Trenton, NJ (WorkersCompensation.com) – New legislation proposed in N.J. would create a “portable benefits” system for independent contractors to ensure they are covered by workers’ compensation, health insurance and paid time off.
The legislation, introduced by Rep. Troy Singleton, D-Delran, would require companies who use independent contractors or freelancers to pay fees to a nonprofit benefits provider that would cover the gig employees with benefits that would stay with them regardless of their employer.
Singleton said his hope is to modernize the benefit system to incorporate new work modes.
“New technology has yielded a modern economy that allows greater flexibility for independent contractors but because many of their jobs do not come with health insurance, retirement plans or paid leave, these workers are more vulnerable than many of their counterparts in the traditional workforce,” he said in a statement. “The way that people work may be transforming, but the notion that all workers deserve to be treated with respect and should have access to benefits that will foster their long-term well-being has not changed.”
Singleton previously had said in an opinion piece in the Star-Ledger that more than a third of all U.S. workers are working “gigs” that are either part-time, temporary or a secondary income to full-time jobs.
Senate Bill 943 would require companies to contribute a fee of either $6 for every hour the freelancer works for them, or 25 percent of the total fee the company collects from a consumer for the product or service provided by the freelancer.
The fee would then go to a nonprofit “qualified benefit provider” chosen by the freelancer to cover the cost of workers’ compensation insurance or occupational accident insurance, as well as other benefits the worker can chose to enroll in. Workers would not be required to enroll in the coverage, however, and if they chose not to participate, they would receive half of the fee paid by the company.
“In addition to workers’ compensation insurance, qualified benefit providers must provide some or all of other, optional benefits. Qualified benefit providers must solicit input from workers on their benefits, and allow workers to choose from available benefits or allocate the contributions among the following benefits:
- Health insurance, including but not limited to subsidies to purchase health insurance;
- Paid time off;
- Retirement benefits; and
- Other benefits determined by the qualified benefit providers, on behalf of the workers.
The law, if passed, would apply to businesses that employ more than 50 independent contractors in a 12-month period. Mostly aimed at companies like Uber, Lyft and other job sharing companies, the bill has received praise from some companies, but criticism from others.
Denzel Singletary, a representative of Postmates, a company that hires drivers to deliver food and other goods from vendors to consumers, praised the bill. Postmates has nearly 10,000 contractors in New Jersey, many of whom work on average between three and five hours a week.
“It is incumbent on the tech industry, organized labor and legislators to forge a new social compact that provides flexible app workers appropriate benefits and injury and civil rights protections,” Singletary said during a hearing for the bill in the state’s Labor Committee.
But others said the bill needs work.
Alida Kass, with the New Jersey Civil justice Institute, said the bill may create a “dis-incentive” for companies to hire gig workers in New Jersey because the proposed benefits fee would be an added fee, instead of being deducted out of a workers’ paycheck.
The bill passed out of committee by a 3 to 1 vote. It now goes before the Senate Budget and Appropriations Committee before going to the New Jersey Assembly.