’s New Jersey task force report to these recently filed New Jersey public comments, if evidence or research do exist, it’s often decades old. And even then, it’s sometimes based on research that can fail to hold up to scrutiny. Other times, we see claims that it’s government or university research when it’s in fact union-associated research. And that union-associated research is often circular in nature or based on all kinds of estimates with caveats.
Employee misclassification happens. It’s real, it’s wrong, and the companies that do it need to be held accountable.
But the unionists have provided little to no evidence to support their claims in these public comments. Instead, what we are seeing in New Jersey is the freelance-busting brigade, yet again, demanding that our government restrict everyone’s freedom to be our own bosses—this time in clear defiance of the will of the people and the intent of the Legislature—based on precious little evidence at all.