New Jersey legislators: History has its eyes on you

This is testimony submitted to the New Jersey Senate Labor Committee, in advance of the December 5, 2019 hearing on S4204, a worker misclassification bill.

According to the U.S. Bureau of Labor Statistics, 79% of independent contractors prefer working as independent contractors. Yet the New Jersey legislature is proposing to sweep up this 79% with a dragnet, to protect a minority of workers who have been rightfully misclassified.

Senator Sweeney said in an email to me that the proposed bill does not change anything for those of us who qualified for independent contractor status before. To that I have three responses:

• The first is to ask why some professions have gotten carve-outs since this bill was introduced. If accountants, clergy, Realtors, insurance brokers, and other commission-based workers qualified before, why are they now given a carve-out while the rest of us are hung out to dry?
• The second is that codifying the problematic ABC rules, is just codifying BAD LAW. We see what’s happening in California as a result of their similar legislation: lawsuits, and workers losing their businesses.
• The third is to say that independent contractors like myself are ALREADY losing business as a result of this proposed legislation and the movement in this direction. When I told a former New Jersey client about the bills, and how it would affect his small agency, his response was this:

“This is one of the reasons you haven’t heard from me lately. We are aggressively outsourcing our work (overseas and out-of-state), writing included, due to these types of laws. Currently, one of our larger projects has a writer based in Delaware, a strategist based in Pennsylvania and a project manager in South Carolina. I recently fired my part-time New Jersey-based bookkeeper because of this potential law. NJ is easily accessible from other nearby states and all of those contractors can easily drive up for a meeting. Also, we use video-based meetings so the contractor is “virtually” in NJ, but not for tax purposes.

If the governor finds a way to tax NJ-based LLCs that hire out-of-state contractors, then I incorporate in Delaware and set up an office in Pennsylvania. Please tell the governor that I will never speak out against this bill, I won’t hold signs up against it, I’ll smile when I see him but I will quietly act out against the bill and so will many other firms. We don’t have the time like the politicians to generate nonsense. We’ve got to generate revenue and that revenue should be used to pay people market-based wages. Not government assigned wages.”

This client paid me $125 an hour for project-based technical writing work, paying me more than $10,000 last year, of which New Jersey received its portion of taxes. Because of the legislation threat and other regulatory concerns, this year I earned zero from him, in spite of this project continuing, and other projects starting.

Employment is not the answer. With employment comes regulation of those workers, and that goes against our pursuit of happiness. Running an independent business means you have flexibility to choose your clients and your hours. As a freelance writer, I work the hours I want, take the vacation days I want, accept the assignments I want. As an employee, even a part time employee, that goes away. And so does my ability to retain my intellectual property – the copyright to my work. If employed, the employer keeps the copyright. That’s a nuance most people don’t understand.

As an employee, I get paid less, because the employer needs to use some of what they’d pay me for overhead. I lose my small business tax write-offs. I don’t work enough hours for any one employer to get benefits. I don’t work enough hours for any employer to give me access to their retirement plan, yet if I have multiple employers, I’m not able to max out my individual 401(k). I could only invest a much smaller amount into a different retirement plan.

The bill disproportionately affects women and people with disabilities, who have found ways to successfully work for themselves, while still being law-abiding and tax-paying citizens. This bill affects florists who install arrangements on site. It affects snow plow drivers only used on a handful of snowy days each winter. It affects translators who work in hospitals, and physical or occupational therapists who provide sessions for multiple clients and agencies. It affects massage therapists and hair stylists who prefer running their own businesses and make more hourly than they would as an employee.

It’s a laudable goal for the government to pass bills to protect workers. But you have to make sure they’re the workers who actually need protecting, and that you’re not harming the majority of those you’re covering with the bill. The current ABC regulations do not work well in this gig economy, where one-third of workers are gig workers, according to the Harvard Business Review. The California AB5 legislation has been a disaster, and the country is watching what happens in New Jersey now. We have the opportunity to do it the right way. I’m asking the Labor Committee to vote no or abstain on this legislation. Let’s put more time and thought into how this affects not only New Jersey workers, but the New Jersey business climate. The reason legislators are getting so many phone calls is because the little guys – small independent businesses like mine – are threatened.

If the legislature is going to pass the law as is, then give independent contractors who create copyrightable work a carve-out so we can show our clients in black and white that they can work with us without worrying about legal recourse.

Debbie Abrams Kaplan is one of the leaders of Fight for Freelancers, a group of independent contractors banding together to protect independent contractors in NJ from a rushed and poorly written bill that would decimate the livelihoods of thousands of independent contractors in the Garden State. Read the more personal story of how I'm affected by this legislation, and stories of other affected freelancers at FightForFreelancers.com.