Why Don’t Independent Contractors Get Benefits?
Companies can employ workers in a number of different capacities, including temporary workers, contract workers, full-time employees, and part-time employees. “Employee” is a specific category that entitles those workers to many legal protections and benefits, including wage and hour protections (including minimum wage, overtime pay, and mandatory breaks), paid or protected leave (including sick leave), workers’ compensation, protection from workplace discrimination, and unemployment benefits. Often, companies also restrict access to company-sponsored medical and life insurance, 401(k) and retirement plans, and other perks to employees only.
Non-employees are “independent contractors” in the eyes of the law, sometimes known as “gig” workers or “1099 employees” (after the type of tax form they are issued). Whether you’re an independent contractor or an employee depends on the degree to which an employer has the right to control and direct a worker’s performance versus the degree of autonomy the worker may exercise. Independent contractors are not protected by state laws, and most companies do not offer voluntary benefits like medical insurance to independent contractors. This is in part because the provision of benefits can be evidence to courts and regulatory agencies that those workers are misclassified as independent contractors and instead should be considered employees (which can result in penalties, fines, and additional expenses).
How Could This Bill Help Workers?
The bill proposes that the state set up a fund into which New Jersey employers would pay. Companies that meet the requirements to be “qualified benefits providers” would use the fund to provide workers’ compensation insurance along with additional benefits to independent workers. The providers would be directed to solicit input from workers and then either allow workers to choose from available benefits or allocate the contributions among the following benefits:
The bill does not address what qualifications a worker would need to meet to be eligible for benefits or whether there would be any waiting period. Once a worker obtained benefits through a qualified benefits provider under this program, he or she would be able to keep those same benefits regardless of the company he or she is working for. The bill also provides that workers would have the option to change their qualified benefits provider once per year.
What Will This Bill Require of Employers?
The bill would require companies or organizations to contribute to the fund if they 1) contract with 50 or more freelance/independent workers in New Jersey and 2) provide services to consumers for 12 months straight. A company would be responsible for contributing the lesser of $0.25 for every dollar of consumer sales or $6 per hour worked by each worker (prorated per minute) to the fund. In order to finance this, companies would be permitted to pass the cost onto their consumers. Many details are not clear from the bill, however, including how enforcement would be regulated and whether there would be any flexibility for companies whose workforces grow and shrink on either side of the 50-worker benchmark.
What’s Next?
New Jersey is one of four states that have introduced legislation to implement some kind of portable benefits program,[2] and a bill has been introduced in the U.S. Congress to develop a federal program.[3] New Jersey’s Assembly Bill 4705 was approved in both the labor and appropriations committees in June 2017 and is likely to be presented to the NJ assembly when it next convenes in the fall.
If you feel you’ve been misclassified as an independent contractor, need employment law advice, or have a New Jersey workers’ compensation or wage and hour issue, contact the experienced NJ workers’ comp attorneys and employment attorneys at the Mark Law Firm. To schedule an appointment at our Basking Ridge, Oradell, or Newark, New Jersey, law offices, contact us online or call 973-440-2311, 908-626-1001, or 201-787-9406 today.
Sources
[1] NJ Assembly Bill 4705, introduced March 20, 2017. Legislative status available at LegiScan.com, https://legiscan.com/NJ/bill/A4705/2016.
[2] Richardson, Tyrone. “Congress Could Follow Some States to Add Benefits for Gig Workers.” Bloomberg BNA News, The Bureau of National Affairs, Inc., 10 May 2017. Web. 27 Jul 2017.
[3] Richardson, Tyrone. “Democrats Introduce Bill to Test Benefits for Gig Workers.” Bloomberg BNA News, The Bureau of National Affairs, Inc., 26 May 2017. Web. 27 Jul 2017.
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