Proposed Law Would Protect Rights of Workers in the “Gig Economy”

The traditional model of “employment” in the U.S., in which individuals work for an employer long enough to establish a career and secure retirement benefits, is a reality for fewer and fewer people. In many workplaces today, employees must fight simply to secure their status as employees—who are entitled to protection under various federal, state, and local employment laws—while their employers try to classify them as independent contractors. The “gig economy” is a relatively new concept of the last decade or so, in which people work as freelancers—i.e., independent contractors—for multiple clients. Unlike misclassified employees, freelancers accept that they are independent contractors, but they often lack the means to assert their contractual rights against much larger clients. These disputes can closely resemble wage and hour disputes between employees and employers. A bill pending in the New York City Council, informally known as the Freelance Isn’t Free Act, would protect the rights of freelancers to timely payment in full.

Currently, no law in New Jersey or New York specifically addresses the circumstances faced by freelancers. Laws regarding employee misclassification offer a good starting point for understanding these issues. Employers may see an incentive in classifying workers as independent contractors. Employees are generally protected by a wide variety of laws dealing with minimum wage, overtime compensation, workplace discrimination and harassment, family and medical leave, unemployment benefits, and other matters. Independent contractors’ rights are mostly limited to whatever is addressed in their contract—assuming they have a written contract.

New Jersey has adopted a standard for employee classification that is favorable to the employee. The New Jersey Supreme Court applied a test known as the “ABC test,” based on a provision of the New Jersey Unemployment Compensation Law. An individual is an independent contractor, rather than an employee, if they are “free from control or direction” by the employer with regard to their job duties, their work is “outside the usual course of the business” or “performed outside of all the [employer’s] places of business,” and they regularly work “in an independently established trade, occupation, profession or business.” N.J. Rev. Stat. §§ 43:21-19(i)(6)(A) – (C); Hargrove v. Sleepy’s, LLC, 106 A.3d 449, 453 (N.J. 2015).

The concept of the “gig economy” is, to speak in very general terms, based on ideas that arose from gradual changes in the overall economy, which came into sharp focus after the 2008 economic crisis. In a 2015 Forbes article about the gig economy, the author quoted a friend who stated that “the social contract is dead.” This referred, in his words, to the agreement between employees and employers that “in exchange for a lifetime of loyal service, you could generally count on a company providing a pension for the rest of that lifetime.” This is no longer the case for many workers, and it is not clear whether the types of contractual arrangements that make up the gig economy can match this “social contract.”

The proposed New York City law, Int. 1017-2015-B, would address these concerns by providing safeguards for freelancers. This would include requiring a written contract for any job paying $200 or more, requiring payment within 30 days, and prohibiting employers from requiring freelancers to choose between timely payment or full payment. Willful violations of these and other provisions would be punishable as a criminal misdemeanor.

If you need to speak with an employment attorney in New Jersey or New York, contact the Resnick Law Group online, at 973-781-1204, or at (646) 867-7997.

More Blog Posts:

Proposed New York City Legislation Would Protect Independent Contractors from Wage Theft, The New Jersey Employment Law Firm Blog, January 21, 2016

Lawsuits, Pending Legislation, Address Question of Whether NFL Cheerleaders Are Employees or Independent Contractors, The New Jersey Employment Law Firm Blog, June 4, 2015

The Distinction Between an “Employee” and an “Independent Contractor” is Critical in New Jersey Employment Law Claims, The New Jersey Employment Law Firm Blog, May 22, 2015

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