Swiss-Cheese Stupidity, Again
Two New Jersey legislators asked to exempt financial advisers from the independent-contractor rule. Here’s why that’s wrong.
Two of the more disappointing letters that I found buried within the estimated 8,300 public comments that the New Jersey Department of Labor & Workforce Development received about its proposed independent-contractor rule came from state Senate Deputy Majority Leader Paul Sarlo and state Senator Benjie Wimberly.
Both of these letters from members of the Democratic Party express concern about the proposed rule—but only on behalf of financial advisers and insurance agents.
The letters urge the Labor Department to exempt these professions, and only these professions, from the rule-making:
Exemptions for favored industries are not the solution to the problem of freelance busting. The solution is to fix the deeply misguided regulatory language that threatens all of us who choose to be self-employed across hundreds of professions.
‘So Many Potential Landmines’
We know that exemptions are a wretched idea because of how this kind of thing has played out in California. An unbelievable breadth of professions get hit in this kind of freelance busting. Californians have identified more than 600 affected professions so far.
New Jersey’s written public comments are from financial advisers, yes, but also from truckers, writers, photographers, bandleaders, translators, interpreters, attorneys, golf caddies, real-estate agents, youth sports coaches, teachers, pediatric services providers, senior citizens, recent college graduates, nonprofits of all kinds, and more—none of them any less worthy of having their livelihoods protected too.
In May, right after New Jersey’s Labor Department announced this rule-making proposal, I anticipated that we’d see this kind of “playing favorites” with exemptions in Trenton, just as we have seen happen in Sacramento. I published this Q&A, called “Swiss-Cheese Stupidity,” with Karen Anderson, founder of the grassroots group Freelancers Against AB5 in California, about the countless reasons why the exemption process is a messy, unfair, wholly ridiculous disaster.
Anderson and I both testified before Congress about the independent-contractor policy problem in 2023, and her testimony included this passage, some three years after the California law had gone into effect:
“To this day, despite the so-called exemptions for certain professions added in September 2020 via the cleanup bill AB2257, the law continues to wreak havoc on legitimate independent contractors and small-business owners. As it turns out, many of the exemptions come with caveats and fine print that make some exemptions nearly impossible to take advantage of. The convoluted language in the law also creates a chilling effect in which businesses don’t want to utilize independent contractors from California at all, even if there is a pathway to an exemption—because there are so many potential landmines.”
Others have also decried California’s Swiss-cheese exemption process, including members of the California Advisory Committee to the U.S. Commission on Civil Rights, who wrote:
“The evidence of the influence of the powerful union lobby on the seismic change in the classification paradigm is clear in the exemption process. The California legislature essentially outsourced the decision-making process for obtaining an exemption from AB5. The result was the politically powerful and those in industries not historical targets of organized labor were more readily able to obtain an exemption.”
And, California state Assemblyman Tri Ta, earlier this year, called for a U.S. Department of Justice investigation into California’s freelance-busting law and exemptions, specifically with regard to manicurists. That profession only received an exemption for several years, and it’s now expiring. Ta says more than 82% of manicurists are Vietnamese-American, and 85% are women, which is why he wants the U.S. Justice Department to launch an inquiry based on “discrimination”:
“Every Californian who believes in justice and equality under the law should be outraged by the unfair treatment of Vietnamese-Americans working in the beauty industry. We cannot wait for politicians in Sacramento to fix this issue. That’s why I’ve called on the U.S. Justice Department to intervene.”
I cannot stress enough how unfair and ridiculous this kind of Swiss-cheese exemption process could become in New Jersey, too, if just a handful of professions are plucked out and kept safe while all the rest of the estimated 1.7 million independent contractors in the state are left to fend for themselves.
One of the biggest lawsuits against the state of California included this passage about the exemptions—two lines I’ve never forgotten, because they seemed so utterly ludicrous the first time I read them:
“There is no rhyme or reason to these nonsensical exemptions, and some are so ill-defined or entirely undefined that it is impossible to discern what they include or exclude. For example, some types of workers are excluded (e.g., a delivery truck driver delivering milk) while others performing substantively identical work are not excluded (e.g., a delivery truck driver delivering juice).”
This is the kind of Swiss-cheese stupidity that exemptions create. Exemptions like these reek of backroom dealing and cronyism.
What should happen in New Jersey, instead, is that the Labor Department should withdraw this deeply misguided proposal that is facing 99% opposition in the public comments. If that fails to happen, then the Legislature must act to protect us all from the Labor Department’s wrongheaded policymaking.
That’s 23 Legislators So Far
Senators Sarlo and Wimberly bring the count to 23 legislators I’m aware of who have publicly urged the New Jersey Labor Department to reconsider its proposed independent contractor rule. I count 13 Democrats and 10 Republicans to date.
Here is the list with links:
Senate Labor Committee Chairman Gordon Johnson, Democrat
Senate Legislative Oversight Committee Chairman Andrew Zwicker, Democrat
Senate Commerce Committee Chairman Joe Lagana, Democrat
Senate Education Committee Chairman Joe Cryan, Democrat
Senate Majority Whip Vin Gopal, Democrat
Assemblywoman Margie Donlon, Democrat
Assemblywoman Luanne Peterpaul, Democrat
Senator Carmen Amato, Jr., Republican
Assemblyman Brian Rumpf, Republican
Assemblyman Gregory Myhre, Republican
Senator Parker Space, Republican
Assemblyman Mike Inganamort, Republican
Assemblywoman Dawn Fantasia, Republican
Senator Declan O’Scanlon, Republican
Assemblyman Gerry Scharfenberger, Republican
Assemblywoman Vicky Flynn, Republican
Senate Transportation Committee Chairman Patrick Diegnan, Democrat
Assemblyman Robert Karabinchak, Democrat
Assemblyman Sterley Stanley, Democrat
Senator Angela McKnight, Democrat
Senator Jon Bramnick, Republican
Senate Deputy Majority Leader Paul Sarlo, Democrat (letter above)
Senator Benjie Wimberly, Democrat (letter above)