New Law Combats Misclassification of Workers
Acting on his commitment to support and uplift New Jersey workers, Governor Phil Murphy signed a legislative package combatting worker misclassification and exploitation. The bills will crack down on employee misclassification in businesses by allowing stop-work orders against employers violating state wage, benefit, and tax law; providing an assessment of penalties for violations in connection with misclassification of employees; and requiring employers to post a notice for their employees regarding employee misclassification, among others.
MISCLASSIFICATION OF WORKERS
Since day one, taking on the practice of misclassification has been a top priority for the Murphy Administration. In May 2018, Governor Murphy signed Executive Order No. 25, establishing the Task Force on Employee Misclassification. He later released a comprehensive report from the Task Force, which included sixteen recommendations for both executive actions and relevant legislation. His administration has already made significant progress in responding to the Task Force’s recommendations to curtail the widespread and illegal practice of misclassifying workers, including through improving cross-training between departments and cooperation with neighboring states.
WHY MISCLASSIFICATION HURTS WORKERS
Workers who are misclassified are denied workers’ compensation benefits from their employers. Employees should contest such denials.
“We cannot build a stronger and fairer economy without strong workplace protections that ensure fairness for employees,” said Governor Murphy. “I am proud to sign these bills today to curb this unethical and illegal practice that hurts our working families and exploits New Jersey’s workers.”
"Gov. Murphy has positioned New Jersey to be a leader in the fight against illegal misclassification by giving the Labor Department powerful new compliance and enforcement tools,” said Labor Commissioner Robert Asaro-Angelo. “These bills protect employees who are misclassified as independent contractors as well as independent contractors improperly treated as employees, and provide critical support for employers who play by the rules. These bills contain important work rights and protections for both our state’s employees and their employers. Thank you to the dedicated leadership of my colleagues on the Misclassification Task Force, which formulated the recommendations for this package of legislation."
The Governor signed the following bills into law:
- A5838 (DeAngelo, Danielsen, Houghtaling/Madden, Singleton) - Concerns stop-work orders.
- A5839 (Moriarty, Verrelli, DeAngelo/Madden, Singleton) - Concerns penalties for misclassification of employees.
- A5840 (Carter, Moriarty/Greenstein, Madden)- Concerns joint liability for payment of employer tax law.
- A5843 (Speight, Verrelli, Moriarty/Lagana, Greenstein) - Requires employers to post a notice for employees on employee misclassification.
- S4226 (Madden, Singleton/Calabrese, Verrelli, Moriarty) - Permits the Department of Labor and Workforce Development to post information about the person who violates State wage, benefit, and tax laws.
- S4228 (Lagana, Madden/Chiaravalloti, Moriarty) - Concerns tax data sharing between State Treasury and DOLWD.
ENHANCING THE QUALITY OF LIFE OF WORKERS
"Workers’ rights enhance the quality of life of all New Jersey residents. They are vital to the livelihoods of those employed in our state and the families they support," said Senator Joseph Lagana. "These rights often come under attack, but in New Jersey, we are committed to standing up for employees and their families. With this bill package in place, we honor that commitment and make our state a greater place to earn a living."
"When the rights of our workers are threatened, we need to take action to ensure that they are protected," said Senator Troy Singleton. "We can protect our workers' rights by punishing those unscrupulous contractors and companies who commit wage theft and ultimately take advantage of their hard work."
STOP CHEATING WORKERS OUT OF BENEFITS
“Today marks a victory for workers all across the state of New Jersey,” said Senator Fred Madden. “For far too long, unscrupulous contractors have cheated their workers out of hard-earned wages and benefits to undercut the competition and increase personal profits. This has created untold social and economic costs for our middle-class families, but today we say no more. These increased protections underscore our commitment to fighting for the rights of our working class.”
EMPLOYEES, NOT INDEPENDENT CONTRACTORS
“When employers misclassify their employees as independent contractors, the impact is not only felt in the homes of hardworking families throughout the state but in our entire state’s economy,” said Senator Linda Greenstein. “Contractors need to understand the severity of their actions; this is not simply the theft of wages; it is the theft of financial security, opportunities, and health benefits. I am proud of New Jersey for taking a stand for its workers and for sending a message that these selfish and criminal actions will be met with consequences.”
Assemblymembers Wayne DeAngelo, Joe Danielsen, Eric Houghtaling, Paul Moriarty, Shanique Speight, Anthony Verrelli, Linda Carter, Clinton Calabrese, and Nicholas Chiaravalloti issued the following joint statement on the new laws regarding misclassification concerns:
“Classifying workers as independent contractors as an alternative to full or part-time employment has been a grossly misused practice of misclassification.
“It hurts employees and their families who do not have access to critical benefits and protections they are entitled to by law, including minimum wage, overtime compensation, family and medical leave and unemployment insurance. It also hurts each of the taxpayers and businesses paying their fair share while others avoid their tax duties.
“These new mandates will work in concert to stem the practice of misclassification together with expanding stop work orders beyond those for construction trades and prevailing wage, and requiring tax data to be shared between the state Department of Treasury and Labor to support more comprehensive investigations.”
“The cost of misclassification is hundreds of millions of dollars. When an employee is wrongfully tagged an independent contractor - when they are actually an employee - they are not paid workers’ compensation, social security, and overtime,” said William Mullen, President of the New Jersey Building and Construction Trades Council. “Not only is the worker being exploited, but the State is not getting its fair share of payroll taxes. In addition, worker misclassification creates an unfair playing field for the contractors that are actually doing the right thing. I commended Governor Murphy for signing into law such an important package of bills to protect working men and women of New Jersey.”
CHEATING WORKERS OUT OF BENEFITS
“Under Governor Murphy’s leadership, New Jersey has aggressively taken action to protect workers who’ve been cheated out of hard-earned pay and benefits,” said Charles Wowkanech, President of the New Jersey State AFL-CIO. “I applaud the Governor for his unwavering commitment to our workers and for always standing with working families in the Garden State.”
Jon L. Gelman, practices law in Wayne, NJ. He is the author of NJ Workers’ Compensation Law (Thomson-Reuters) and co-author of the national treatise Modern Workers’ Compensation Law (Thomson-Reuters). For over five decades, the Law Offices of Jon L Gelman 1.973.696.7900 firstname.lastname@example.org have represented injured workers and their families who have suffered occupational accidents and illnesses.
Recommended Citation: Gelman, Jon L., New Law Combats Misclassification of Workers, www.gelmans.com (2020), https://www.gelmans.com/ReadingRoom/tabid/65/ArtMID/1482/ArticleID/1076/preview/true/Default.aspx
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