Many of us are familiar with and have even utilized the so-called “Gig Economy”. The term is commonly defined as “a labor market characterized by the prevalence of short-term contracts or freelance work as opposed to permanent jobs.” Uber, Lyft, Postmate, and Grubhub are just a few of the more popular companies comprising the “gig economy”. But as this article posted by the New York Times’ Editorial Board on April 10, 2017, suggests, the gig economy offers false promises.
As the article explains, “[s]ince workers for most gig economy companies are considered independent contractors, not employees, they do not qualify for basic protections like overtime pay and minimum wages.” For example, in New Jersey, the minimum wage for “employees” under New Jersey’s Wage and Hour Law is $8.44 per hour for every hour worked for 40 hours of working time or less and, the employer must pay its employees one and one-half (1 ½) times such employee’s hourly wage rate for each hour of working time in excess of 40 hours in any week (with exceptions). N.J.S.A. 34:11-56a4. In addition, employers may not make illegal deductions or withholdings from an employee’s pay for expenses that exclusively benefit the employer’s business under the New Jersey Wage Payment Law (i.e. gas, tolls, parking fees, etc.). N.J.S.A. 34:11-4.4. Employers must also pay their share of federal and state tax withholdings, unemployment compensation insurance premiums and maintain workers’ compensation insurance.
Unfortunately, by misclassifying their workers as “independent contractors” as opposed to “employees”, gig economy companies are attempting to circumvent these remedial and humanitarian pieces of legislation enacted by our State’s Legislature in order to protect their bottom line and increase profits. It is illegal and must be challenged in the Courts. New Jersey courts employ the so-called “ABC” test for determining employee status under the seminal case of Hargrove v. Sleepy’s LLC, 220 N.J. 289 (2015). Under that legal precedent, the burden is on the company to show that a worker is in fact an independent contractor and not an employee. It can be a very difficult burden to meet.
If you believe you have been misclassified as an “independent contractor” as opposed to an “employee”, you should meet with an experienced employment attorney to discuss what your rights are and how they may be affected. Contact the attorneys at The Sattiraju & Tharney, LLP in Princeton, New Jersey at (609) 722-7039 for a free consultation to discuss these types of issues. We fight for workers’ justice under a myriad of employee-rights statutes including the New Jersey Wage and Hour Law and New Jersey Wage Payment Law and handle many types of misclassification cases. The Sattiraju & Tharney, LLP has successfully litigated a number of misclassification cases including those for delivery truck drivers.
FAQs About Legal Implications Of The Gig Economy
If I work for a rideshare or food delivery app in New Jersey, am I legally considered an independent contractor?
Not necessarily. Just because an app makes you check a box agreeing you are a “partner” or “independent contractor” does not make it true under the law. New Jersey uses a strict three-pronged legal standard called the “ABC Test” to check your real employment status. Because these apps tightly control your pay rates, monitor your routes, and handle customer assignments, many gig workers in New Jersey are actually misclassified employees who are legally owed minimum wage and overtime.
Can an app-based company kick me off their platform or “deactivate” me without a good reason?
Because gig companies treat you as an independent contractor, they often claim they can deactivate your account instantly for any reason—or no reason at all—without a formal appeal process. However, if they deactivate you because you complained about unfair pay, reported safety hazards, or because of discrimination based on your race, gender, or religion, that is completely illegal. New Jersey laws protect workers from retaliation and bias, regardless of whether a company labels you an employee or a contractor.
Do New Jersey’s progressive wage and hour laws protect gig workers who get paid per task or per delivery?
Yes, if you are actually an employee under the state’s ABC classification test. Gig companies love to pay workers flat “per-piece” or “per-trip” rates to obscure how little you are making per hour. In New Jersey, if your total task earnings divided by the actual hours you spent logging into the app and waiting for or completing jobs drops below the state minimum wage, your employer owes you the difference. Furthermore, if your active app hours cross 40 in a single week, they legally owe you time-and-a-half overtime.