By Lisa Yakomin
Despite overwhelming evidence that Senate bill 4204 will have devastating economic consequences for New Jersey, our State Legislature continues to rush forward on Senator Sweeney’s ill-conceived bill, claiming his goal is to protect workers from being misclassified.
Instead of admitting that this hastily cobbled-together legislation is awful, the sponsors have been assuring opponents of the bill that “all the amended version will do is codify existing regulations--nothing will change for independent contractors.”
But that's the problem.
Change IS needed, because the existing ABC test is outdated, vague, and being applied by the New Jersey Department of Labor in a very narrow way. For years, the Department of Labor has been subjectively interpreting the ABC test, making it easier to find law-abiding companies guilty of misclassification and restrict the use of independent contractors.
In 2018, the Department of Labor quietly changed their regulations to declare the ABC test the primary criteria for determining if someone is an employee vs. an independent contractor. Under their new rules, independent contractors must pass the ABC test “to the satisfaction of the division” — without considering the more inclusive, nuanced guidelines used by the Internal Revenue Service, commonly known as the 20-factor test.
That’s why Senator Sweeney’s new plan to codify the ABC test and make it law is so dangerous. The Department of Labor has already made it nearly impossible for anyone to be classified as an independent Contractor. Even if amended to restore the full ABC language, the bill will give permanence to the Department of Labor’s subjective application of the test -- a test that is deeply flawed, and does not address the needs of independent contractors in the modern-day era.
Labor statistics show that this attack on independent contractors will disproportionately harm minorities, women, and those over 55, but rest assured, all New Jerseyans will feel the pain of this bill. The intermodal trucking community will be especially hard hit, and when transportation costs go up, the cost of everything consumers buy -- including food, medicine, clothes, fuel, electronics -- will skyrocket.
I believe there is a simple way to fix this: reverse what was done in 2018, reinstate the usage of the IRS 20-factor criteria, and force the Department of Labor to use those guidelines again.
If the true goal of this legislation is to reduce the misclassification of independent contractors, then our representatives must take action to modernize the standard by which that determination is made, and keep pace with the evolution of our workforce.
Lisa Yakomin is the president of the Association of Bi-State Motor Carriers, a non-profit membership group that is responsible for moving a majority share of the freight at the Port of NY & NJ.
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