Keep it simple: if you primarily provide your labor to someone for pay then you are an employee. If you run a licensed business, with typical business features like a business plan, advertising, business insurance, and pay business taxes then you likely work as an independent contractor.
I’m aware that some people are making a big fuss about changes in this New Jersey S4202 bill being pushed forward by state Senator Sweeney tomorrow. The revised bill says that individuals who perform services for pay should be called employees, not independent contractors. It’s really no big deal and not rocket science. It’s really just applied common sense. Some states already have almost the same law.
Part time and temporary workers have the right to be treated like workers and not as independent contractor businesses. A 2018 study by the New Jersey Governor’s office found more than 12,000 cases of worker misclassification in the state resulting in many instances of unfair treatment of workers. We should try to keep this basic human fairness issue separate from the inevitable politicization of the larger other issues.
Furthermore, all of my clients (and I presume the clients of any good small business accountant) already do it this way so no change is needed when the bill becomes law. Those who follow federal law as explained here an in a dozen or more other posts on this blog already recognize this core business principle.
As a small business accountant, I’ve been involved in dozens of messy worker misclassification cases over the years and firmly believe that the new simple and clean rules proposed by Sweeney will help everyone in the long run. While compliance in New Jersey is never easy or hassle-free, it works in everyone’s benefit in this case.
Disclosure: I am a contributor to the NJCPA Political Action Committee that has been active in and generally supportive of this proposal and a range of current labor law reforms in New Jersey this year.