The S.B. 94 Bill was approved by New Jersey Senate Labor Committee on February 13 and is now pending before the Senate Budget and Appropriations Committee. This bill would require gig economy companies such as Lyft and Uber to provide retirement plan benefits to New Jersey-based workers. Other states like New York and California are working on similar legislation to treat gig workers more like employees instead of contractors.
Here are some of the highlights of the New Jersey bill:
- The bill would require “contracting agents” that facilitate the provision of services by at least 50 workers (i.e., independent contractors) over a 12-month period to contribute funds to qualified benefit providers to provide benefits to the workers.
- The requirement to contribute funds under only applies when the services are provided to consumers located in New Jersey. The contribution amount would be the lesser of 25 percent of the total fee collected from the consumer for each transaction of services provided or six dollars for every hour that the worker provided services to the consumer. If determined per hour, then the determination shall be prorated per minute.
- Contributions would be made to the qualified benefit provider on no less than a monthly basis and no later than 15 days after the end of the month in which the services were provided.
In conclusion, the solo 401k plan may be the solution for now while the states and the federal government figure out how to best serve the retirement needs for workers in the gig economy which is estimated to makeup one third of American workforce according to Senator Troy Singleton. The solo 401k plan is for the self-employed including 1099 contractors and it allows for high pretax contributions.