Will make it hard for free-lancers and small subcontractors to get work, and create legal nightmare.
A Senate bill, S 4204, which passed Thursday in the New Jersey Senate Labor Committee, would drastically alter New Jersey’s legal definition of independent contractors—a change that would hurt free-lance business owners, small subcontractors, and the businesses that contract with those companies. NFIB, a small business association with thousands of members in the state, adamantly opposes this bill and is concerned about the turmoil it would create within the small business community.
“This bill isn’t about just Uber and Lyft. This dangerous legislation ties the hands of every aspiring entrepreneur in the state who owns their own company, including subcontractors with employees who sell their services to another business,” said NFIB’s State Director in New Jersey, Laurie Ehlbeck. “The companies that contract with them would hesitate to offer them work if this bill passes because the definition of ‘independent contractor’ would become so broad there would be concern about legal risks.”
The New Jersey bill, based on a California law, would require any company hiring an independent contractor in the state to prove without exception that the person is performing work “outside the usual course of the hiring entity’s business.” Under the New Jersey version, for example, if a masonry subcontractor works for a home builder, they may be considered an employee because the hiring business’ usual course of work is building houses, of which masonry is a part. If a hairdresser prefers to make a higher income by renting a booth at a salon, but the salon’s core business is hairstyling, they too may fall into the employee category.
“A similar policy in California created havoc for small PR firms, hairdressers, small construction companies, and many other entrepreneurs—this New Jersey bill will create the same chaos in the small business community here,” added Ehlbeck.
“If a contractor has his or her own employees, their own equipment, they actively marketed their services, and the business hiring them has no control over their work, they could still be considered an employee if it so happens the work they are doing is within the scope of what that hiring business normally does,”said Ehlbeck. “That would leave a lot of people out of work and without income.”
The Senate committee did add some exemptions to the bill for realtors, CPAs, and certain insurance and salespeople.
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