How the “Gig Economy” Could Impact Wage and Hour Law Claims in New Jersey

The term “gig economy” has entered common usage in recent years. It broadly refers to alternatives, of sorts, to having a single 9-to-5 employer. This includes rideshare or delivery services, and services ranging from childcare to odd jobs through online platforms. It also includes selling goods through online marketplaces, and most kinds of freelance work. One supposed advantage of the gig economy is that it provides greater flexibility for workers than the traditional workplace. It also comes with certain disadvantages, including a lack of legal protections when compared to the traditional definition of “employment.” This summer, the New York Times reported on several studies examining the gig economy. While most of the workforce still holds traditional jobs, the gig economy is growing. The studies provide nationwide information, not figures on employment in New Jersey or any other specific state. As this type of work arrangement becomes more common, our system of employment laws may have to catch up. Speak to a New Jersey employment lawyer to discuss any questions you might have.

Minimum wage and overtime laws are among workers’ most important legal protections, but state and federal laws only apply to people who meet a specific definition of an “employee.” The federal Fair Labor Standards Act (FLSA) establishes a national minimum wage, overtime requirements, and limits on child labor. Its definition of an “employee” is simply “any individual employed by an employer.” 29 U.S.C. § 203(e)(1). Gig economy workers are often considered to be independent contractors instead of employees, for FLSA purposes. The extent to which the FLSA’s minimum wage and overtime requirements apply to gig economy workers is a matter of ongoing dispute, with courts deciding cases in both directions and the U.S. Department of Labor (DOL) recently changing its position on the issue.

New Jersey’s Wage Payment Law expressly states that it only applies to “employees,” which it defines as “any person suffered or permitted to work by an employer.” N.J. Rev. Stat. § 34:11-4.1. The statute specifically excludes independent contractors from that definition. The state’s Wage and Hour Law has a similar definition of “employee,” but without the specific exclusion of independent contractors. Id. at § 34:11-56a1(h). State regulations establish a test for determining whether an employee has been misclassified as an independent contractor. N.J.A.C. § 12:56-16.1. See also Hargrove v. Sleepy’s, LLC, 106 A.3d 449 (N.J. 2015).

A June 2018 report by the Bureau of Labor Statistics (BLS), part of the DOL, found that about ten percent of the U.S. workforce works in “alternative work arrangements.” It defines this term to include “workers who are identified as independent contractors, independent consultants, or freelance workers,” whether they are paid a salary or are considered self-employed. A report issued around the same time by the Federal Reserve, on the other hand, found that more than one-third of the workforce participates in the “gig economy,” which it defines as “independent workers and short-term contracts.” This includes people working in the gig economy full-time and those who take gigs to supplement their income.

If you are involved in a dispute with an employer in New Jersey or New York, the Resnick Law Group’s employment attorneys are available to help you. Please contact us at 973-781-1204, at 646-867-7997, or online today to schedule a confidential consultation with a member of our skilled and experienced team.

More Blog Posts:

Equal Pay Law Takes Effect in New Jersey, The New Jersey Employment Law Firm Blog, September 20, 2018

FLSA Collective Action Alleges Failure to Pay Overtime by New Jersey Hospital, The New Jersey Employment Law Firm Blog, August 10, 2018

Congress Passes Law Protecting Tipped Employees in New Jersey and Nationwide, The New Jersey Employment Law Firm Blog, May 3, 2018


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