LEGISLATIVE UPDATE: Independent Contractor v. Employee

NJ: Proposed Legislation

NJ State House

It was all but certain to pass. New Jersey Governor Phil Murphy was waiting to sign it. Television ads proclaimed its virtues. But the State’s anti-independent contractor bill (similar to California’s AB5) was pulled from the last legislative session. Groups representing independent contractors in myriad occupations made forceful and practical arguments against the bill. Included were freelance writers, musicians, doctors, various independent teachers, truckers, graphic designers, bakers, and others. Many legitimate independent contractor businesspeople prefer the freedom of owning and operating their own businesses. They do not want to be artificially classified as employees, a move they say would harm their businesses. The legislation was re-introduced on January 14th, and referred to the Labor Committees of both the Senate and Assembly. We are watching developments in both New Jersey and New York, which is also considering similar legislation.

CA: Preliminary Injunction Granted

Much to the relief of many, on January 16th, Judge Benitez granted a preliminary injunction to the California Trucking Association, temporarily stopping the enforcement of AB5 upon motor carriers. In his decision, Judge Benitez writes, “…there is little question that the State of California has encroached on Congress’ territory by eliminating motor carriers’ choice to use independent contractor drivers, a choice at the very heart of interstate trucking. In so doing, California disregards Congress’ intent to deregulate interstate trucking, instead adopting a law that produces the patchwork of state regulations Congress sought to prevent. With AB-5, California runs off the road and into the preemption ditch of the FAAAA.”

Of Course Unreimbursed Medical Expenses are Recoverable…Aren’t They?

Traditionally, New Jersey’s no-fault statute was interpreted to allow a plaintiff in a personal injury suit to recover unreimbursed medical expenses that exceeded his PIP coverage.  This was not an issue when all policies carried a required $250,000 in PIP coverage.  Over the years, however, the state legislature tweaked the PIP requirements, allowing insureds to purchase automobile liability policies with lower PIP limits to combat the rising cost of policy premiums.  Today, insureds can designate their health insurer as their primary PIP carrier, or purchase auto policies with PIP coverage as low as $15,000.  The courts, however, continued to view any medical expenses exceeding an insured’s PIP coverage recoverable, except where those expenses were paid by a private health insurer.            

In March 2019, all that changed when the New Jersey Supreme Court, in Haines v. Taft, ruled that a plaintiff could recover only those medical expenses in excess of $250,000.  Thus, under the Haines decision, a plaintiff carrying $15,000 in PIP coverage, would be barred from recovering any medical expenses that fell between $15,000 and the $250,000.

In response to the Supreme Court’s decision, the New Jersey state legislature passed a bill that was subsequently signed into law by Governor Murphy, effectively overturning Haines.  The new law, however, allowed for the recovery of any medical expenses exceeding an insured’s PIP coverage, even if those medical bills had been paid by private insurance, thus, allowing for a double recovery.   After signing the bill into law, Governor Murphy realized the possibility of a double recovery, and a second bill was quickly enacted and signed into law.  The second bill includes the term “unreimbursed” medical expenses, eliminating recovery of any medical bills exceeding no-fault that were paid for by another insurer, except where the insurer has a statutory right to be reimbursed, such as with Medicare. 

Thus, the law returns to its pre-Haines status, allowing a plaintiff to recover unreimbursed medical expenses to the extent they exceed the plaintiff’s chosen PIP coverage.