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New Jersey Independent Contractor Bill Based on “ABC” Test Has Failed – For Now

On January 14, 2020, the latest session of the New Jersey legislature ended and, with it, so did Senate Bill (SB) 4204. The bill, which in many respects mirrored California’s recently-enacted Assembly Bill (AB) 5, sought to codify the “ABC test” as the proper method for determining whether an individual should be classified as an independent contractor or as an employee for purposes of wage claims and unemployment compensation under state law. However, by ending its session without a vote on the bill, the legislature effectively pushed any further consideration of it to the next session.

Under SB 4204, for an individual to be properly classified as an independent contractor, a company must demonstrate all of the following:

(A) The individual has been and will continue to be free from control or direction over the performance of his service, both under his contract of service and in fact;

(B) The service is outside the usual course of the company’s business for which such service is performed; and

(C) The individual is customarily engaged in an independently established trade, occupation, profession, or business.

Significant opposition, in large part by those contractors whom the proposed law purportedly was designed to protect, resulted in the New Jersey legislature pausing to further consider the utility of the bill. Nevertheless, its concept very well may have enough support for a similar bill to gain momentum in the new legislative session. Notably, the senator introducing the bill already has indicated that the measure will be considered again.

Jackson Lewis P.C. © 2020

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About this Author

David Walsh, Employment Attorney, Jackson Lewis Law Firm
Shareholder

David M. Walsh is a Shareholder in the firm’s Morristown, New Jersey office. 

Mr. Walsh concentrates his practice on litigation and has experience representing employers in many types of matters, including restrictive covenant matters, defense of harassment and retaliation claims, defense of whistleblower claims, and counseling concerning employee discipline issues.  He is a member of the firm’s Non-Compete Practice Group and frequently counsels clients regarding non-compete, non-solicitation, and confidentiality issues and the implementation of...

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