Legal Implications Of The Gig Economy

Written by Ravi Sattiraju on May 5, 2017

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 Law Firm, P.C. 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 Law Firm, P.C. has successfully litigated a number of misclassification cases including those for delivery truck drivers.

Posted Under: New Jersey Employment Law
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