Making it harder to use or be an independent contractor in New Jersey.
Senate Bill 4204, that changes the standard for how New Jersey will classify independent contractors, is barreling towards the finish line. This Bill, sponsored by Senator Sweeney, moves the classification analysis away from the “ABC” test that has been in place for decades. This Bill is modeled after one signed into law in California.
SB 4204, designed to target “disruptive” industries like Uber and Lyft, will actually make it very difficult to do business in NJ as an independent contractor. In fact, AB5 in California includes carve outs for 25 industries and is still facing ongoing backlash from other industries, resulting in the need to carve out further exceptions. Interestingly, the NJ Bill has been drafted with only a carve out for CPAs. The rest of us will likely be forced into classifying workers as W2 employees rather than 1099s.
Consider the financial impact of this Bill in the context of other employment laws:
- W2 employers must pay minimum wages as per state law;
- W2 employees must comply with the Paid Sick Leave Act (accruing 1 hour of paid leave for every 30 hours worked);
- W2 employees must be included in workers compensation coverage (the cost of which increases per employee)
- W2 employees may claim unemployment compensation benefits while independent contractors cannot;
- Increased HR and administration and payroll expenses.
These are just a few of the impacts that solopreneurs, small and medium sized businesses and non-profits will face if this bill becomes a law.
Call your Assembly and Senate legislators and let them know that this is bad for business in New Jersey. You can find your legislator at www.njleg.state.nj.us