Sarah Block
Tue, 07/27/2021
On July 8, 2021, New Jersey Governor Phil Murphy signed three new laws which increase the penalties, fines, and litigation risks for employers who unlawfully misclassify workers as independent contractors, rather than as employees. The bills enacted into law were labeled as A5890/S3920, A5891/S2391, and A5892/S2392 in the legislature.
Among other things, the new laws create an Office of Strategic Enforcement and Compliance within the New Jersey Department of Labor (“NJDOL”), which will investigate claims of employee misclassification and allow for coordinated enforcement efforts within the NJDOL and across numerous state agencies. The new laws also authorize the NJDOL to close down a workplace through issuance of a stop-work order for all of that business’s work sites if that business is found to have violated the Unemployment Compensation Law by failing to make contributions for misclassified employees. In addition, the law creates fines for businesses which refuse to comply with a stop-work order issued by the NJDOL, and also requires employers to pay employees for the first 10 days that a stop-work order is in effect. Further, the new laws create heavy fines of not less than $1,000 per day for a business’s failure to maintain wage records and allows for the permanent suspension of business operations for employers who fail to comply. The laws also simplify the process for identifying misclassified workers for enforcement purposes.
These new laws will have a significant and positive impact on New Jersey’s workforce, as complaints of worker misclassification are rampant. In fact, according to a 2018 audit of only one percent of New Jersey businesses, there were more than 12,300 cases of worker misclassification, resulting in over $360 million in underreported wages and $14 million in lost state unemployment and disability contributions. The passage of these bills is part of the progress made by Governor Murphy’s “Misclassification Task Force,” which is aimed at addressing and alleviating issues of workplace misclassification.
If you believe you have been wrongfully classified as an independent contractor or have been wrongfully classified as ineligible to receive overtime compensation, please contact MSE at info@mselaborlaw.com.
