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The “Gig Economy” and the Minimum Wage in New Jersey

Advocates for increasing minimum wage rates around the country argue that the current federal rate is insufficient to cover expenses in many American cities. A campaign known as the “Fight for $15” seeks to raise the minimum wage to $15 nationwide. Under newly-enacted legislation, the New Jersey minimum wage will gradually increase to $15 per hour over several years. As advocates succeed in this effort, however, the workforce is undergoing changes that could lessen the impact of their success. Workers in the “gig economy” are often classified as independent contractors rather than employees, or they only work part-time. Either way, many are excluded from a wide range of protections under federal and state employment laws, including minimum wage. Recent news reports have shown, however, that workers and their advocates are fighting for better terms.

The federal minimum wage last increased on July 24, 2010, from $6.55 to $7.25 per hour. 29 U.S.C. § 206(a)(1)(C). New Jersey’s minimum wage has been higher than that for some time. A new law signed by the governor in February 2019 will increase the minimum wage for many New Jersey workers to $10 per hour on July 1. On the first day of 2020, it will increase to $11 per hour. A $1 increase will follow on January 1 of each following year until the rate reaches $15 per hour in 2024. See N.J. Rev. Stat. § 34:11-56a4, as amended by P.L.2019, c.32. The definitions provided by state wage laws, however, continue to omit many gig economy workers. An “employee” is still simply “any individual employed by an employer.” Id. at § 34:11-56a1(h).

The term “gig economy” has no distinct definition, but generally refers to individuals who work for companies on a job-by-job basis. This includes people who provide freelance services to multiple clients, but also people who provide services to customers of companies like Uber or Instacart. Driving for a ridesharing company might look like a full-time job. On paper, the relationship between the two parties is not employer/employee, but employer/independent contractor.

Different state laws and court decisions have created tests for determining whether an individual is an employee misclassified as an independent contractor. Regardless of any one individual’s legal classification, analyses of the gig economy have found that many companies fail to pay an amount equal to minimum wage. One study of ridesharing companies, published by Forbes in 2018, found that nearly three-fourths of respondents made less than minimum wage. Workers saw a median net profit of $3.37 per hour.

Proposed legislative solutions to low gig economy wages have appeared in statute legislatures around the country. New York City, for example, enacted a minimum wage for rideshare drivers in August 2018. A bill introduced in the New Jersey Assembly in 2017 would have established a fund to provide benefits to gig economy workers. California is considering a variety of new measures. Some companies have decided that paying a guaranteed minimum amount to gig workers is a good business practice. In other cases, the gig workers have launched their own protests and gained concessions from the companies that employ them.

If you have questions about a dispute with an employer in New Jersey or New York, the the Resnick Law Group’s team of employment attorneys is available to help you. Please contact us at 973-781-1204, at 646-867-7997, or through our website today to schedule a confidential consultation to discuss your case.

More Blog Posts:

How the “Gig Economy” Could Impact Wage and Hour Law Claims in New Jersey, The New Jersey Employment Law Firm Blog, October 15, 2018

New York Court Rules on Employee Misclassification Claim, Applying Different Standard than New Jersey Courts, The New Jersey Employment Law Firm Blog, August 24, 2018

The Rights of Unpaid Volunteers and Interns in New Jersey Employment Law, The New Jersey Employment Law Firm Blog, November 10, 2017

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