Senate President Steve Sweeney has said he will amend the misclassification bill to protect independent contractors, but how far that protection will go remains unclear.
Sweeney said the amendments would will restore language in the “B” part of the ABC test the state uses to determine if a contractor was hired by a company properly or if the business should employ someone to do the work. As the bill is currently written, an independent contractor would have to do work “outside the usual course of business for which the service is performed.”
The amendment would add a provision allowing for work outside the usual place of businesses, which is what the ABC test requires now. This amendment has already been included in the Assembly version of the bill.
Unfortunately, the bill would also add new requirements for independent contractors under the “C” prong, which requires them to be “customarily engaged in an independently established business or enterprise of the same nature as that involved in the work performed.” How that provision will be interpreted is unclear, however.
With the proposed amendent, S-4204 would require independent contractors to meet all three prongs of this ABC test, specifically to:
A: be free from control or direction over the performance of that service, both under the contract of service and in fact; and
B: do work outside the usual course of the business for which the service is performed or the service is performed outside the all places of business of the employer; and
C: be customarily engaged in an independently established business or enterprise of the same nature as that involved in the work performed.
NJBIA is concerned how the bill would impact small businesses, which often rely on independent contractors for tasks outside their core business. NJBIA Vice President Mike Wallace said the amendment to prong “B,” however, would improve the bill.
“As originally written, this bill would have hit small businesses especially hard because they would be unable to use contractors for their non-essential tasks, like payroll or janitorial services,” said NJBIA Vice President Mike Wallace said last week when he testified against the bill. “Larger corporations usually handle such tasks in house, but for many small businesses, the cost doesn’t allow for it.”