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New Jersey Gig Worker Bills Go to Governor, But Not ‘Big One’

Jan. 14, 2020, 1:49 AM

Gig economy employers dodged “the big one” in New Jersey’s just-finished legislative session, but efforts to pass a California-style worker classification law will start over immediately.

Instead, New Jersey lawmakers took on worker misclassification in other ways, sending a handful of bills to Gov. Phil Murphy (D) on Jan. 13, the last day of the state’s 2018-2019 legislative session. Now it’s up to the governor to sign a trio of bills that would let the state impose financial penalties for misclassification of workers (A.5839), give the state the ability to halt an employer’s operations for violations (A.5838), and require employers to post notices in the workplace about the state’s classification laws (A.5843).

State lawmakers also passed a series of bills aimed at easing burdens on workers affected by outsourcing and layoffs.

The new two-year legislative session begins Jan. 14. Supporters of reclassifying thousands of New Jersey workers as employees, including Senate President Steve Sweeney (D) and labor unions, have vowed they’ll keep pushing for a bill that imitates California’s AB5 law—although one advocate says the New Jersey version will be better crafted and better able to overcome legal challenges California has faced.

“Our bill is not California’s,” said Eric Richard, lobbyist for the New Jersey AFL-CIO. The new California law has faced industry pushback on multiple fronts, including a lawsuit that saw the law blocked from applying to the trucking industry.

Worker classification is a hotly disputed issue, as more workers ranging from ride-share and truck drivers to health-care providers and IT workers are identified as independent contractors instead of employees, exempting their employers from legal requirements such as minimum wage and overtime pay.

The three-factor “ABC” test that California enacted via AB5 makes it much harder for employers to treat their workers as independent contractors. Like New Jersey, New York also is expected to follow in California’s footsteps with a major proposal to address worker classification.

Fewer ‘Carveouts’

The California law included a wide range of exemptions, “carveouts and subtests” for various industries and types of occupations that make the law more susceptible to legal scrutiny, Richard said.

The New Jersey version contains fewer carveouts and also contains “more lenient” language in part B of the three-factor ABC test that would determine whether workers are independent contractors or employees. Part C of the test contains different language as well that Richard said was crafted in response to litigation faced in California and Massachusetts.

The ABC test adopted in California presumes most workers are employees unless employers can show A) that workers have freedom from control over how to perform the services provided; B) that the services are outside the business’s normal variety of work; and C) that the workers are engaged in an independently established role.

Still, Richard acknowledged New Jersey would still face legal challenges if its enacts a three-factor classification law.

“It’s a work in progress,” he said. “It is a priority for us. We continue to work with the sponsors, legislative leadership, and the governor’s office.”

Smaller Classification Moves

S.4204, the three-factor test bill that Sweeney sponsored, was “the big one” that employers fought hardest against in 2019, said Michael Wallace, lobbyist for the New Jersey Business and Industry Association.

The bill stalled after a wave of litigation crashed into California’s A.B. 5 measure. The delay ultimately kept the New Jersey bill from getting a Senate floor vote before the Jan. 13 session ended.

To contact the reporter on this story: Chris Marr in Atlanta at cmarr@bloomberglaw.com

To contact the editor responsible for this story: Terence Hyland at thyland@bloomberglaw.com

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